SK Innovation Turns to Operating Profit in Q3... Sales Reach 20.53 Trillion Won

Operating profit of 563.5 billion won, turning to profit year-on-year
"Petroleum performance improves on higher refining margins"
"E&S operating profit of 255.4 billion won driven by seasonal effects"
SK On-SK Enmove integrated entity to la

SK Innovation returned to profitability in the third quarter of this year, just two quarters after posting a loss, thanks to a recovery in its core businesses such as petroleum and the effects of restructuring its battery business.

On October 31, SK Innovation announced that it recorded sales of 20.5332 trillion won and an operating profit of 573.5 billion won in the third quarter of 2025. Compared to the same period last year, sales increased by 16.3%. The company also swung to an operating profit after recording an operating loss of 423.3 billion won in the third quarter of last year and a loss of 417.6 billion won in the second quarter of this year. A company representative explained, "Operating profit increased significantly due to the petroleum business returning to profitability on the back of rising oil prices and refining margins, as well as solid performance in the Energy & Service (E&S) business thanks to the seasonal peak for liquefied natural gas (LNG) power plants."

SK Innovation and SK E&S, which merged last November.

Global inventories of refined oil products remained low due to prolonged supply disruptions caused by extended sanctions on Russia, geopolitical instability in the Middle East, and major facility maintenance. This led to an increase in refining margins. Domestic refiners also benefited from these global supply constraints, resulting in improved performance in their petroleum businesses.

By business segment in the third quarter, the petroleum business posted sales of 12.4421 trillion won and an operating profit of 304.2 billion won; the chemical business had sales of 2.4152 trillion won and an operating loss of 36.8 billion won; the lubricants business recorded sales of 980.5 billion won and an operating profit of 170.6 billion won; the petroleum development business reported sales of 320 billion won and an operating profit of 89.3 billion won; the battery business saw sales of 1.8079 trillion won and an operating loss of 124.8 billion won; the materials business posted sales of 23.5 billion won and an operating loss of 50.1 billion won; and the E&S business recorded sales of 2.5278 trillion won and an operating profit of 255.4 billion won.

The petroleum business saw a significant recovery in profitability due to inventory valuation gains stemming from higher international oil prices and improved refining margins. The chemical business, despite weak market conditions for benzene and olefins, saw a reduction in losses thanks to an improved paraxylene spread. The lubricants business delivered solid profits due to increased seasonal demand and inventory effects from rising raw material prices. The petroleum development business experienced a decline in operating profit due to falling gas prices in the Peru block.

SK On, which operates the battery business, recorded sales of 1.8079 trillion won and an operating loss of 124.8 billion won. However, on a consolidated basis with SK Enmove, the integrated entity achieved a profit of 17.9 billion won, marking its second consecutive quarter of profitability. The integrated entity is set to launch on November 1. The benefit from the Advanced Manufacturing Production Credit (AMPC) reached 173.1 billion won in the third quarter and 617.3 billion won cumulatively. The E&S business posted an operating profit of 255.4 billion won, driven by the seasonal peak for LNG power plants during the summer and strengthened competitiveness in cargo imports.

SK On Seosan Plant View. Photo by The Asia Business Daily

Regarding the outlook for the fourth quarter, SK Innovation stated, "While oil prices are expected to adjust due to the potential for increased production by OPEC Plus (OPEC+), refining margins are expected to remain robust due to ongoing geopolitical risks in the Middle East." The company expects the chemical business to remain weak due to sluggish benzene and olefin markets, despite reduced paraxylene supply. For the lubricants business, demand is expected to decrease as the off-season begins. The petroleum development business is scheduled to begin new drilling operations in China, Vietnam, and Malaysia.

Although the battery business faces heightened uncertainty due to slowing demand for electric vehicles in the United States, the company plans to defend profitability by expanding its portfolio, with a focus on energy storage systems (ESS). The materials business is expected to reduce its losses through cost improvements and increased orders from ESS customers. The E&S business is projected to deliver stable profits thanks to the start of production at the Caldita-Barossa (CB) gas field in Australia and increased city gas sales during the winter season.

Seo Geongi, Chief Financial Officer of SK Innovation, said, "Our performance improved significantly year-on-year, driven by the recovery of our core businesses such as petroleum and LNG. Moving forward, we will solidify our foundation for future growth by strengthening new growth businesses centered on batteries and ESS, and by leveraging synergies from the merger of SK On and SK Enmove."

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