As petrochemical companies posted a series of earnings surprises in the first quarter, analysts said the industry has indeed entered a super cycle. LG Chem and Lotte Chemical, the companies considered to be the industry's top-two producers, reported record-high sales and operating profit. SK Innovation, the largest company in the oil refining sector, saw its operating profit for the quarter rise over 1 trillion won. Given the first-quarter results, the petrochemical industry will likely continue its record-breaking results for the rest of the quarters this year.
LG Chem and Lotte Chemical posted a combined sales revenue of more than 10 trillion won in the quarter. As for LG Chem, its quarterly sales and operating profit were 6,486.7 billion won and 796.9 billion won, respectively. This is the first time for the company to hit the 6-trillion-won level in quarterly sales since its founding. As for Lotte Chemical, its operating profit of 815.1 billion won was the historic high. its sales of 3,995.9 billion won were up 48.9 percent from the same period last year.
In the oil refining sector, non-oil segments like chemical and lubricant took the lion's share in profits. SK Innovation posted first-quarter sales of 11,387.1 billion won and operating profit of 1,004.3 billion won, up 20.3 percent and 18.8 percent from the same period last year. The share of operating profit from non-oil businesses was 55 percent (549.6 billion won), overtaking that for oil businesses (453.9 billion won) for the first time.
S-Oil also reported that it earned operating profit of 139.6 billion won (43%) from the petrochemical division out of the total profit of 323.8 billion won. Even though its operating profit from the oil refining sector shrank 54 percent from the same period last year, the operating profit from the petrochemical unit more than offset the loss by increasing 75.2 percent from the previous quarter.