Away from Deficits
The prospect came out that SK Innovation’s performance in the first quarter of this year will improve. Earlier, SK Innovation suffered an annual operating loss for the first time in 37 years. However, uncertainties from the drop in oil prices still exist, since there is a large range of estimated operating profits by each securities firm.
KDB Daewoo Securities forecast that SK Innovation will see an operating profit of 95.1 billion won (US$87.23 million) in the first quarter due to the smaller impact of low oil prices, turning into profit-making.
Even though the losses are expected due to further drops in oil prices, the deficit range in the oil refining sector will also be reduced due to the decrease in the amount of falling. Also, as the refining margins will be improved further, its performance deterioration will be relieved as well.
While the performance in the second quarter will be volatile, it will not fall much further. Also, the refining margins are expected to improve finitely and the operating profit will increase to 271 billion won (US$248.58 million).
Shinhan Investment Corp. forecast that SK Innovation’s operating profit in the first quarter will reach 194.4 billion won (US$178.32 million). It said that the company’s oil refining sector will turn a profit just after four quarters, thanks to the improvement of the refining margins and the drop in the import unit cost of crude oil.
As losses related to inventory from the previous quarter will drop in the chemical sector, its operating profits will increase compared to the previous quarter. However, operating profits in the lubricants and exploration & production (E&P) sectors are expected to drop due to the aftereffects of lower oil prices.
Meritz Securities Co. forecast that the performance in the oil refining sector in the first quarter will maintain due to a further drop in oil prices. However, the losses will decrease sharply, and the operating profits in the first quarter will reach 17.5 billion won (US$16.05 million), turning a profit.