S-Oil saw first quarter base oil revenue drop compared to the same period a year ago because of a slide in prices, but its operating income surged significantly.
Revenue for the companys base oil business decreased 29 percent to 378.1 billion won (U.S. $352 million) for the first three months of 2015, the Seoul-based refiner announced yesterday. But the units operating income increased 39 percent to 73 billion won.
Base oil [spreads] sharply dropped as product prices reflected the crude oil price drop [after a] time lag, S-Oil Executive Director Bang Juwan said in a written statement accompanying the earnings report.
Bang attributed the increase in operating income to an uptick in base oil sales volumes, which rose 11 percent from the fourth quarter of 2014. The base oil business was also able to reduce inventory-related losses.
Discussing the outlook for coming months, Bang said, There will be no further contraction in base oil spreads. Demand growth for high-quality lube base oil in the United States and Europe will offset supply increases from new capacity additions of competitors amid stabilizing product prices.