By Park Si-soo
SK Innovation said Thursday it has scrapped a plan to list its lubricant-making affiliate because its financial health has improved.
The nation’s biggest oil refiner had pushed forward with an initial public offering (IPO) of SK Lubricants to bring it out of financial troubles with new investment. The company suffered from an industry-wide slump last year. But it showed better-than-expected earnings in the first and second quarters, reducing internal pressure to attract new investment.
“We are stopping the IPO process of SK Lubricants as it might be difficult to evaluate its appropriate corporate value after the lube business suffered a temporary downturn,” SK Innovation said in a regulatory filing. “We will focus on ways to improve SK Lubricants’ profitability for now as the group posted better earnings in the first half of this year and reduced the debt level.”
A SK Innovation spokesman said the company will try harder to have better financial health.
SK Innovation in May submitted an IPO application for SK Lubricants, one of several options the refiner considered along with a stake sale to improve its finances after posting a record high operating loss last year.
Last year, SK Innovation registered operating losses of 224.1 billion won ($202.5 million), falling into the red for the first time in 37 years.
The refiner reduced inventory-related losses in the first quarter on the back of a rebound in oil prices, marking a 38 percent rise in its operating profit from a year earlier.
Meanwhile, SK Innovation said Thursday it swung to a profit in the second quarter on better refining margins and stock valuation gains from a recent rebound in oil prices.
Consolidated net income reached 587.53 billion won ($507.73 million) in the April-June period, a turnaround from a 33.2 billion won net loss a year ago, the company said in a regulatory filing.
Sales tumbled 21 percent year-on-year to 12.99 trillion won, while operating profit jumped to 987.85 billion won from 33.3 billion won in operating loss a year earlier. These figures included earnings from SK Innovation and its subsidiaries, including SK Energy, SK Global Chemical and SK Lubricants.