(LEAD) SK Innovation posts record operating profit in 2022 on higher oil prices, petrochem demand

(ATTN: CHANGES headline, lead; UPDATES with more details; ADDS byline, photo; COMBINES earlier article slugged 'SK Innovation-Q4 earnings')
By Kim Seung-yeon

SEOUL, Feb. 7 (Yonhap) -- SK Innovation Co. said Tuesday it posted a record high operating profit of nearly 4 trillion won (US$3.18 billion) in 2022 on the back of a rise in oil prices and strong petrochemical demand.

The operating income for the January-December period came to 3.99 trillion won, more than doubling from 1.74 trillion won logged in the previous year, the refinery unit of South Korea's SK Group said in a regulatory filing.

Annual sales rose 66.6 percent to a record 78.05 trillion won. Net income grew by more than fourfold to 1.99 trillion won in the same period.

"The year-on-year performance improved significantly thanks to the rise in oil prices that continued until the first half of last year and widening refining margins due to the increased demand for petroleum products," SK Innovation said in a release.

Refining margins, a key gauge of profitability, are linked to international oil prices. Higher crude prices mean greater margins, or the difference between the total value of petroleum products and the cost of crude and related services.

The petroleum segment generated 3.4 trillion won in operating profit, with 52.6 trillion won in sales for 2022. The operating income from the chemical business stood at 127.1 billion won and the sales came to 11.26 trillion won.

Its battery division booked a record 7.6 trillion won in sales as new factories ramped up production, but the operating loss widened to 991.2 billion won due largely to increased operational costs from new production lines.

SK Innovation said it expects the petrochemical demand will remain solid this year as China is likely to take measures to revive the domestic demand and ease COVID-19 border restrictions.

The company also gave a rosy outlook for the battery sector, as the ramp-up will continue at its manufacturing facilities overseas to meet the surging demand from global automakers amid the electrification trend.

In the fourth quarter of 2022, the company's operating loss widened to 683.3 billion won from 62.2 billion won a year earlier, due largely to inventory losses caused by a fall in oil prices in the latter half of the year that narrowed the margins.

It suffered a net loss of 386.8 billion won, swinging to the red from a net profit of 151.4 billion won the previous year.

Sales rose 39.5 percent to 19.13 trillion won in the three-month period.

elly@yna.co.kr
(END)