Oil prices send refiners’ operating profits into free fall

Korea’s top refiner SK Innovation and three other industry players saw their operating profits tumble in the first half of the year as a drop in oil prices more than offset brisk sales, industry data showed yesterday.

According the data, SK Innovation posted 824 billion won ($726 million) in operating profit in the period, sharply down from 1.66 trillion a year ago, as its subsidiary SK Energy’s operating profit fell 85 percent to 116 billion won from 813 billion won a year earlier.

GS Caltex recorded 72.5 billion won in operating profit in the January-June period, down 93.4 percent from 1.13 trillion won the previous year.

S-Oil’s operating profit dropped 74 percent to 224.5 billion won from 889.1 billion won a year ago, while Hyundai Oilbank posted an operating loss of 25 billion won, compared with a profit of 324 billion won last year.

The weaker results were blamed on a sharp fall in oil prices starting in the April-June period, market watchers said.

“The plunge in operating profits stemmed from inventory losses and weak refining margins as international oil prices dropped in the second quarter,” said Son Young-joo, an analyst at Kyobo Securities.

Local refiners brought oil to the country at high prices in the first quarter when oil prices were skyrocketing, but a drop in prices in the second quarter sent their oil product prices lower to eat into their margins, he added.

Yonhap