Chairman Huh Jin-soo of GS Caltex is seen during a tour of GS Caltex facilities at the GS Caltex Refinery Complex in Yeosu, South Jeolla Province.

GS Caltex, the nation’s 2nd largest oil refinery, last year posted its largest operating profit of 2.1 trillion won since the oil refinery went online. The surprise earnings also helped its holding company, GS Co., register the largest operating profit of 1.7 trillion won for 2016.

In a public notice released Feb. 9, the second-largest oil refinery in Korea said sales revenue for 2016 reached 25.770,2 trillion won; operating profit amounting to 2.13 trillion won; and net profit to 1.417 trillion won.

The notice explained that sales contracted 9.1 percent YoY, but operating and net profit both climbed 64 percent and 45.8 percent, respectively.

Officials said the oil refinery’s continuous investments have paid off. GS Caltex has been pouring money into facilities to boost the quality of oil products to make them more competitive.

The operating profit in the oil refining sector rose 115.9 percent YoY to 637.3 billion won. Operating profit in the petrochemical sector increased 10.9 percent at 469.4 billion won. The lubrication oil sector saw operating profit rise 23.4 percent YoY to 195.9 billion won. 

GS Caltex announced that its operation turned a corner in the first quarter of 2016, with operating profit rising to 303 billion won, up 272.2 percent year-on-year compared to a loss of 452.3 billion won in the first quarter of the previous year. The company said this year’s success is due mainly to the drastic fall in crude oil prices.

The oil refinery’s great performance boosted GS Group’s Q1 performance results to 198 billion won, up 187.5 percent year-on-year on sales of 2.784 trillion won and net profit of 140.4 billion won, which are up 5.2 percent and 215.2 percent, respectively, year-on-year.

Officials of the group attributed the excellent results to the turnaround in the operation of GS Caltex in Q1, boosting the group’s overall figures.

GS Caltex officials said the peak seasonal demand period for light fuel oils has arrived, while the price of crude oil has been rising, signaling that the oil refiner’s performance would continue to improve in the Q2.

To break down the group’s operating profit by its affiliates, the oil refining sector posted 182.4 billion won; petrochemical 90.8 billion won; lube oil 28.4 billion won; and others 1.3 billion won. The oil refining sector recorded operating profit for the first time since the Q3 of 2013.

The group’s major affiliates, including GS Homeshopping, also posted profits with GS Retail registering 39.7 billion won, up 27 percent year-on-year, followed by GS Energy with 89.2 billion won recovering from the loss of 4.9 billion won in the Q1 of last year.

GS Homeshopping saw its operating profit slide from last year by 28 percent at 26.7 billion won. 

Analyst Hong Song-soo of NH Investment and Securities said the home shopping company had to cope with rising marketing expenses to compete with online shopping firms in such areas as TV ads, and fees on broadcasting of its programs.

In 2014, GS construction posted 9.5 trillion won in revenue and a 51 billion won operating income, reversing an operating loss of 950 billion won in 2013. The builder plans to boost its revenue and operating income to 10.1 trillion won and 200 billion won in 2015, respectively. It also seeks to secure new orders totaling 12 trillion won.

In 2015, GS Construction expects to sell more than 25,000 apartments, up 75 percent from 14,350 in 2014, as the local housing industry continues to boom amid low interest rates and other favorable market conditions.

"The company plans to earn 5.7 trillion won from its domestic operations this year. In addition, it expects to win orders worth 6.15 trillion won in foreign countries," a spokesman said. "We are having a smooth start overseas by securing an order in January to build a $2.6 billion gas plant in Venezuela.”

A view of GS Caltex Building in Seoul.(Photos: GS Caltex)