SK Innovation Q2 Operating Loss of 439.7 Billion KRW... Narrowing Deficit (Comprehensive)

[Asia Economy Reporter Park So-yeon] SK Innovation recorded an operating loss of 439.7 billion KRW on a consolidated basis in the second quarter. Although the scale of the loss was significantly reduced compared to the nearly 2 trillion KRW record-breaking loss in the first quarter, the company still failed to turn a profit.

SK Innovation announced on the 29th that its preliminary management performance for the second quarter of this year recorded sales of 7.1996 trillion KRW and an operating loss of 439.7 billion KRW. Compared to the worst-ever loss of 1.7752 trillion KRW in the first quarter, the deficit was reduced by more than 1.3355 trillion KRW, escaping the worst situation, but the company continued to post losses for two consecutive quarters. Sales also decreased by 44.7% compared to the second quarter of last year.

Most of the losses occurred in the petroleum business. The petroleum business division recorded an operating loss of 432.9 billion KRW. Although it posted a loss, margins improved due to the price difference effect caused by the decline in Middle Eastern crude oil prices and the rise in oil prices, and inventory-related losses decreased, reducing the deficit by about 1.2031 trillion KRW compared to the previous quarter.

The chemical business turned to a profit with an operating income of 68.2 billion KRW. This improvement in performance compared to the previous quarter was due to reduced inventory-related losses and decreased variable costs from falling fuel prices.

The lubricant business recorded an operating profit of 37.4 billion KRW, an increase of 8.5 billion KRW from the previous quarter, due to margin improvement effects from cost reductions, despite a significant drop in sales volume in the U.S. and European markets caused by the COVID-19 pandemic.

The petroleum development business saw sales volume decline sharply due to the spread of COVID-19, and the composite sales price fell, resulting in an operating profit of 11.8 billion KRW, down 33.5 billion KRW from the previous quarter.

The battery business recorded an operating loss of 113.8 billion KRW, an increase of 8.9 billion KRW from the previous quarter, due to one-time cost increases from global investments despite increased sales volume as newly operated overseas plants stabilized early.

In the materials business, operating income increased by 16.7 billion KRW from the previous quarter to 43.7 billion KRW due to increased sales of separators for electric vehicles. This is interpreted as a result of growing demand for separators as the electric vehicle battery market continues to grow despite COVID-19.

SK Innovation forecasted, "In the second half of the year, petroleum demand will increase and refining margins will improve due to economic stimulus measures in various countries and gradual recovery of the global economy."

Meanwhile, during a conference call on the same day, SK Innovation stated, "The government approval process for the sale of the Peru mining rights is facing difficulties due to COVID-19," adding, "We aim to close the deal by the end of September, and related profits and losses will be removed at that time."

Additionally, the company said, "SK IE Technology, a materials business division, is expected to be listed as early as the first half of next year," and "It is expected to help improve the financial structure."

The company also stated, "We will not be able to conduct an interim dividend this year," and added, "It is difficult to specify a concrete dividend policy at this time, and we will mention any changes while observing the turnaround situation in the second half."

This content was produced with the assistance of AI translation services.