S Korea’s S-Oil swings to net profit in Q3 on strong refining earnings

SINGAPORE (ICIS)–Major Korean refiner S-Oil posted a third-quarter net profit of Korean won (W) 545.4bn ($403m), a sharp reversal of the loss in the same period last year, on the back of strong refining margins and higher crude prices.

in billion won (W)	Q3 2023	Q3 2022	Yr-on-yr % change	Jan-Sept 2023	Jan-Sept 2022	Yr-on-yr % change
Revenue	8,999.6	11,122.6	-19.1	25,896.8	31,852.1	-18.7
Operating income	858.9	511.7	67.9	1,411.0	3,565.6	-60.4
Net income	545.4	-9.6	–	788.3	1,875.5	-58.0

Refining operating profit for July-September 2023 surged to W666.2bn from W78.8bn in the previous corresponding period, the company said on Monday.

“Regional refining margins rebounded sharply [from the second quarter] due to strong demand in summer driving and air travel peak season amid tight supply situation,” S-Oil said.

In the second quarter, the refining segment incurred a loss of W292.1bn.

Oil prices rose in the third quarter as OPEC and its allies (OPEC+) extended their voluntary production cuts.

S-Oil’s petrochemical and lube businesses, however, both reported double-digit declines in earnings “primarily due to one-off and seasonal factors”, S-Oil said, citing a negative impact of W146.1bn from regular maintenance with a positive inventory-related impact of W234.3bn.

Petrochemical operating profit fell by 19% year on year to W45.4bn, while lube operating profit slumped by 61% to W147.2bn.

The paraxylene (PX) and benzene markets “maintained a decent level”, aided by “steady gasoline blending demand for feedstock aromatics and fresh demand from start-up of new large-scale downstream plant in the region”.

The polypropylene (PP) and propylene oxide (PO) markets, however, weakened due to start-ups and sluggish downstream demand linked to China’s manufacturing slowdown, S-Oil said.

Saudi Aramco, the world’s biggest crude exporter, through its subsidiary Aramco Overseas Co owns more than 63% of S-Oil.

($1 = W1,353.40)