(2nd LD) S-Oil-Q3 earnings

(2nd LD) S-Oil swings to red in Q3 on falling oil prices, currency loss

(ATTN: ADDS closing share price at bottom)

SEOUL, Oct. 27 (Yonhap) -- S-Oil Corp. said Thursday it swung to the red in the third quarter from a year earlier on weaker margins from falling oil prices and currency loss.

The company reported a net loss of 9.6 billion won (US$6.7 million), shifting from a profit of 334.5 billion won a year earlier, the company said in a regulatory filing.

Operating profit came to 511.7 billion won for the July-September period, down 6.9 percent from a year ago, and sales rose 56.3 percent to 11.12 trillion won.

Weaker-than-expected seasonal demand during the summer and China's extension of a fuel exports quota to boost trade pulled down the refining margin, a key gauge of profitability, the company said.

The quarterly loss is also attributable to currency loss from the recent depreciation of the Korean won against the U.S. dollar, which worked to raise its financial costs.

An S-Oil official said the company incurred about 520 billion won in currency losses.

Its refinery segment, which accounts for over 80 percent of revenue, posted 78.8 billion won in operating profit in the third quarter. That contrasts with the previous quarter's 1.45 trillion won operating income. Sales reached 9.15 trillion won in the third quarter.

The petrochemical division logged 56.1 billion won in operating profit, with sales at 1.16 trillion won.

Operating profit of the lubricant oil sector was 376.7 billion won, with the sales coming in at 945.4 billion won.

S-Oil said it expects the Asia crack margin to improve in the fourth quarter given the rising seasonal demand in winter, although it may fluctuate.

Lower output of oil products in Russia could help offset the impact from China's increase in the export quota, it said.

Despite the weaker earnings, shares in S-Oil rose 3.26 percent to 85,500 won on the main Seoul bourse, outperforming the broader KOSPI's 1.74 percent gain. The earnings results were released before the market opened.

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