SK Inno turns profitable in Q4 with E&S merger effect... Operating profit 159.9 billion won

Battery Business Returns to Losses with 359.4 Billion KRW Deficit in Q4
"Battery Sales and Profitability Expected to Improve This Year"

SK Innovation succeeded in turning a profit in the fourth quarter of last year, thanks to its merger with SK E&S, the group's cash cow. However, concerns are growing as the battery business returned to a loss in the 300 billion KRW range despite increased sales.

SK Innovation announced in its earnings report held on the 6th that it recorded sales of 19.4057 trillion KRW and an operating profit of 159.9 billion KRW in the fourth quarter of last year. Sales decreased by 0.6% compared to the previous year, but operating profit increased by 120.2%. The full-year performance for last year showed sales of 74.717 trillion KRW and an operating profit of 315.5 billion KRW, down 3.3% and 83.4% respectively from the previous year.

SK Innovation explained, "In the fourth quarter of last year, the turnaround to profitability was due to improved refining margins and the reflected performance of the merged SK Innovation E&S." SK Innovation completed its merger with SK E&S on November 1 last year, emphasizing a total energy value chain including oil and liquefied natural gas (LNG). The market viewed this as a move to continue investing in and improve the performance of the battery business (SK On), which has been experiencing deteriorating results.

The battery business, which posted a quarterly profit for the first time in three years after becoming independent in the third quarter, returned to a loss. The battery business recorded sales of 1.5987 trillion KRW and an operating loss of 359.4 billion KRW in the fourth quarter. The company explained that although sales increased by 167.9 billion KRW due to higher sales volume, one-time costs such as inventory valuation losses were reflected. The benefit from the Advanced Manufacturing Production Tax Credit (AMPC) under the U.S. Inflation Reduction Act (IRA) in the fourth quarter increased by about 34% compared to the previous quarter, reaching 81.3 billion KRW.

This year, the battery business is expected to achieve double-digit annual sales growth. It is anticipated that both sales and profitability will improve thanks to expanded sales in North America and the resulting increase in AMPC. Additionally, the company expects improved profitability through cost structure improvements and strengthened profit enhancement activities, as well as performance improvements through synergy from mergers with SK Trading International and SK Entum.

Other business segments recorded the following: ▲Oil business sales of 11.6868 trillion KRW and operating profit of 342.4 billion KRW ▲Chemical business sales of 2.3734 trillion KRW and operating loss of 84.2 billion KRW ▲Lubricants business sales of 970.7 billion KRW and operating profit of 139.5 billion KRW ▲Oil development business sales of 379.2 billion KRW and operating profit of 145.8 billion KRW ▲Materials business sales of 31.2 billion KRW and operating loss of 74.2 billion KRW ▲SK Innovation E&S business sales of 2.3537 trillion KRW and operating profit of 123.4 billion KRW. For SK Innovation E&S, only the profit and loss from November to December last year were reflected, and on an annual basis, it recorded an operating profit of 1.1157 trillion KRW.

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