GS Holdings Corp., the holding company of South Korea’s seventh largest conglomerate GS Group, reported a year-on-year 42.2 percent surge in operating profit for the second quarter thanks to increased earnings from its key refinery unit GS Caltex Corp.

GS Holdings in a regulatory filing on Thursday said its consolidated operating profit for the April-June period reached 557.2 billion won ($495.5 million), up 42.2 percent from a year earlier. Net income gained 34.2 percent on year to 220.6 billion won, and sales added 18.8 percent to 4.58 trillion won.

For the full first six months, the company’s operating profit rose 8.3 percent on year to 1.12 trillion won on sales of 9.04 trillion won, up 16.3 percent on year. Net income totaled 492.9 billion won, falling 17.8 percent over the cited period.

On Friday, shares of GS Holdings rose 2.29 percent to end at 53,700 won.

From the previous quarter, its operating profit dropped 1.7 percent despite a 2.8 percent gain in sales over the same period due to higher cost in crude imports. Net profit also retreated 19 percent. The on-quarter fall in profits largely owed to poor performance of its power subsidiaries due to seasonal effect, the company said.

However, stellar performance of its refinery unit GS Caltex is expected to help the holding company recoup losses in the following quarters, market analysts expected.

GS Caltex, Korea’s second-largest refiner and the group’s core subsidiary, drove the on-year surge in profit on oil price hike that has sent up inventory-related profits. Its operating profit soared 178.4 percent on year to 584.0 billion won on revenue of 9.06 trillion won, up 30.4 percent from the previous year. On quarter, its operating profit also more than doubled and net profit jumped 30.4 percent, cushioning the sharp fall in its power affiliates’ profits, according to the company’s data.

The company expects better results in the upcoming quarters on signs of recovery in refinery margin and rising power demand for air conditioning in the hottest summer in 111 years in the country.

The company, however, remains cautious citing worsening trade tensions between the United States and China and the volatile financial market.

By Lee Dong-in and Lee Ha-yeon

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