S-Oil Sees Profits Soar on Strong Refining Margins

S-Oil has reported a significant turnaround in its second-quarter financial results, thanks to strong refining margins and lube spreads. The company's operating profit on a consolidation basis reached 965 billion won, marking a shift from a loss in the same period last year.

The revenue for the quarter rose by 40.9% to 11.3435 trillion won, with net profit also turning into a profit at 514.6 billion won. An S-Oil official attributed this success to the maintenance of solid operating profit despite lower oil prices, citing tight supply-demand conditions that are expected to continue in the second half.

The refining institutional sector saw revenue and operating profit of 9.0293 trillion won and 532.4 billion won respectively. Crude prices remained elevated during the quarter before plummeting at the end of June when the Strait of Hormuz was temporarily reopened, leading to a sharp increase in refining margins.

The petrochemical institutional sector reported revenue of 1.0125 trillion won but an operating loss of 44.8 billion won due to narrowing spreads for paraxylene (PX) and polypropylene (PP), while spreads for benzene (BZ) and propylene oxide (PO) increased.

The lubricants institutional sector, however, posted revenue of 1.3017 trillion won and an operating profit of 477.4 billion won, driven by all-time high spreads for base oil due to supply disruptions in the Middle East and logistics constraints from the closure of the Strait of Hormuz.