SK Innovation recorded a deficit of 45.8 billion won in the second quarter of the year with its battery sector facing deficits for 11 consecutive quarters.

[SK Innovation provided by SK Innovation]

SK Innovation announced today (1st) that it recorded sales of 18.7991 trillion won and an operating loss of 458 billion won in the second quarter of 2024.

Compared to the same period last year, sales increased by 719 billion won, and the loss was reduced.

In the first half of this year, it recorded sales of 37.6542 trillion won and an operating profit of 5.789 trillion won. Although sales decreased by 2.159 billion won compared to the first half of last year, operating profit increased by 3.107 billion won.

By business segment, the petroleum business recorded an operating profit of 1.442 billion won, a decrease of 4.469 billion won from the previous quarter.

Despite a slight increase in the spread of major products such as paraxylene (PX) and benzene in the chemical business, the operating profit decreased by 251 billion won to 994 billion won due to a decrease in sales volume caused by regular maintenance in the second quarter.

The lubricant business recorded an operating profit of 1.524 billion won, a decrease of 680 billion won from the previous quarter, due to weak demand in China and other factors.

The battery business reported an operating loss of 4.601 billion won, despite an increase in state-of-the-art manufacturing production tax deductions (AMPC) due to the recovery of sales in the U.S. region. This marks the 11th consecutive quarterly loss, attributed to decreased factory operating rates and initial cost increases associated with the operation of a new factory in Hungary.

SK Innovation explained, “The decrease in second-quarter operating profit compared to the previous quarter was due to the weaker refining margins in the petroleum business and the decrease in factory operating rates in the battery business, along with fixed cost burdens.” The company expects improved performance in the second half of the year, as refining margins recover and demand for electric vehicles increases with the expansion of the new car lineup in the battery business.

SK Innovation plans to achieve additional profitability of approximately 2.2 trillion won in earnings before interest, taxes, depreciation, and amortization (EBITDA) by 2030 through a merger with SK E&S. This includes over 500 billion won from the existing petroleum/gas business and over 1.7 trillion won from the electrification business.

The company aims to achieve a total EBITDA of over 20 trillion won by 2030.

If the merger plan is approved at the scheduled extraordinary shareholders’ meeting on the 27th, the merged entity will officially launch on November 1st.