SK INNOVATION said on Thursday (Aug 1) it expects strong oil refining margins in the second half of the year as Opec+ production cuts buoy prices and the peak demand season for transportation, cooling and industrial use begins.
The owner of South Korea’s biggest refiner, SK Energy, posted an operating loss of 46 billion won (S$33.6 million) from April to June versus a 107 billion won loss a year earlier. The result compared with an LSEG SmartEstimate of 295 billion won profit.
Revenue rose 0.4 per cent to 18.8 trillion won, just missing analyst estimates.
Lower oil prices and narrowing refining margins as well as declining utilisation rates at battery factories and new factory costs contributed to the quarterly result, SK Innovation said.
Battery subsidiary SK On, a supplier of automakers including Ford Motor, Hyundai Motor and Volkswagen, booked an operating loss of 460 billion won versus a loss of 332 billion won in the previous quarter.
SK On reiterated its target of breaking even in the fourth quarter, citing a demand recovery in electric vehicles (EVs) and batteries in general as well as cost reduction initiatives.
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It said it will continue to broaden its battery product portfolio to better meet automaker customer needs.
Last month, a senior executive said SK On was in talks with automakers to supply prismatic batteries, in addition to its mainstay pouch-type batteries.
Parent SK Innovation is merging with energy affiliate SK E&S, which analysts said will likely shore up the finances of the money-losing battery subsidiary by combining it with a profitable company with a stronger balance sheet.
Slowing EV demand has prompted automakers to adjust electrification plans. Ford last month said would use a Canadian plant earmarked for EVs for petrol-powered versions of its F-Series pickup truck.
Hyundai Motor is expanding its petrol-electric hybrid vehicle lineup due to easing EV demand and uncertainty over EV policies in the US due to a presidential election there in November.
SK On’s cross-town rival LG Energy Solution last week cut its annual revenue target by more than 20 per cent and said it would slow expansion plans due to a sharper-than-expected slowdown in EV demand.
SK Innovation’s share price was 0.4 per cent higher in morning trade versus a 0.4 per cent rise in the benchmark Kospi. REUTERS
