SK on posts first quarterly profit in Q3 on improved operations

SK on CI

SK on Co., the battery manufacturing unit of South Korea’s SK innovation Co., has posted its first quarterly profit since its inception three years ago thanks to its operational improvement (OI).

SK innovation announced on Monday that its subsidiary SK on raised 24 billion won in operating profit in the third quarter on sales of 1.43 trillion won.

It is the first quarterly profit since the company was launched as an independent entity in October 2021.

SK on managed to swing to a profit during the July-September period after posting an operating loss of nearly 800 billion won in the first half of this year.

The turnaround was due to cost reductions, inventory clearance through OI, and decreased initial operation costs at its new plant in Hungary.

OI includes not only cost savings and efficiency gains but it also encompasses core competitive strength.

The company saw its subsidy benefit under the Advanced Manufacturing Production Credit (AMPC) of the U.S. Inflation Reduction Act (IRA) fall 51 billion won to 60.8 billion won from the previous quarter.

“We expect a significant reduction in our capital expenditures after 2025 as the majority of our CAPEX related to our joint ventures, BlueOval SK LLC with Ford Motor Co., and a JV with Hyundai Motor Group, will be completed by the end of this year,” said SK on Chief Financial Officer Kim Kyung-hun.

“We are also making efforts to minimize financing costs, including borrowing from financial institutions, domestic and foreign policy financing, and loans from JV partners,” he added.

BlueOval SK’s Kentucky Plant 1 and Tennessee Plant in the United States are scheduled to commence operations next year. The Hyundai Motor JV will start battery cell production in Georgia beginning next year.

New models, such as the Ioniq 9 and Polestar, equipped with SK on batteries, will also be launched in 2025.

SK on, in the meantime, completed its merger with SK trading international Co. on Friday.

The new name of SK trading International is now SK on trading international. It will operate as a Company-in-Company (CIC).