S-Oil Corp., Korea’s third- biggest oil refiner, posted a fourth-quarter profit that beat analysts’ estimates as a global economic recovery helped increase earnings from processing crude into gasoline and diesel.
Net income was 322.7 billion won ($290 million) in the three months ended Dec. 31, compared with a loss of 87.4 billion won a year earlier, the Seoul-based company said in a regulatory filing Thursday. That compares with the 276.8 billion-won median profit estimate of 11 analysts surveyed by Bloomberg News.
S-Oil CEO Ahmed A. Subey (right) helps out in an event to give free tteokguk, traditional Korean rice cake soup typically eaten on Lunar New Year, to homeless people in a charity event in Seoul on Thursday. (S-Oil)
Larger rival SK Innovation Co. reported last week that refining margins almost doubled as the recovery from the worst recession since World War II boosted fuel demand. Higher prices of petrochemicals such as paraxylene, used in synthetic fibers, also contributed to S-Oil’s earnings and sales are set to rise after a new plant starts production in the second half of 2011.
“Earnings momentum will remain strong in 2011 as the company will start commercial output of its new petrochemical plant soon when prices are good,” said Park Jae Chul, an analyst at Mirae Asset Securities Co. “It’s perfect timing.”
Shares of S-Oil advanced 7.4 percent to a record 106,000 won at 10:12 a.m. Seoul time, compared with the 0.2 percent gain in the benchmark KOSPI index. S-Oil jumped 71 percent in 2010.
S-Oil is scheduled to complete a 1.4 trillion-won expansion at its Onsan complex in June to increase the company’s petrochemicals capacity. The new plant will be capable of producing 900,000 metric tons of paraxylene and 280,000 tons of benzene annually.
The company is also expanding its oil processing capacity to 630,000 barrels a day from the current 580,000 barrels a day to boost production of naphtha, which will be used as a raw material at the new petrochemicals plant.
Paraxylene prices jumped 26 percent last year, according to Taurus Investment & Securities CO. SK Innovation said Jan. 20 its refining division earned $20.10 a barrel from processing fuel oil into gasoline and $22.10 a barrel from converting it into diesel in the fourth quarter.
S-Oil’s operating profit, or sales minus the cost of goods sold and administrative expenses, was 416.8 billion won, compared with a loss of 85.7 billion won a year earlier. Overall sales rose 25 percent to 6.09 trillion won, the company said.
(Bloomberg)
