S-Oil "Solo Profit in Q4 Last Year, Effect of Proactive Investment"

[Asia Economy Reporter Kim Hyewon] S-OIL announced on the 14th that the effects of its large-scale preemptive investments in refining and petrochemical facilities are leading to improved performance.

S-OIL posted sales of 4.2803 trillion KRW and an operating profit of 93.1 billion KRW in the fourth quarter of last year, turning a profit compared to the previous quarter. It was the only one among the four major domestic refiners to record a profit in the fourth quarter of last year. Although the refining business incurred a loss of 89.7 billion KRW, the petrochemical (72.7 billion KRW) and lubricants base oil (110.1 billion KRW) businesses led the turnaround to profitability.

A company official evaluated, "Despite the global decline in petroleum product demand and falling refining margins, the strategy to maximize production of profitable products such as propylene oxide (PO), a petrochemical raw material, lubricants base oil, and low-sulfur fuel oil (LSFO) for ships was effective."

PO is a raw material for polyurethane, widely used in automotive and home appliance interiors. In the fourth quarter of last year, the PO spread rose about 85% compared to the previous quarter, reaching 1,098 USD per ton. This is the highest level since December 2014.

The company expects PO profitability to continue this year following last year, contributing to future performance improvements. S-OIL's new advanced facilities (RUC & ODC) producing high value-added petrochemical products such as PO began operations at the end of 2018.

The Residue Upgrading Complex (RUC) uses cheaper heavy residue compared to crude oil as raw material to produce gasoline, premium gasoline additives (MTBE), propylene, ethylene, and more. The Olefin Downstream Complex (ODC) produces high value-added petrochemical products such as polypropylene (PP) and propylene oxide (PO) based on propylene.

While the utilization rate of domestic refiners' facilities in the fourth quarter was around 80%, S-OIL stated that it operated its crude oil refining facilities at 100% capacity, based on PO profitability and product distribution channels secured through its overseas network.

A company official said, "With the spread of COVID-19 vaccinations, demand for petroleum products is recovering, and refining margins are expected to gradually improve. We also expect the company's business performance to improve rapidly."

S-OIL recorded an operating loss of 1.0877 trillion KRW last year, the largest in its history, due to the impact of COVID-19.