Profits Down at S-Oil


South Korean base oil refiner S-Oil reported a decline in profits for its lubricants segment during the third quarter, compared to a year earlier.

According to the companys third quarter investor relations presentation, S-Oils lubricants division reported a 26.1 percent decline in operating income for the three months ending Sept. 30, to 57 billion Korean won (U.S. $61.9 million), down from 86 billion won ($93.6 million) during the year-earlier period.

Revenue for the lubricants segment fell by 23.1 percent to 253 billion won ($274.8 million) in the third quarter, down from 329 billion won ($358.2 million) during the same period in 2006.

According to the Oct. 26 presentation, the company has strengthened its domestic lube distribution channel in South Korea to maintain market dominance, with a 51.5 percent third quarter domestic market share, up from 49.5 percent in 2007s second quarter. S-Oil also said it has focused on the more lucrative overseas premium lube market in the United States and Europe. According to the presentation, the U.S./Europe premium lube market accounted for about 26.7 percent of S-Oils third-quarter sales, up from about 23.7 percent in 2007s second quarter.

S-Oil, headquartered in Seoul, has capacity to produce 24,500 barrels per day of lubricant base oils, including 15,000 b/d of API Group II and 9,000 b/d of Group III. Its Ultra-S Group III products are marketed in the United States by ConocoPhillips.

As a whole, S-Oil posted quarterly operating income of 139.2 billion won ($151.2 million), down 52.9 percent from 295.8 billion won ($322 million) in the year-earlier period. The company recorded revenue of 3.8 trillion won ($4.1 billion) for the third quarter, down 6.2 percent from 4 trillion won ($4.4 billion) in 2006s third quarter.

Seasonality-driven margin and spread declines along with increased costs (turnaround and special bonus) contributed to the decline in overall operating income, the company said in its presentation.

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