In This Article:
Release Date: January 24, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
-
S-Oil Corp (XKRX:010950) recorded KRW260.8 billion in operating income for Q4 2024, marking a turnaround from the previous quarter.
-
The refining business showed significant improvement with KRW172.9 billion in Q4 operating income, driven by higher refining margins and favorable FX rates.
-
The Shaheen Project is progressing smoothly, with a completion rate of 51.8% as of December 2024, slightly ahead of schedule.
-
The GTG project is expected to reduce carbon emissions by 116,000 tonnes per year and has a projected internal rate of return (IRR) of 26.6%, indicating high profitability.
-
S-Oil Corp (XKRX:010950) maintains a stable financial structure with a cash balance of KRW1.957 trillion and a net debt-to-equity ratio of 69.3%.
Negative Points
-
The petrochemical business posted an operating loss of KRW28.1 billion in Q4 2024 due to narrowed spreads of major products.
-
The lube business experienced a decline in operating income in Q4 due to seasonal factors and scheduled maintenance.
-
S-Oil Corp (XKRX:010950) recorded a net FX loss of KRW415.7 billion in Q4, impacting income before tax.
-
Return on equity was negative at -1.8%, and return on capital employed was -0.4%, indicating challenges in profitability.
-
The company faces economic uncertainties both domestically and internationally, which could impact future performance.
Q & A Highlights
Q: How do you expect the increase in EV sales in China to affect refining product demand and regional market dynamics? A: Unidentified Company Representative: We forecast stable demand growth in the region, supported by economic growth in emerging economies like India. China's demand is expected to grow due to economic stimulus packages. The recent export tax rebate cut by the Chinese government and sanctions against Russia and Iran are expected to affect small refineries in China, leading to restructuring. These factors are expected to favorably impact market dynamics.
Q: What is the outlook for the lube-based oil market for 2025 and 2026? A: Unidentified Company Representative: Since the second half of 2023, the lube-based oil spread has been stable around $50, positively impacting income. We expect this stability to continue, with capacity additions mainly in India and Singapore. Demand is expected to rebound during the Lunar New Year and due to stockpiling for the spring lubricant replacement season, supported by Chinese economic stimulus.