This marks an increase of approximately 231% compared to the previous quarter's operating profit of 371.9 billion won, and a turnaround from an operating loss of 21.5 billion won in the first quarter of last year. The net profit was reported at 721 billion won.
The operating profit was significantly influenced by inventory effects due to rising oil prices, which accounted for more than half of the total. Despite the impact of scheduled maintenance and the implementation of a maximum oil price policy, the refining division's profits improved compared to the previous quarter due to a lagging effect. This lagging effect arises from the time difference between crude oil purchases and product sales, leading to a cost input delay.
By business segment, the refining division reported sales of 7.10 trillion won and an operating profit of 1.04 trillion won. The petrochemical division achieved sales of 1.10 trillion won and a slight operating profit of 25.5 billion won. The lubricants division recorded sales of 737 billion won and an operating profit of 166.6 billion won.
The refining division benefited from a surge in oil prices due to disruptions in global crude supply caused by the blockade of the Strait of Hormuz. Additionally, reduced operations at regional refineries and export restrictions from some countries led to an expanded spread between gasoline and diesel, boosting refining margins in Asia.
In the petrochemical division, high operating rates at downstream facilities in China improved the aromatic market conditions. However, since March, a sharp rise in raw material prices has dampened demand, leading to a decline in spreads. The olefin downstream also faced worsened profitability due to soaring raw material prices following the Middle East conflict, although the drop in propylene oxide (PO) prices was relatively limited due to downstream demand effects.
In the lubricants division, despite tight supply conditions, the increase in raw material prices outpaced product price increases, resulting in a decline in spreads.
S-OIL anticipates that solid market conditions will continue into the second quarter due to supply disruptions. However, it warned of potential risks to profitability from inventory-related losses and lagging effects if oil prices decline in the future. S-OIL stated, "We are maintaining a stable crude oil import system despite increasing uncertainties in supply and demand."
The Shahin project reported an EPC (engineering, procurement, and construction) progress rate of 96.9% as of the end of April, with plans for mechanical completion by the end of June. Major equipment installations have been completed, and the company aims to prepare for commercial operations by the end of the year after conducting trial runs. A company official stated, "There are no delays in the plan for mechanical completion by the end of June," adding that it is expected to be a positive project with competitive cost advantages in the global market.
* This article has been translated by AI.
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