S-OIL turned profitable in the fourth quarter of last year, supported by an improvement in refining margins. However, the consolidated operating profit for the entire year was recorded to have decreased by 66% compared to the previous year.
S-OIL announced on the 24th that its operating profit for the fourth quarter of last year was 260.8 billion KRW, marking a turnaround to profit compared to the same period last year and the previous quarter. Sales amounted to 8.9171 trillion KRW. On a consolidated basis, operating profit for the entire last year was 460.6 billion KRW, down 66% from the previous year. Annual sales increased by 2.5% year-on-year to 36.637 trillion KRW, while a net loss of 163.4 billion KRW was recorded, returning to the red. S-OIL explained that the decrease in operating profit for the year was due to weaker refining margins and petrochemical and lubricants base oil spreads compared to the previous year.
President Yoon Suk-yeol is performing the groundbreaking ceremony at the S-OIL Shahin Project groundbreaking event held on March 9, 2023, at Onsan National Industrial Complex, Ulju-gun, Ulsan Metropolitan City. Photo by Yonhap News
Operating profit by business segment last year showed that the petrochemical and lubricants base oil segments posted profits of 134.8 billion KRW and 571.2 billion KRW, respectively. The refining segment recorded a loss of 245.4 billion KRW. However, in the fourth quarter, refining margins improved and positive inventory-related effects appeared, leading to a successful turnaround to profit. The refining segment’s sales amounted to 7.0138 trillion KRW, with an operating profit of 172.9 billion KRW.
Asian refining margins rose compared to the previous quarter as the scale of scheduled maintenance by refiners increased, limiting supply, while seasonal demand for heating oil increased.
In the first quarter, refining margins are expected to remain firm due to factors such as a decrease in export volumes to China. This year, oil demand is projected to increase steadily as economic growth continues in developing countries within the region and China strengthens its economic stimulus measures.
S-OIL plans to complete a facility that generates electricity using natural gas (GTG·Gas Turbine Generator) by December next year. Through this, the company expects to reduce operating costs and achieve an annual reduction of 160,000 tons of carbon emissions in response to rising electricity prices and increased power consumption.
The progress rate of the 'Shahin Project' that S-OIL is promoting at its Ulsan plant stands at 51.8%, advancing 1.4 percentage points faster than planned.
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