SK innovation’s Q1 profit tumbles, battery biz posts best quarterly sales

SK innovation Co.’s battery plant site in Georgia, U.S. [Photo provided by SK innovation]

SK innovation Co. Thursday reported a 77 percent decline in profit in the first quarter due to sluggish performance in its petroleum business.

Operating income in the first quarter was 375 billion won ($28.3 million), down 77.3 percent from 1.65 trillion won a year ago, according to regulatory filing Thursday. Net loss reached 52 billion won, compared with a net income of 793.7 billion won a year ago. Sales gained 18 percent to 19.14 trillion won.

The revenue growth was driven by stable growth of petrochemical business and its electric vehicle battery business, which posted the highest quarterly sales.

The improvement in refining margins and paraxylene (PX) spreads led to stable sales growth in the petroleum and chemicals business and improved operating profit and the battery business achieved the highest sales in the quarter and continued to improve its profitability, the company said.

Net borrowings rose by 1.04 trillion won from the end of the previous year to 15.55 trillion won due to increased investment in battery business.

By business sector, the petroleum business turned positive from the previous quarter with an operating profit of 274.8 billion won. Refining margins improved due to the impact of lower official selling prices of crude oil in Middle East oil-producing countries such as Saudi Arabia, and operating profit improved due to a reduction in inventory-related losses as oil price reductions eased.

The chemicals business also turned positive with an operating profit of 108.9 billion won, up 197.3 billion won from the previous quarter, due to higher PX margins.

The lubricants business posted an operating profit of only 259.2 billion won amid intensified sales competition, while the petroleum development business an operating profit of 113.5 billion won due to higher cost of sales.

The battery business posted the highest quarterly sales of 3.35 trillion won, up 429.7 billion won from the previous quarter due to the ramp-up of new plants that started operations last year. One-time expenses increased, resulting in an operating loss of 344.7 billion won, but the operating margin improved due to higher battery sales volume and improved yields at new factories.