S-Oil (A010950) 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 steady lube segment performance.

• Sales revenue increased 2.8% quarter-on-quarter 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 from a profit of 166.2 billion Won in Q1 2024, mainly due to refining losses and negative financial items.

• H1 2024 revenue was 18,879,327 million KRW, up 11.7% year-over-year, but operating profit dropped 55% to 614,753 million KRW due to weaker margins and higher costs.

• Major investments continue in the Shaheen petrochemical 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 income before tax: -KRW 40.9 billion.

• 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).

• EBITDA for H1 2024: 1,789 billion Won.

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

• H1 2024 EPS: 1,244 KRW (basic, common stock).

Outlook and guidance

• Regional refining margins expected to rebound in Q3 2024, driven by summer transport fuel demand.

• Gasoline and jet fuel/diesel spreads projected to improve with seasonal demand and strong air travel.

• Lube fundamentals may see modest correction but remain sound due to limited capacity additions.

• Petrochemical market may slow slightly in Q3 due to added supply and seasonal factors, but downstream demand and Chinese economic measures provide support.

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