By Kwanwoo Jun
S-Oil swung to an annual profit as it reported stronger-than-expected net profit for the final quarter of 2025, driven by solid refining margins.
The Saudi Aramco-controlled South Korean refiner said its oil-refining margins remained robust for the October-December period despite easing toward the end of the year amid Russia-Ukraine cease-fire negotiations.
It expects regional refining margins to stay robust in the first quarter of 2026, fueled by steady demand, continuing supply disruptions and the planned closure of an aging U.S. refinery.
Fourth-quarter net profit was 265.01 billion won, equivalent to $183.3 million, above a FactSet-compiled consensus estimate of 201.04 billion won. That was more than quadruple the level of the previous quarter, when the company snapped a five-quarter losing streak.
Revenue fell 1.4% to 8.793 trillion won for the fourth quarter, resulting in operating profit of 424.47 billion won.
For the full year, revenue declined 6.5% to 34.247 trillion won, largely due to lower oil-product prices. Operating profit dropped 32% to 288.17 billion won amid losses in the petrochemical business, while net profit came in at 216.88 billion won, moving S-Oil back into the black after 2024's loss.
The company said Monday that earnings at its flagship oil-refining business improved on robust margins amid global refinery disruptions and Northern Hemisphere heating-oil demand, while losses in its petrochemical segment narrowed in the fourth quarter.
Shares in S-Oil were recently 1.5% lower after the results, trimming their year-to-date gains to around 18%. The stock climbed 51% in 2025.
The company has maintained an upbeat outlook, expecting tight oil supply-demand conditions globally and lower crude prices to support a favorable business environment in 2026.
Some analysts shared S-Oil's optimistic view. NH Investment & Securities analysts Y.K. Choi and S.W. Ryu said in a recent note that Saudi Arabia's official selling price for crude oil is expected to be set at $1.10 a barrel above the Oman/Dubai average this year, down from $2.00 in 2025, which could help S-Oil maintain solid profit margins.
Mirae Asset Securities analyst Jinho Lee said recently that he expects the company to deliver solid earnings in the first quarter of 2026, citing limited growth in global refining capacity and continued disruptions to Russian petroleum-product exports following Ukrainian drone attacks.
S-Oil appears well-positioned to benefit from strong refining margins that could persist through 2030, given that it derives a larger share of revenue from refining than any of its local peers, Korea Investment & Securities analyst Lee Chung-jai also said recently.
The company's business environment could improve further if rival Chinese refiners struggle to import and process Venezuela's cheap, heavy crude following the capture of the country's leader, Nicolas Maduro, by U.S. forces in January, said Kang Dong-jin, analyst at Hyundai Motor Securities.
Write to Kwanwoo Jun at kwanwoo.jun@wsj.com
(END) Dow Jones Newswires
January 26, 2026 00:12 ET (05:12 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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