‎“S-Oil” profits decreased to $198.5 mln during Q1, by 70%‎

“S-Oil” company said today, Thursday, that its net profit declined by about 70% year on year in the first quarter, as the slowdown in oil demand affected profitability.

According to the “Korean Yonhap Agency,” the company’s net profit reached 265.3 billion won ($ 198.5 million) in the January-March period, down 69.5 percent from 870.8 billion won a year earlier, the company said in a regulatory report.

Operational income was 515.7 billion won for the same three months, down 62 percent from a year earlier. Sales fell 2.3 percent to 9.07 trillion won.

Profits were below market expectations. The average estimate for net profit by analysts was 334.1 billion won, according to a survey conducted by Yonhap Infomax, the financial data company for Yonhap News Agency.

Decreased fracturing margin, a key measure of refinery profitability, is cited as the main factor hurting bottom line profitability.

Refining margins are linked to global oil prices. Higher crude oil prices mean larger margins, or the difference between the total value of petroleum products and the cost of crude oil and related services.

Singapore’s refining margin reached $2.5 a barrel, the lowest level in a year so far. The range of $4 to $5 per barrel is usually considered the break-even point

“We expect to see an increase in demand with the start of the summer driving season,” S-Oil said in a statement, referring to the summer season when gasoline demand usually reaches its peak.

“We also expect that demand for gasoline and jet fuel will recover in light of the first holiday season in China after reopening,” she said.

The oil giant Saudi Aramco is the largest shareholder in S-Oil, with a stake of 63.4%.