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(LEAD) SK Innovation swings to black in Q2, to hive off battery biz

All News 09:13 August 04, 2021

(ATTN: CHANGES headline, lead; UPDATES throughout with more details; ADDS photo)
By Kim Eun-jung

SEOUL, Aug. 4 (Yonhap) -- SK Innovation Co. said Wednesday it turned to the black in the second quarter from a year earlier on robust lube oil and battery sales, and decided to spin off its battery business to further propel its growth.

The energy and chemical subsidiary of the nation's No. 3 conglomerate SK Group said it booked 415.9 billion won (US$362.2 million) of net profit in the April-June period, shifting from a loss of 345.8 billion won a year earlier.

SK Innovation also swung to an operating income of 506.5 billion won in the second quarter, from an operating loss of 456.3 billion won a year ago, the company said in a regulatory filing.

Revenue rose 55.9 percent on-year to 11.1 trillion won over the cited period.

Its operating profit in the first half of the year surpassed 1 trillion for the first time in three years, the firm said.

SK Innovation Co. displays its battery during the InterBattery event held at COEX in southern Seoul on June 9, 2021, in this file photo. (Yonhap)

The company said the strong lube oil sales offset the sluggish gasoline and diesel sales in the second quarter, while its battery business continued to grow on the back of strong demand from automakers.

SK Innovation said its board of directors approved the plan to separate the petrochemical and battery businesses to accelerate its transition from a carbon-intensive model to a green business.

"The split off of (the petrochemical and battery businesses) is aimed at enhancing competitiveness of each business and paving the way to speed up the future growth driver," SK Innovation CEO Kim Jun said in a statement.

The company said it plans to launch two separate entities on Oct. 1 after receiving approvals from its shareholders next month.

SK Innovation will serve as a holding firm in charge of developing its eco-friendly business portfolio and push for a merger and acquisition in the green business, the firm said.

The company has announced its plan to increase the ratio of eco-friendly businesses from the current 30 percent to 70 percent by 2025 to reduce its carbon footprint and create new business opportunities.

The company said it will ramp up its battery production capacity from the current 40 GWh to 200 GWh in 2025 and 500 Gwh in 2030 to meet growing demand, raising prospects of generating 2.5 trillion won of earnings by 2025.

SK Innovation said it aims to pass the break-even point in 2022 by expanding its manufacturing capacity under the new corporate structure.

SK Innovation Co.'s petrochemical complex in Ulsan, 414 kilometers southeast of Seoul, is seen in this photo provided by the company on April 16, 2021. (PHOTO NOT FOR SALE) (Yonhap)

Battery sales jumped 86 percent on-year to 630.2 billion won in the April-June period thanks to solid demand for EV batteries, and its operating income surpassed 500 billion won for the second consecutive quarter.

SK Innovation, the world's No. 6 battery maker, said earlier it has bagged 1,000 gigawatt-hours worth of EV battery orders so far, which are estimated at around 130 trillion won.

SK Innovation's clients include Volkswagen and Ford in the United States, Daimler in Europe, and Hyundai Motor and Kia in Asia.

Its new battery production lines in China started operations in the first quarter, and factories in Hungary and the U.S. are set to roll out batteries when construction is completed in phases in the coming years.


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