S-OIL chalked up more than 1.2 trillion won in operating profit on the back of inventory profit, caused by crude oil price hikes for the first quarter of this year, in results that surprised analysts.
Preliminary figures released in an electronic notice on May 11, showed that the refinery company logged 1,231.1 billion won in operating profit in the first quarter of the year, a departure from a 22.5 billion won operating loss in the same period of 2025.
S-OIL saw Q1 sales decline 0.5 percent year-on-year to 8,942.7 billion won and Q1 net profit rise to 721 billion won.
The refinery company’s good business performance is owed to inventory profit, caused by crude oil price hikes and a lagging effect. In particular, more than half of the operating profit came from inventory profit.
Rising refining margins were not fully reflected due to a declining operation rate, caused by regular repair and the maximum oil price system, but the lagging effect caused the refinery business to see its profit improve over the previous quarter.
By business, the refinery business led the overall rising momentum by posting 7,101.3 billion won in sales and 1,039 billion won in operating profit.
A rising refining margin, caused by crude oil supply uncertainties in the wake of the Middle East situation, contributed to improving the business performance.
The petrochemical business chalked up 25.5 billion in Q1 operating profit, a departure from a loss in the same period of the previous year.
The lubricant business saw Q1 operating profit decline to 166.6 billion won over the previous quarter since reflecting of raw material price hikes took time.
In a conference call following the announcing of the Q1 results, S-OIL said the refinery company will reflect its compensation for losses, caused by the maximum oil price system later.
S-OIL said, “Our company is in a situation of suffering heavy losses since domestic oil prices do not index international petroleum prices due to the introduction of the maximum oil price system.”
The government compensation committee plans to make up for losses but has not yet come up with detailed calculation standards, and when the government’s loss compensation amounts are fixed, they will be reflected as losses, the refinery company said.
Related business sources said losses major refinery companies, including S-OIL, had sustained in the wake of the maximum oil price system were estimated at more than 3 trillion won.
The government decided to make up for the losses the refinery companies suffered, but it will have to discuss compensation amounts with 4.2 trillion won in its reserve fund.
S-OIL presented an optimistic prediction on the future market situation.
If and when the U.S.-Israeli war with Iran ends, the refinery company said, petroleum prices will return to normal gradually, and declining oil prices, caused by the end of the war, will normalize demand and maintain a steady refining margin for a quite long time.
S-OIL forecast that crude oil supply will be restored to pre-war levels at year-end.
As for shareholders return policies, the refinery company was considering offering a mid-term dividend on the back of the good H1 business performance.
It is up to the board of directors to make a final decision on the issue in consideration of inventory losses, caused by possible declining oil prices.
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