SK On records first-ever profit with $17.5 million in Q3

SK On, a Korean battery maker, posted a profit in the third quarter for the first time since its establishment three years ago.

SK On CEO Lee Seok-hee, center, tours the company's booth at InterBattery 2024 in southern Seoul in March. [YONHAP]

SK On, a Korean battery maker, posted a profit in the third quarter for the first time since its establishment three years ago.

The company reported an operating profit of 24 billion won ($17.5 million) for the July to September period, recovering from an 86.1 billion won loss during the same period a year earlier.

This marks SK On's first profit since October 2021, when it was split off from its parent company, SK Innovation.

Revenues, however, dropped 56 percent on year to 1.43 trillion won. The figure for net profit was not provided.

“Depletion of high-priced inventories and activities to lower raw material costs contributed to improving its profitability,” said Kim Jin-won, chief financial officer at SK Innovation, during a conference call on Monday.

SK On received U.S. Advanced Manufacturing Production Credit (AMPC) benefits worth 60.8 billion won under the program in the third quarter. The AMPC, part of the Inflation Reduction Act, grants $35 per kilowatt-hour for cells and $45 for modules.

SK On is the only Korean battery maker to post a year-over-year increase in operating profit in the third quarter as LG Energy Solution, the biggest player, reported a 38.7 percent drop in operating profit. Samsung SDI's operating profit plummeted 72 percent during the same period.

The Korean battery maker predicts a rosy fourth quarter due to planned mergers with SK subsidiaries that are considered to be “cash cows,” profitable without large capital expenditures.

SK On recently merged with SK Trading International, a crude oil trading company, and is scheduled to merge with SK Enterm on Feb. 1.

Kim added that “more shipment is expected in the fourth quarter” as Hyundai Motor, its major client, has recently started production at its EV facility in Georgia. SK On supplies batteries to Hyundai's Ioniq 6 and Ioniq 9, Kia's EV6 and EV9, and Genesis' GV60 and G80.

SK Innovation, the parent company that owns 89.5 percent of SK On, swung to an operating loss of 423.3 billion won from 1.56 trillion won of operating profit during the same period of last year, impacted by falling oil prices and weak petrochemical markets.

Its revenue slid 11.2 percent to 17.66 trillion won.

SK Innovation's shares closed at 121,100 won, down 0.57 percent from the previous trading session.

BY SARAH CHEA [chea.sarah@joongang.co.kr]