The base oil and lubricants business of S-Oil reported a 23% increase in operating profit for the quarter ending Dec. 31 and a 17% increase in sales revenue, along with substantial increases in operating profit and revenue for the full year.
The business unit reported had an operating profit of ₩279.5 billion (U.S. $184.5 million) for the fourth quarter of 2022, rising from ₩226.8 billion for the same quarter of 2021. Sales in the fourth quarter rose to ₩840.4 billion, up from ₩718.8 billion.
Operating profit for the full year reached ₩1.1 trillion won, 12% increase from ₩989 billion won. Full-year sales reached ₩3.4 trillion, a 31% improvement from ₩2.6 billion.
S-Oil noted in its earnings presentation that the base oil fundamental moderated in the fourth quarter due to seasonally softer demand, while demand for high-quality products remained at a firm level.
The company said that the product spread between composite base oil – an aggregated number including Group I base oils – and vacuum gas oil averaged $73.10 per barrel in the fourth quarter, after peaking at $81.80/bbl during 2022’s third quarter. In describing the market environment during the fourth quarter, S-Oil predicted the base oil spread will remain robust because feedstock costs will fall.