Lower crude oil costs helped S-Oils base oil business record a 42 percent year-to-year improvement in third quarter profitability, the company reported today.
The South Korean refiners base oil unit posted operating income of 95.6 billion won (U.S. $84.6 million) for the three months ended Sept. 30, up from 67.5 billion won for the third quarter of 2014. Sales revenue for this years third quarter was 329.3 billion won, a 33 percent drop reflecting the reduction in base oil prices.
S-Oils profit margin for base oils jumped to 29 percent, up from 13.8 percent a year earlier. Management noted that the improvement occurred despite seasonally weak demand.
The company expressed optimism about the outlook for coming months, despite the fact that the global base oil market is mired in a large overall glut. Demand for API Group II and III oils – which accounts for most of S-Oils output – remains strong, it said.
Despite oversupply market status, decent demand for high quality products will support [a] healthy spread, the company stated in its earnings report.