SK Innovation logs record results in Q2 on upbeat petroleum product sales

SEOUL, July 29 (Yonhap) — SK Innovation Co. said Friday its second-quarter profit more than quadrupled from a year earlier, boosted by robust sales of petroleum products amid higher oil prices.

Its battery unit, SK On Co., however, suffered an extended loss. Despite this, the refiner maintained its forecast that the loss-making battery unit would achieve the break-even point in the fourth quarter given its solid growth outlook amid strong demand for electric vehicles.

Operating profit reached a record 2.32 trillion won (US$1.78 billion) in the April-June period, up 318.9 percent from an operating income of 556 billion won the previous year, the South Korean refiner said in a regulatory filing.

Sales increased 76.9 percent to a record 19.9 trillion won.

Its net profit grew by nearly sevenfold to 1.33 trillion won from a year earlier. For the first half of this year, the company swung to the black from last year’s net loss.

The earnings beat market expectations. The average estimate of net profit by analysts stood at 1.09 trillion won, according to the survey by Yonhap Infomax, the financial data firm of Yonhap News Agency.

“Refining margins improved amid the coronavirus endemic and global energy supply jitters, and inventory gains from the rise in oil prices and higher demand for petroleum products helped improve the bottom line,” SK Innovation said.

SK Innovation sold 65 million barrels of petroleum products in the first half of this year, up 41.4 percent from a year earlier, it said in the release.

Its petroleum business raked in 2.23 trillion won in operating profit in the second quarter, up 722.4 billion won from three months ago.

The chemical division booked a 76 billion won in operating profit, up 44.8 billion won, with the corresponding figure for the lubricant oil sector coming to 255.2 billion won, up 43.6 billion won on-quarter.

SK On posted 1.28 trillion won in sales, an increase of 28.1 billion won from the previous quarter. But the quarterly operating loss widened to 326.6 billion won from 273.4 billion won in the same period, due largely to increased costs in its European operations.

“We are sticking to our forecast of making a turnaround in the fourth quarter, as SK On has posted twofold growth every year since 2017, and we expect this year’s sales to be in the mid-7 trillion-won range or higher,” Jin Seon-mi, SK On’s head of the battery strategy division, said in the earnings call.

SK Innovation said it plans to pour an additional 12 trillion won into its battery and material businesses, on top of the 8 trillion won invested so far, to continue its green energy drive.

In 2021, SK Innovation unveiled a 30 trillion-won, five-year investment plan to bolster its green energy portfolio, including hydrogen and nuclear power, and plastic recycling.

Shares in SK Innovation jumped 3.02 percent to 187,500 won on the Seoul bourse on Friday, outperforming the wider KOSPI’s 0.67 percent gain. The earnings results were released before the market opened.

Source: Yonhap News Agency

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