SK Inno Reports 3Q Operating Profit of 618.5 Billion KRW... Lubricants and Petroleum Profitable, Battery Business Expands

SK Innovation Q3 Preliminary Earnings Announcement

Ulsan SK Innovation Complex View

[Asia Economy Reporter Choi Dae-yeol] SK Innovation announced on the 29th that its preliminary operating profit for the third quarter of this year turned positive at 618.5 billion KRW. This figure increased by more than 112 billion KRW compared to the previous quarter, as the lubricants business recorded its highest-ever performance and the refining business's profitability recovered, improving overall results. The cumulative operating profit up to the third quarter reached 1.6275 trillion KRW. In contrast, there was a loss exceeding 2.3 trillion KRW up to the third quarter of last year.

Third-quarter sales amounted to 12.3005 trillion KRW, up 48% from the same period last year and about 11% compared to the previous quarter. Cumulative sales up to the third quarter totaled 32.6599 trillion KRW, an increase of more than 6 trillion KRW compared to the same period last year. The battery business's third-quarter sales reached a quarterly record of 816.8 billion KRW, with a cumulative total of 1.9733 trillion KRW for this year. The company expects annual sales to exceed 3 trillion KRW.

The petroleum business's operating profit was 290.6 billion KRW, up 57.5 billion KRW from the previous quarter, due to rising oil prices and improved margins on petroleum products such as gasoline and diesel. The company anticipates a significant improvement in refining margins in the fourth quarter as demand recovers with the easing of COVID-19 impacts. The chemical business's operating profit decreased by 83.5 billion KRW from the previous quarter to 84.4 billion KRW, due to margin declines from spread reductions and increased power costs.

The lubricants business set a new record just one quarter after achieving its highest-ever performance in the second quarter. Improved market conditions enhanced profitability, and sales increased in the US and Europe. Operating profit rose by 102.8 billion KRW from the previous quarter to 329.3 billion KRW. This is the highest quarterly operating profit since its spin-off as a subsidiary in 2009, and strong performance is expected to continue into the fourth quarter. The petroleum development business's operating profit increased by 12.8 billion KRW from the previous quarter to 16.4 billion KRW, influenced by rising international oil prices, increased sales volume, and reduced selling and administrative expenses.

The battery business's sales increased by 186.6 billion KRW from the previous quarter to 816.8 billion KRW, driven by higher operating rates at the Chinese Yancheng and Huizhou plants, which began mass production in the first half of this year. Sales grew 68% compared to the same period last year. The expectation that annual battery sales will exceed 3 trillion KRW is due to anticipated production increases at the US (Georgia Plant 1) and Europe (Hungary Plant 2) facilities. The company projects sales to rise to the mid-6 trillion KRW range next year. Although sales and gross profit margins increased, operating losses in the battery business decreased by 800 million KRW from the previous quarter to 98.7 billion KRW, due to increased expenses such as research and development costs.

The materials business's operating profit decreased by 1.3 billion KRW from the previous quarter to 40.1 billion KRW, affected by weak demand for small batteries for smartphones in China despite stabilization of production at the lithium-ion battery separator (LiBS) plant in China. Kim Jun, SK Innovation's CEO, stated, "We will strongly promote the transition to green businesses to achieve greater gains and enhance corporate value."

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