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[Alpha Biz=(Chicago) Reporter Kim Jisun] S-OIL's performance fell short of market forecasts in the second quarter of this year due to massive regular maintenance and falling international oil prices.
However, S-Oil predicted that it will be able to improve its performance at a rapid pace as regular maintenance has been completed in the second half of this year and demand for oil refining products has increased. The recent recovery in refining margins is also a positive sign.
S-OIL announced on the 28th that its consolidated operating profit in the second quarter of this year was KRW 36.4 billion, down 97.9% from a year earlier. This is well below the 189.4 billion won (based on FnGuide) estimate of operating profit estimated by the stock market. During the same period, sales fell 31.6 percent to 7.8196 trillion won and net losses for the current term turned into losses of 22.4 billion won, respectively.
S-OIL analyzed that the drop in sales volume due to regular remuneration in the second quarter and the drop in sales unit prices due to falling international oil prices affected its performance.
Usually, $4 to $5 per barrel is considered a break-even point, and the refining margin, which started with an average of $10.3 per barrel in January this year, averaged $7.6 in March before hovering around the break-even point throughout the April-June period.
Strong business in the petrochemical and lubricant sectors prevented S-Oil's quarterly deficit. S-OIL's operating profit in the petrochemical sector reached 82 billion won in the second quarter, up 355.6 percent from a year earlier. During the same period, operating profit in the lubricant sector fell 4.8 percent from the second quarter of last year to 246.5 billion won, but it served as a stable cash cow with an operating profit ratio of 30.4 percent.
AlphaBIZ 김지선(stockmk2020@alphabiz.co.kr)
