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The upcoming earnings season for the nation’s leading oil refiners is expected to be poor due mainly to lower refinery margins in the third quarter, a stock analyst said in a report on Monday.
“Slower oil demand in the Southeast Asian markets amid rising economic uncertainties and eased tension in the Middle East in the July-September period kept international oil prices from soaring, which led to lower refinery margins, a key income source of oil refiners,” Baek Young-chan of Hyundai Securities said.
Contrary to the expectations of Korean refiners for a rise in international oil prices, global oil prices moved up and down moderately in the third quarter as the possibility of U.S. military action in Syria and a spread of violence in the Middle East retreated after a deal between American and Russian chemical weapons negotiators.
Based on an analysis of the external business environment, Baek said SK Innovation and S-Oil, the nation’s top two oil refiners, were forecast to issue poorer-than-expected operating profit in the third quarter compared with the same period last year.
“Only GS Caltex is expected to see a pick-up in its third-quarter earnings thanks to a recent facility expansion,” Baek said.
The nation’s second-largest oil refiner in March completed a 53,000-barrel-per-day heavy oil upgrading unit worth 1.3 trillion won ($900 million) in Yeosu, where the company runs its extensive refining complex, which raised its gasoline and diesel output. The new facility also annually produces 250,000 tons of propylene for petrochemicals.
“Despite the continued efforts to diversify business portfolios of top local refiners amid falling refinery margins, it seems for them to take more time to hit the bottom of the protracted business slump,” he added.
Regarding the outlook for operating profits of the top three oil refiners in the third quarter, Baek projected 509 billion won for SK Innovation, the holding company of top refiner SK Energy, 289 billion won for GS Caltex and 264 billion won for S-Oil.
By Seo Jee-yeon (jyseo@heraldcorp.com)
“Slower oil demand in the Southeast Asian markets amid rising economic uncertainties and eased tension in the Middle East in the July-September period kept international oil prices from soaring, which led to lower refinery margins, a key income source of oil refiners,” Baek Young-chan of Hyundai Securities said.
Contrary to the expectations of Korean refiners for a rise in international oil prices, global oil prices moved up and down moderately in the third quarter as the possibility of U.S. military action in Syria and a spread of violence in the Middle East retreated after a deal between American and Russian chemical weapons negotiators.
Based on an analysis of the external business environment, Baek said SK Innovation and S-Oil, the nation’s top two oil refiners, were forecast to issue poorer-than-expected operating profit in the third quarter compared with the same period last year.
“Only GS Caltex is expected to see a pick-up in its third-quarter earnings thanks to a recent facility expansion,” Baek said.
The nation’s second-largest oil refiner in March completed a 53,000-barrel-per-day heavy oil upgrading unit worth 1.3 trillion won ($900 million) in Yeosu, where the company runs its extensive refining complex, which raised its gasoline and diesel output. The new facility also annually produces 250,000 tons of propylene for petrochemicals.
“Despite the continued efforts to diversify business portfolios of top local refiners amid falling refinery margins, it seems for them to take more time to hit the bottom of the protracted business slump,” he added.
Regarding the outlook for operating profits of the top three oil refiners in the third quarter, Baek projected 509 billion won for SK Innovation, the holding company of top refiner SK Energy, 289 billion won for GS Caltex and 264 billion won for S-Oil.
By Seo Jee-yeon (jyseo@heraldcorp.com)
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