S-Oil (010950) Q2 2024 earnings summary

Executive summary

• Q2 2024 operating income was KRW 160.6 billion, down 64.6% sequentially due to weaker refining margins, but supported by improved petrochemical and lube base oil (LBO) segment performance.

• Sales revenue rose 2.8% sequentially to KRW 9.57 trillion and 22.4% year-over-year, aided by currency effects.

• Net income turned to a loss of -21.3 billion Won in Q2, mainly due to refining losses and negative financial items, while H1 2024 net income was 144,866 million KRW, down 84.7% year-over-year.

• The Shaheen project is progressing as planned, with 94.9% site preparation and 30.9% EPC completion as of July 10, and mechanical completion targeted for H1 2026.

• Major investments continue in the Shaheen project, with diversified funding secured, including a 600 million USD shareholder loan and a 538 million USD credit line.

Financial highlights

• Q2 operating income: KRW 160.6 billion; Q2 sales revenue: KRW 9.57 trillion, up 2.8% from Q1.

• H1 2024 revenue: 18,879,327 million KRW (+11.7% YoY); operating profit: 614,753 million KRW (-55% YoY); net income: 144,866 million KRW (-84.7% YoY).

• Inventory-related gain in Q2 was KRW 81.1 billion, up from Q1.

• Cash and equivalents at period-end: 1,318,523 million KRW, down from 1,963,279 million KRW at 2023 year-end.

• H1 2024 EBITDA: 1,789 billion Won; ROE: 4.0%; ROCE: 4.0%.

Outlook and guidance

• Asian refining margins expected to rebound in Q3, driven by seasonal transportation fuel demand.

• Gasoline spread projected to improve with summer driving season; jet fuel and diesel spreads to remain strong.

• LBO spread may see slight downward correction in Q3 but fundamentals remain healthy.

• The Shaheen project is on track for mechanical completion in H1 2026 and commercial operation in H2 2026, expected to double chemical production capacity.

• The company is expanding into hydrogen, biofuels, and carbon capture to diversify revenue and address long-term energy transition risks.