Q2 2026 S-Oil Corp Earnings Call (English, Korean) Transcript
Key Points
- Record-high operating income of KRW477.4 billion in the Lube segment, driven by record product spreads and tight supply-demand conditions.
- Strong refining margins, particularly for diesel and kerosene, supported by Middle East conflict and supply disruptions, expected to persist in Q3.
- Successful mitigation of crude sourcing risks through diversified shipping routes, alternative crude grades, and government stockpile leasing.
- Shaheen project on track for mechanical completion and commercial operation in early 2027, with marketing agreements secured for olefin monomers.
- Expectation of continued strong refining and lube market conditions through 2027, with limited impact from new capacity expansions.
- Operating income declined 21.6% Q-on-Q due to the absence of one-off crude price benefits recognized in Q1.
- Petrochemical segment turned to an operating loss of KRW44.8 billion due to inventory-related losses and weak PX spreads.
- Net foreign exchange loss of KRW155.6 billion and net interest loss of KRW66.6 billion negatively impacted earnings.
- High volatility in crude prices and OSP, with potential for further disruptions if the Red Sea is blocked, adding freight and working capital burdens.
- Uncertainty regarding government compensation for losses from the maximum price cap policy, with no conclusive outcome yet.
Good morning. This is S-OIL IR Team Leader, H.D. Jeong. Before we begin, please note that Q2 2026 financial results are provisional and therefore subject to change according to outside independent external auditors' audit results.
First, please refer to page 5 for Q2 2026 financial results. In Q2 the company posted sales revenue of KRW11.3 trillion, up 26.8% Q-on-Q driven by higher crude prices. Operating income was KRW965 billion, down 21.6% Q-on-Q, as the one-off impact of higher crude prices recognized in Q1 largely subsided. If you look at each business segment, operating income from the Refining segment declined 49% Q-on-Q to KRW532.4 billion.
Although global Refining margins remained strong, particularly for diesel and (inaudible) amid the Middle East conflict. Operating income decreased Q-on-Q due to the reverse base effect from the one-off crude price benefit recognized in the first quarter.
Although margins in the Petrochemical segment improved slightly Q-on-Q, the segment turned into a loss due to
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