S-Oil Posts Record Profit

Oil refiner posts 23 tln won in sales up 51 pct YoY in 2008 and Chmn Cho Yang-ho, CEO A.A. Subaey renamed as board members

S-Oil Corp. officially posted 23 trillion won in sales in 2008, 1.396 trillion won in operating profit and 446.3 billion won in net profit, which were announced the oil refinery's shareholders meeting on March 20 held at the Elysee Hall in the DLI63 Building in Yeouido, Seoul.
The sales figures were up 51 percent YoY, operating profit up 29 percent YoY and net profit fell 40 percent YoY, the oil company said. The reduction in net profit has been attributed to the losses from the foreign exchange rate and foreign exchange borrowing, the company said
The company also announced a cash dividend of 1,500 won per common share or 60 percent of face value, and 1,525 won per preferred share or 61 percent of face value.
The shareholders meeting also approved the renaming of 10 of the board of directors led by Chairman Cho Yang-ho of the Korean Airlines and CEO Ahmed A. Subaey and reduced the annual reimbursement for board of directors from 3.5 billion won to 1.5 billion won due mainly to bleak prospect of the company's performance in the years ahead as the economic crisis lingers on.
CEO Subaey, in his speech at the meeting, said the oil company has to be faithful to principles when the business trends turn difficult. This year, too, will see the economic crisis continue to persist making the oil market uncertain, but he will run the company to overcome the difficulty so that it will be a super-class oil refinery in the world.
In the meantime, S-Oil got the credit evaluation level of Baa2 and BBB respectively from Moody's and S&P, the highest among oil refineries in Asia except those run by the governments, which is considered very significant in the fact that many oil refineries had their credit ratings adjusted downward lately and worry that they will be lowered further as their operations continue to stay sluggish due to reduced demand for oil products.
With the company getting such high credit ratings among Asian oil refineries from world famous credit ratings agencies such as Moody's and S&P, its international trust has been further upgraded and possible to secure more advantageous long-term loans through diversification of its financial sources.
The two foremost credit agencies noted S-Oil's high profitability and stable financial structure in their evaluation of the company's operation. They noted that the company's large cash holdings and thus would not have trouble funding the 1.4 trillion won to finance a new expansion project at its Onsan refinery, along with the high cash annual dividends paid to its shareholders, and virtual absence of loans, except usance trade loans to finance its crude oil imports.
They also remarked that S-Oil is having its crude oil supplied by Saudi's Aramco, the national oil company, on a very stable basis, and on long-term repayment periods if needed by the crude oil supplier.
During the 70's, the oil industry suffered two separate oil shocks. S-OIL was founded in 1976 to ensure stable import of crude oil and the steady supply of petroleum products to the markets.
The construction of an oil refinery began on a 400,000 pyong plot of land inside an industrial complex located in Ulsan City. In May 1980, 4 years after the construction started, commercial operation of the oil refinery began. As the Company began commercial operation of the lube base oil production plant in January 1981, the Company came to commence full-scale operation of the 'Oil refining and lubricant production' system.
Remarkable growth continued thereafter to become a fully-functional oil refining company, and today, S-OIL runs a crude oil refinery with a capacity of 580,000 barrels/day, a B-C cracking center with a capacity of 292,000 barrels/day, BTX production plant with an annual capacity of 900,000 ton, a para-xylene production plant with an annual capacity of 650,000 ton, a lube base oil plant with a capacity of 24,000 barrels/day
S-OIL is able to import a stable volume of crude oil from an oil-producing country at favorable conditions by maintaining close and friendly relations with the oil-producing country. The Company made special efforts to promote profitability and improve operating rate by pushing full-fledged crude oil processing projects by actively utilizing the prevailing overseas market situation. nw

A view of one of the many S-Oil service stations in Seoul and across Korea.