SK innovation considers selling SK ie technology as part of realignment

[Graphics by Song Ji-yoon and Han Yubin]

SK innovation Co. is expected to realign its battery business, which includes the plan to sell its battery separator manufacturing affiliate SK ie technology Co. (SK IET), according to sources on Wednesday. The realignment is part of a move to raise funds to support SK on Co., which has been suffering financially due to the sluggish electric vehicle market.

According to multiple sources from the investment bank industry on Wednesday, SK innovation has begun contacting investors to provide liquidity support for SK on, including the sale of SK IET.

SK innovation holds a 61 percent stake in SK IET, valued at about 2.5 trillion won ($1.8 billion).

Industry observers noted that SK on needs additional funds to expand its global battery market share and overseas factories, including those in the United States.

The company‘s expected capital expenditure (CAPEX) this year is about 7.5 trillion won, which market experts say falls much short of the funds necessary for sustainable expansion.

The sale of SK IET could be an opportunity for SK on to get through the current funding challenges, according to market sources.

Last year, SK on posted an operating loss of 581.8 billion won, marking the third consecutive year of losses.

In the first quarter of 2024, SK on reported an operating loss of 331.5 billion won on sales of 1.68 trillion won as the world’s EV industry faced temporary stagnation in the wake of high interest rates.

Industry observers, however, indicate that it remains to be seen whether SK innovation could find a buyer, given the lackluster business performance of SK IET.

As of 2022, the battery separator manufacturer‘s sales to domestic and overseas affiliates in SK Group account for 73 percent of the entire sales.

SK IET has shown lackluster performance in recent quarters, with an operating loss of 67.4 billion won in the first quarter.

After an operating profit of 26.9 billion won in the fourth quarter of last year, the company fell back into the red because of plummeting EV separator sales.