S-Oil on Friday posted an operating loss 164.3 billion won ($136.7 million) in the second quarter this year, getting back on its feet after suffering its worst-ever operating loss of 1 trillion won in the previous quarter.

According to regulatory filings, the Korean refiner witnessed its operating loss decline 84.6 percent to 164.3 billion won in the second quarter compared to an operating loss of 1 trillion won in the previous quarter. In the same period, its net loss dropped 92.4 percent to 66.9 billion won from 880.6 billion won.

“Despite that S-Oil increased sales volume more than 6 percent with extensive sales efforts, a fall in oil prices led to lower product prices, resulting in a 33.4 percent drop in revenue of 3.4 trillion won in the second quarter from 5.1 trillion won in the previous quarter,” a company official said.

“However, we were able to minimize our losses significantly as demand gradually recovered starting May, raising oil prices. Higher oil prices allowed us to reduce inventory losses.”

Inventory losses are booked when oil prices fall by the time a company processes oil into fuel or petrochemical products.

S-Oil’s revenue fell 44.8 percent to 3.4 trillion won in the second quarter from 6.2 trillion won on-year. Though its operating loss increased 81.5 percent to 164.3 billion won from 90.5 billion won, its net loss decreased 54.6 percent to 66.9 billion won from 147.4 billion won in the same period.

Refining margins are expected to improve in the third quarter as coronavirus-related restrictions become less stringent, eventually driving up demand, the company said.

By Kim Byung-wook (kbw@heraldcorp.com)