Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
SK Innovation achieves major turnaround
Jang Yong-ho, executive president of SK Innovation, speaks on the firm's plan to strengthen its corporate value at SK Group's headquarters in Seoul, July 30. Courtesy of SK Innovation
By Lee Min-hyung
SK Innovation reported a major turnaround in its third-quarter earnings, attributing it to the recovery of its petroleum business, the company said Friday.
According to the firm’s regulatory filing, the energy and chemical firm reported an operating profit of 573.4 billion won ($400 million) between July and September. This is an outstanding rebound from a year earlier, when it reported an operating loss of 423 billion won.
The company explained that it has been able to improve its earnings in the petroleum business, driven by rising oil prices and better refining margin.
SK Innovation also chalked up 20.53 trillion won in sales, up 16.3 percent, during the same period.
“We have improved our operating profit by a huge margin on the solid earnings performance of our cash cow businesses, in areas such as petroleum and liquefied natural gas,” a company official said.
However, SK Innovation’s battery business — operated by the firm’s affiliate, SK On — widened its operating loss in the third quarter on sluggish electric vehicle (EV) demand in the United States.
SK On reported third-quarter sales of 1.8 trillion won, but its operating loss came in at 124.8 billion won during the same period. The operating loss expanded by 58.4 billion won from the previous quarter.
Outlook for the firm’s EV battery business remains murky as the Donald Trump administration stopped offering an EV tax credit worth $7,500 to carmakers starting at the end of September.
This has reduced demand for EVs and batteries from one of the world’s largest eco-friendly vehicle markets, making a negative earnings impact on SK On.
SK On’s key partners, including Hyundai Motor and Kia, are on track to reshape their U.S. business strategy with a focus on hybrid cars rather than EVs.
The company also shared its plan to make up for falling revenue from its EV battery business by increasing sales for its energy storage systems (ESS) in North America.
“We will expand our presence in the ESS business and keep taking relevant steps to find our next growth engines for improved corporate value,” said Seo Kun-ki, chief financial officer at SK Innovation.