SK Innovation Posts 3.4873 Trillion Won in Q2 Operating Profit on Strong Lubricants and Battery Performance

Earnings Driven by SK Enmove and SK On Improvements
Profitability in Refining Business Weakens Due to Falling Oil Prices

SK Innovation recorded operating profit in the 3 trillion won range for the second quarter of this year, driven by improved profitability in its lubricants and battery businesses. However, the refining business saw weaker profitability compared to the previous quarter due to declining oil prices since June.

On July 30, SK Innovation announced consolidated results for the second quarter, posting revenue of 29.1572 trillion won and operating profit of 3.4873 trillion won. Compared to the previous quarter, revenue increased by 4.8662 trillion won and operating profit jumped by 1.3251 trillion won. Year-on-year, revenue rose by 9.704 trillion won, and the company returned to profitability in terms of operating profit.

The earnings improvement was led by SK Enmove, which handles the lubricants business, and SK On, responsible for the battery business.

SK Enmove achieved operating profit of 691.9 billion won, up 503.4 billion won from the previous quarter, thanks to improved base oil margins caused by supply disruptions among competitors in the Middle East. The company expanded sales based on its competitiveness in Group III base oil and its global production and sales network.

SK On turned profitable, recording operating profit of 821.8 billion won. Performance was boosted by increased sales in the Asian market, customer compensation, and higher tax credits from the U.S. Inflation Reduction Act (IRA). The company also restructured its business by completing the termination process for the BlueOval SK joint venture with Ford and launching the independent "SK On Tennessee" plant in the U.S.

In contrast, the refining business saw profitability decline due to falling oil prices. SK Energy's operating profit was 651.2 billion won, down 632 billion won from the previous quarter. The company explained that lag effects and inventory-related gains supported earnings in April and May when oil prices were rising, but noted negative lag effects and inventory valuation losses emerged in June as oil prices fell.

By business segment, SK Geocentric saw profitability decline due to a narrowing paraxylene (PX) spread and adjustments in operating rates. SK IE Technology reduced its operating loss as sales increased with the completion of inventory adjustments by major customers. SK Innovation E&S (SK Innovation Energy & Service) saw a decrease in operating profit, attributed to reduced city gas demand and power plant maintenance.

SK Innovation forecasts that, in the third quarter, refining margins will somewhat weaken due to increased OPEC+ production and higher refinery operating rates in Asia. However, it plans to maintain profitability through flexible operations tailored to market changes.

The company intends to further improve results in the battery business through fixed cost reductions and operational efficiency, as well as increased orders for energy storage systems (ESS). Growth factors for the power and liquefied natural gas (LNG) businesses were cited as increased power demand during the summer and the start of commercial production at Australia's Barossa gas field.

An SK Innovation official stated, "Even as uncertainties persist in the Middle East, we will make every effort to ensure a stable supply of petroleum products while responding flexibly to market changes to continuously improve operational efficiency and profitability."

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