Petrochemical and Lubricant Profits Improve Despite Decline in Refining Margins
Gasoline Market to Recover in Q3 Due to Seasonal Demand Increase
S-OIL announced on the 26th that it recorded sales of 9.5708 trillion KRW and operating profit of 160.6 billion KRW in the second quarter.
Sales increased by 2.8% compared to the previous quarter due to higher KRW-denominated selling prices resulting from the rise in exchange rates.
Despite a deficit in the refining segment due to declining refining margins, the company achieved an operating profit of 160.6 billion KRW thanks to improved profits in the petrochemical segment and solid operating profit in the lubricants segment. However, net profit turned into a deficit of 21.3 billion KRW due to foreign exchange losses caused by the rising exchange rate.
By business segment, the refining segment recorded sales of 7.4514 trillion KRW and an operating loss of 95 billion KRW. Refining margins in Asia weakened as gasoline demand in the US remained sluggish and higher shipping costs limited diesel exports to Europe.
The petrochemical segment posted sales of 1.3085 trillion KRW and operating profit of 109.9 billion KRW, while the lubricants segment achieved sales of 810.9 billion KRW and operating profit of 145.8 billion KRW. The fundamentals of base oil remained solid due to regular maintenance by major global suppliers and robust demand for Group II products.
S-OIL expects Asian refining margins to rebound in the third quarter, driven by demand for transportation fuels during the summer peak season.
Additionally, while the PX and benzene markets are expected to see increased supply following the end of regional facility maintenance and a slowdown in gasoline blending demand, the company believes this will be offset by stable downstream demand.
Furthermore, while the fundamentals of base oil may see a slight adjustment due to seasonal off-peak demand, the company expects a healthy level to be maintained as facility expansions remain limited.
A company representative stated, "The Asian gasoline market is regaining upward momentum as we enter the third quarter. Even in the US, the world's largest gasoline market, demand was weak in the second quarter but is expected to show solid summer demand in the third quarter."
S-OIL is striving to achieve an accident-free workplace by establishing a safety-first culture and continuously strengthening safety management. It was the first in the domestic refining industry to obtain KOSHA-MS (Occupational Safety and Health Management System) certification, and in June 2024, achieved its second accident-free record of 8 million man-hours since its founding.
In response to the era of energy transition, S-OIL is mobilizing company-wide capabilities to successfully carry out the Shaheen Project to enhance corporate value, with the goal of mechanical completion in the first half of 2026.
S-OIL.
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