SK Innovation swings to black in Q1 on robust petrochem sales

SK Innovation Co said yesterday it swung to the black in the first quarter from a year earlier, boosted by robust sales of petrochemical products amid higher oil prices.

Net income reached 863.3 billion won (US$680.3 million) in the January-march period, a turnaround from a loss of 371.4 billion won a year earlier, the company said in a regulatory filing.

Operating income grew by nearly threefold to 1.64 trillion won from 584.3 billion won, with sales increasing 72.9 per cent on-year to 16.26 trillion won in the same period.

The earnings beat market expectations. The average estimate of net profit by analysts stood at 754 billion won, according to the survey by Yonhap Infomax, the financial data firm of Yonhap News Agency.

"The operating profit reflected the surge in refining margins and increased profit from inventory-related gains and exploration projects," SK Innovation said in a release.

The strong sales were also due to the rise in oil and petrochemical product prices and the sales growth in electric vehicle batteries, it said.

Its petrochemicals business posted 1.5 trillion won in operating profit in the first quarter, driven by a 57 per cent on-year growth in the exports of petrochemical products that came to 31 million barrels.

The oil exploration and development business saw its profit increase by 86.5 billion won to 198.2 billion won in the first quarter from three months ago, as higher oil prices boosted the selling prices.

The battery business booked 1.25 trillion won in sales, up by 193.4 billion won from the previous quarter and more than a twofold jump from a year ago. Its operating loss, mainly from the operational costs for overseas factories, narrowed by 37 billion won on-quarter to 273.4 billion won.

SK Innovation expects to achieve seven trillion won in revenue for this year, more than double from last year's 3.04 trillion won.

Its global battery production capacity is forecast to jump to 77 gigawatt hours (GWH) this year, once its Yancheng factory in China starts commercial operations.

SK Innovation, which has the battery-making arm SK On Co under its wing, aims to boost the production capacity to 220 GWH by 2025.