Employees of S-Oil check a petrochemical factory, in this photo provided by the South Korean refiner on March 10, 2021. (S-Oil)
S-Oil Corp., South Korea's No. 3 refiner, said Tuesday it turned to the black in the first quarter from a year earlier on rising prices of petrochemical products and inventory-related gains.
S-Oil's net income reached 344.7 billion won ($310.1 million) in the January-March period, turning from a loss of 880.6 billion won a year earlier, the company said in a regulatory filing.
Its logged a higher-than-expected operating profit of 629.2 billion won in the first quarter, the highest in five years, also swinging from a loss of 1 trillion won a year ago, it said.
Sales rose 2.8 percent on-year to 5.3 trillion won over the period.
S-Oil, wholly owned by Saudi Arabian state oil giant Aramco, said a hike in sales prices of its main petrochemical products and inventory-related gains improved its bottom line in the first quarter, offsetting a weak recovery in cracking margins.
"Refining margins remained weak under the ongoing COVID-19 impact," S-Oil said in a release. "However, the crack spreads of gasoline and diesel continued to increase, showing demand recovery with global rollout of vaccine."
The average sales prices of its oil and petrochemical products jumped 30.6 percent in the first quarter compared with three months earlier, while its sales volume declined 5.7 percent on-quarter over the period, the firm said.
S-Oil expected refining margins to rise in the second quarter in line with the global economic recovery and rising travel demand in the wake of coronavirus vaccinations.
Looking ahead, the refiner said it will step up investment in the hydrogen business to foster it as one of its new growth engines and actively respond to climate change.
In March, the company acquired a 21 percent stake in Fuel Cell Innovations (FCI) for 8.2 billion won to become its largest shareholder.
FCI, a joint venture between Korea and Saudi Arabia, has more than 40 patents focusing on the solid oxide fuel cell system, which is more efficient than conventional fuel cells and uses relatively inexpensive nickel.
Fuel cells, which generate electricity from hydrogen, can be integrated into vehicles, ships, generators and other suitable applications without emitting greenhouse gases.
The refiner said the strategic investment is part of its plan to tap into hydrogen, fuel cell and recycling businesses beyond its refinery and petrochemical units by 2030.
Shares in S-Oil gained 0.36 percent to 84,600 won the Seoul bourse, outperforming the benchmark Kospi's 0.07 percent fall. The earnings report was released after the market opened. (Yonhap)