S-Oil swings to profit in second quarter on strong refining and lubricant margins

S-Oil said Monday its second-quarter operating profit swung to a surplus of 965 billion won ($673 million), reversing a loss of 344 billion won recorded in the same period a year earlier. The company attributed the turnaround to robust refining margins and record-breaking performance in its lubricant business amid tight global supply.

Consolidated revenue for the April-June period rose 40.9 percent on-year to 11.3 trillion won ($7.91 billion) from 8.05 trillion won. Net income also returned to the black, reaching 515 billion won ($359 million) compared with a net loss of 66.8 billion won a year prior.

The lubricant division drove much of the gain, posting operating profit of 477 billion won ($333 million), its highest quarterly result ever. S-Oil noted that production disruptions in the Middle East and logistics constraints stemming from tensions near the Strait of Hormuz tightened base oil supply, pushing spreads to record levels.

Its core refining segment contributed operating profit of 532 billion won ($371 million) on sales of 9.03 trillion won ($6.3 billion). While strong international refining margins supported earnings, the company said these gains were partially offset by opportunity costs associated with scheduled maintenance work.

In contrast, the petrochemical division struggled against weak market conditions, recording an operating loss of 44.8 billion won ($31.3 million).

Looking ahead, S-Oil expects favorable conditions to persist into the third quarter, citing the start of the driving season, increased power generation demand due to heat waves, and export restrictions in some countries as factors likely to keep the refining market tight.