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(LEAD) S-Oil shifts to Q4 net loss on inventory-related losses

All News 17:28 January 28, 2019

(ATTN: ADDS details in last seven paras)

SEOUL, Jan. 28 (Yonhap) -- S-Oil Corp., South Korea's third-largest refiner by sales, said Monday it shifted to a net loss for the October-December period due to inventory-related losses.

For the three months that ended in December, the company's net loss stood at 247.85 billion won (US$222 million) from a net profit of 386.94 billion won a year earlier, S-Oil said in a statement.

"Crude oil inventory-related losses worth 390 billion won cut into the quarterly bottom line amid declining oil prices. Moreover, foreign exchange losses also weighed on the results amid the won's strength against the dollar," a company spokesman said.

The refiner also shifted to an operating loss of 292.36 billion won in the last three months of 2018 from an operating profit of 386.31 billion won a year ago. Sales rose 18 percent to 6.861 trillion won from 5.814 trillion won, it said.

Refining margins fell to 2.8 dollars per barrel in the fourth quarter from 4.9 dollars a barrel in the same period a year ago. This dealt a blow to the earnings results, the statement said.

Looking ahead, the company said refining margins will likely improve this year on the back of demand growth sufficient to accommodate a supply increase.

"The margin will gain notable momentum in the second half (of 2019) helped by soaring demand for diesel ahead of the International Maritime Organization's (IMO) 2020 sulfur cap regulation," the spokesman said.

Last year, the IMO's Marine Environment Protection Committee adopted a measure banning vessels without scrubbers from carrying fuels which contain more than 0.5 percent sulfur for use on board. The sulfur cap is set to enter into force on Jan. 1, 2020.

Cargo ships and bulk ships have mainly used bunker C fuel oil due to cost reasons.

For the whole of 2018, net profit plunged 73 percent to 333.98 billion won from 1.246 trillion won a year earlier.

The company swung to an operating profit of 292.36 billion won from an operating loss of 369.31 billion won during the same period. Sales rose 22 percent to 25.463 trillion won from 20.891 trillion won, the statement said.

The S-Oil headquarters building in Mapo, western Seoul (Yonhap)


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