SK Innovation vows $1.1 bn on 3rd Hungary battery plant, ends ¡®20 with largest loss

[Photo provided by SK Innovation Co.]

(Updated with additional information)

South Korean battery major SK Innovation Co. is adding a third battery plant in Hungry at a cost of 1.27 trillion won ($1.1 billion) to ramp up capacity to meet EV demand in Europe, despite having had finished 2020 with a whopping income loss of more than $2 billion.

SK Innovation said in a disclosure on Friday that it will invest 1.27 trillion won in SK Battery Hungary Kft to build a new battery electric vehicle battery plant in Europe. The investment plan was approved by the board on Thursday.

The plant – which will be fully owned by SK Innovation – will be the third of its kind in the European country.

Shares of SK Innovation rose 1.27 percent to finish Friday at 280,000 won.

SK Innovation currently operates its No. 1 battery plant with annual capacity of 7.5 gigawatt-hours (Gwh) in Komarom, Hungary, after completing construction in the end of 2019. The No. 2 plant with annual capacity of 9.8 Gwh is currently under work with an aim to begin mass production from the first quarter of 2022.

The location and size of the new battery plant will be disclosed later.

SK Innovation on the same day reported its largest-ever operating loss last year due to worsened business environment amid Covid-19 pandemic.

SK Innovation, the largest oil refiner, said that it logged an operating loss of 2.57 trillion won last year on sales of 34.1 trillion won, down 30.7 percent from the previous year. It also shifted to a net loss of 2.1 trillion won.

The company said that overall sales volume fell due to sluggish global demand for petrochemical and chemical products and margin decline in major products. Its battery unit, however, posted growth last year.

By business, its petrochemical business logged an operating loss of 2.2 trillion won on sales of 22.6 trillion won for full 2020. Its chemical business posted an operating loss of 121.2 billion won on sales of 7.05 trillion won while its lubricant business raised an operating income of 262.2 billion won on sales of 2.37 trillion won.

[Photo provided by SK Innovation Co.]

SK Innovation¡¯s battery business reported an operating loss of 426.5 billion won on sales of 1.6 trillion won, which is double than that of 690.3 billion won in the previous year. It is the first time for the company¡¯s battery division to raise more than 1 trillion won in annual revenue.

In the fourth quarter ending December, SK Innovation logged an operating loss of 243.4 billion won, down 354 percent from the previous quarter, on sales of 7.7 trillion won, down 7.6 percent on quarter and 34.1 percent on year.

By business, its petrochemical business logged an operating loss of 192.5 billion won on sales of 4.8 trillion won while its chemical business a loss of 46.2 billion won on sales of 1.6 trillion won. Its lubricant business raised 125.3 billion won in profit on sales of 652 billion won while oil development business 1.6 billion won on sales of 14 billion won.

Sales from battery business more than doubled to 479.2 billion won in the fourth quarter, marking a quarterly all-time high. The division, however, logged an operating loss of 108.9 billion won despite continued efforts to improve profitability due to early costs to cover overseas facilities.

The company expects battery business will remain robust this year. It aims to ramp up its global annual battery output to 85GWh by 2023 and 125GWh by 2025.

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