SK Innovation reports earnings surprise in Q3
SK Innovation reported an operating profit of 963.6 billion won ($865.3 million) in the third quarter, up 132 percent from a year ago, on improving refining margins and stable sales growth in its petroleum and chemical products.
Its sales reached 11.75 trillion won, up 17.5 percent from the previous year. The nation’s leading oil refiner will also likely continue its upward momentum in the fourth quarter when the oil demand grows. The stable rise of international oil prices also adds to the bright outlook of the company’s earnings growth.
The petroleum business of the company topped the list of its divisional earnings, generating 526.4 billion won in operating profit. Its chemical unit came in second by chalking up an operating profit of 326 billion won, driven by the ongoing business structure realignment focusing on producing value-added chemical products.
The battery unit, which supplies batteries for electric vehicles, also posted decent earnings of 23.5 billion won during the same period based on the growing demand for electric cars and widening client bases.
The company said the whopping growth in its quarterly earnings is the fruit of SK’s group-wide efforts to push for “deep change,” a key slogan driven by SK Group Chairman Chey Tae-won.
“Under the slogan, SK Innovation has established diversified and stable revenue structure in the non-petroleum businesses,” SK Innovation CEO Kim Jun said. “We are going to continue pushing ahead with the deep change strategy in a way to innovate revenue and business structures to survive in the toughening competition.”
This February the company took over Dow Chemical’s ethylene acrylic acid business for $370 million, securing production facilities and chemical manufacturing technologies from the U.S.-based company. The move came as part of the firm’s bid to diversify its product lineups encompassing basic chemicals and value-added new growth areas.
The company is also leading the industry in terms of innovative products.
In September, it started the world’s first commercial production of mid- and large-sized NCM811 battery pouches. They will be supplied for energy storage systems to be installed in electronic vehicles from this December.
The company was the first in the world to succeed in the commercial production of advanced NCM 622 batteries. Since then, it has focused its efforts on developing more advanced NCM 811 batteries to meet the rising demand in the electric car industry for longer range and cost competitiveness.
As for mid- and large-sized batteries, a higher proportion of nickel in the batteries results in higher energy density, enabling a longer driving range per charge. SK Innovation raised the proportion of nickel for the NCM 811 batteries, which can extend the range of electric vehicles by 100 kilometers more than existing batteries do.
Moreover, a higher use of nickel will help reduce costs, considering the prices for other materials such as cobalt are rising.