S-Oil Reports 42.4 Trillion KRW in Sales and 3.4 Trillion KRW Operating Profit Last Year... Turns to Loss in Q4

[Asia Economy Reporter Jeong Dong-hoon] S-oil achieved its highest-ever performance last year, driven by high oil prices and strong refining margins. However, in the fourth quarter, it turned to a loss due to falling oil prices.

S-oil announced on the 1st that its consolidated annual sales for last year reached KRW 42.446 trillion, and operating profit was KRW 3.4081 trillion. Both sales and operating profit were the largest ever, increasing by 54.6% and 59.2% respectively compared to the previous year.

Last year's annual net profit recorded KRW 2.1068 trillion, up 34.6% from the previous year. The net profit is planned to be used for the 'Shahin Project,' a petrochemical project worth about KRW 9 trillion, as well as for dividends to shareholders and strengthening financial soundness.

However, the operating loss in the fourth quarter of last year was KRW 157.5 billion, turning to a loss compared to KRW 391.3 billion in the same period last year.

Sales in the fourth quarter of last year were KRW 10.594 trillion, up 21.7% from KRW 8.2911 trillion in the same period last year, but down 4.8% from KRW 11.1226 trillion in the previous quarter.

S-oil explained, "Due to one-time factors such as inventory-related losses caused by the decline in oil prices, the fourth-quarter operating profit turned to a loss compared to KRW 511.7 billion in the previous quarter," adding, "Despite the operating loss in the fourth quarter, net profit recorded KRW 231.3 billion through foreign exchange risk management policies."

Looking at the fourth-quarter results by sector, the refining division recorded an operating loss of KRW 379.6 billion. S-oil explained, "Asian refining margins remained firm due to winter heating demand and recovery in aviation demand," but "crude oil prices fell to the lowest point of the year in December last year due to concerns about a global economic recession and the resurgence of COVID-19 in China, reflecting inventory-related losses."

The petrochemical division posted an operating loss of KRW 57.4 billion. This appears to have been influenced by increased petrochemical product supply from new facilities in China and delayed demand recovery due to COVID-19. The lubricants division recorded an operating profit of KRW 279.5 billion. Although demand for lubricant base oils decreased due to seasonal factors, the company stated that demand for high-quality products remained solid.

Regarding this year's outlook, S-oil said, "Despite concerns about slowing demand growth due to the economic downturn, Asian refining margins are expected to remain firm as the global refining capacity shortage continues," adding, "The European Union's (EU) ban on Russian refined products, China's reopening leading to increased domestic demand, and the recovery of global jet fuel demand will positively affect refining margin strength."