Losses from the battery division were offset by profits from the refining and chemical business.
Park Jae Hyuk
SK Innovation has decided to slow down investments in its battery sector, following LG Energy Solutions and POSCO Future M, which postponed investments due to the slowdown in global electric vehicle (EV) demand, the oil refiner said on Monday. It was announced on .
The decision comes after SK Innovation’s battery division, SK On, posted an operating loss of 331.5 billion won ($241 million) in the first quarter, following a loss of 18.6 billion won in the previous quarter. I was disappointed. Sales also decreased by 49% from the same period last year to 1.68 trillion won due to a decline in sales volume and prices.
SK Innovation’s overall revenue decreased 1.5% year-on-year to 18.9 trillion won, but operating profit increased 67% to 624.7 billion won due to an increase in refining margins due to soaring global crude oil prices.
Kim Jin-won, chief financial officer of SK Innovation, said at a press conference, “In order to deal with the unfavorable business environment, we will flexibly adjust the timing of facility expansion in Europe and China, and we will continue to improve profitability (of the battery division).” We expect improvement.” First quarter earnings conference call.
In particular, SK On delayed the start of operations at its third Hungarian plant from the first quarter to the second quarter. The battery company also lowered its overall production capacity outlook.
This file photo from July 2023 shows SK On’s third Hungarian plant under construction in Ivancsa. Screenshot from SK On Hungary’s Facebook
SK Innovation also confirmed during the conference call that a rebalance of its business portfolio is underway, although it did not disclose details of its plans. The refiner was expected to merge SK On and its lubricants division, SK Enmove, and list on the stock market.
Mr. Kim said, “We are organizing the businesses we need to focus on and trying to gain momentum for growth.”
SK Innovation also remained optimistic about its goal of achieving its first-ever quarterly operating profit in its battery business in the second half of this year, despite the deterioration in SK On’s profitability.
SK On’s Chief Financial Officer Kim Kyung-hoon said, “Market conditions are expected to improve due to increased sales in the U.S. and an increase in production credits from advanced manufacturing industries following the release of new EVs.”
Responding to concerns that the Middle East conflict could lead to oil supply setbacks, SK Innovation said the Strait of Hormuz is unlikely to be closed, given similar geopolitical risks in the past.
“Even if the strait is closed, we can still transport crude oil by detouring through other routes,” said SK Innovation’s chief financial officer.
S&P Global’s decision last month to downgrade the credit rating of SK Innovation and its petrochemical unit SK Geocentric from ‘BBB-‘ to ‘BB+’ He said the impact would be limited. In the domestic market.
