S-Oil’s Second Quarter Results

S-Oil, a South Korea-based oil refiner controlled by Saudi Aramco, is set to report its second-quarter results on Friday. According to a consensus forecast provided by FactSet, here are the key details you should be aware of:

Net Profit Forecast

It is expected that S-Oil will post a net profit of 184.00 billion won ($144.1 million) for the April-June quarter, which represents an 82% decrease compared to the previous year.

Revenue Forecast

The FactSet forecast estimates S-Oil’s revenue and operating profit for the quarter to be KRW8.623 trillion and KRW205.46 billion, respectively.

What to Watch For

Oil Refining Segment

Investors will closely monitor whether S-Oil’s quarterly earnings fall below the consensus forecast. The company’s oil-refining segment is expected to have been impacted by narrower refining margins and inventory losses due to lower oil prices. Yongsik Yun, an analyst at Hanwha Investment & Securities, predicts S-Oil’s refining margins to be $6.5 a barrel in 2Q, down from $10.3 in 1Q.

Outlook

Investors will be interested in any signs of S-Oil moving towards an earnings recovery. Kim Do-hyeon, an analyst at SK Securities, suggests that the company’s earnings are likely to start recovering from 3Q, driven by a solid demand for downstream products in emerging markets like China, India, and Southeast Asia. Y.K. Choi from NH Investment & Securities also expects a gradual improvement in S-Oil’s refining margin from 3Q due to seasonally strong demand for gasoline and increasing Chinese demand.