Hyundai Oilbank posted a loss of more than 500 billion won (some $410 million) in the first quarter of this year. It was an "earning shock" stemming from the COVID-19 outbreak and the plunge in international oil prices.
Hyundai Oilbank made a public notice on April 29 that it recorded 563.2 billion won ($462 million) in operating losses based on consolidation in the first quarter. It swung to a deficit compared to the same period last year. Its sales fell 14 percent to 4.416 trillion won ($3.6 billion) over the same period.
"Sales declined and operating profit shifted to a deficit due to a fall in oil prices caused by the spread of COVID-19 and subsequent massive inventory-related losses," a company official said.
In the second quarter, the situation is unlikely to change rapidly. First of all, uncertainties in oil price fluctuations remain due to the possibility of oil-producing countries agreeing to cut production and the timing of the recovery of the real economy, and a rebound in gasoline demand is only possible after the end of COVID-19, which is spreading in Europe and the United States.
Diesel price is also expected to rebound in the third quarter as demand will inevitably decrease unless countries lift the blockade.
However, Hyundai Oilbank expected that if oil prices fluctuate around $30 a barrel, sales will be at the level of the first quarter in the second quarter, and operating profit will be able to reach the break-even point beyond the deficit.
"We expect oil prices to continue to rise in the future," a company official said. "We are currently doing regular maintenance, and these measures have played a part in defending our performance in the event of a sharp drop in oil prices this month."
