SK Innovation sees big boost in second quarter

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SK Innovation sees big boost in second quarter

SK Innovation reported an operating profit of 987.9 billion won ($851.7 billion) in the second quarter of this year, its second-highest quarterly profit ever, thanks to stabilized international oil prices.

The nation’s leading oil refiner on Thursday reported 12.99 trillion won in revenue from April to June on a consolidated basis. Revenue dropped 21 percent from a year ago, but year-on-year operating profit rose 207.6 percent.

It’s largest-ever operating profit was 1.35 trillion won in the first quarter of 2011.

SK Innovation’s net income was 587.53 billion won, a turnaround from a 33.2 billion won net loss a year ago. The company had its toughest year yet in 2014 with an operating loss of 224.1 billion won - its first time in the red in 37 years - due to the plummeted international oil price.

“Overall market conditions in both the oil refining and chemical businesses led us to improve overall profitability as the international oil price stabilized,” the company said in a statement.

The biggest success in the quarter was in the oil refining business, where the company recorded a 754.7 billion won operating profit. The chemical business also did well, reporting 242.9 billion won in operating profit with an increase in sales of major products like ethylene and benzene during the period. It was the first time the company made an operating profit of over 200 billion won in the chemical sector since the third quarter of 2013.

The company added, however, that its oil refining business might have a tough time later this year.

“We were able to turn around in the first half as the overall market conditions in the oil refining and chemical industries were improved from last year, but we have seen many bad signs that the industry will worsen,” the company said. “In the second half, we will focus on improving overall profit and business structure to survive in the game.”

The company also announced it has decided not to float affiliate SK Lubricants on the stock market. After reporting its first loss last year, SK Innovation had been trying to float the company as part of efforts to improve its own financial structure.

It said the plan has been halted as the lubricant market isn’t in good shape and SK Innovation improved its own balance sheet more than expected.

“We concluded that recent struggles in the lubricant business aren’t helpful in evaluating the company’s true value,” the company said. “We will let it focus on improving its profitability from now on.”

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