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• Operating Income: KRW 168.6 billion in Q2 2024.

• Sales Revenue: Increased by 2.8% from the previous quarter, reaching KRW 9.57 trillion.

• Inventory Gain: KRW 81.1 billion in Q2.

• Income Before Tax: KRW 186.3 billion for the first half of 2024.

• Cash Balance: KRW 1.33 trillion at the end of Q2.

• Net Debt to Equity Ratio: 58.1%.

• ROE (Return on Equity): 3.2% annualized for the first half of 2024.

• ROCE (Return on Capital Employed): 4.0% annualized for the first half of 2024.

• EBITDA: KRW 545 billion for the first half of 2024.

• Refining Business Operating Income: Loss of KRW 95 billion in Q2.

• Petrochemical Business Operating Income: KRW 109.9 billion in Q2.

• Loop Base Oil Business Operating Income: KRW 145.8 billion in Q2.

• Warning! GuruFocus has detected 4 Warning Sign with XKRX:010950.

Release Date: November 04, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• S-Oil Corp (XKRX:010950) reported KRW168.6 billion in operating income for Q2 2024, supported by improved results in the petrochemical segment.

• The company is actively enhancing its safety management systems, achieving Kosha MS certification and recording zero safety incidents in the first half of 2024.

• S-Oil Corp is progressing well with the Shaheen project, with a 94.9% progress rate in site preparation, aiming to enhance corporate value in the long term.

• The petrochemical business saw a significant income improvement, with operating income reaching KRW109.9 billion in Q2 2024.

• The company maintains a stable financial structure with a cash balance of KRW1.33 trillion and a net debt to equity ratio of 58.1%.

Negative Points

• S-Oil Corp's refining business segment recorded a loss of KRW95 billion in Q2 2024 due to weak refining margins.

• The company experienced a net FX loss of KRW152.2 billion due to an increase in the dollar rate.

• The overall impact of oil price movements led to a slight decrease in income before tax compared to the previous quarter.

• The company's cash balance slightly decreased due to capital expenditures for the Shaheen project and dividend payouts.

• There is uncertainty regarding the impact of global geopolitical tensions and extreme weather patterns on refining operations and margins.

Q & A Highlights

Q: What impact will hurricanes and extreme heat have on the supply side, and what is the status of new refineries like Dangote and Olmeca? A: The US NOAA predicts a higher frequency of hurricanes, potentially causing operational disruptions in Gulf Coast refineries. Extreme heat could interrupt around 1.5 million BD of capacity, similar to last year. The Dangote refinery in Nigeria is operating at 40-50% capacity, with plans to ramp up in the second half of the year. The Olmeca refinery in Mexico is nearing construction completion but faces startup issues, with normal operations expected in the first half of 2025.