[Sponsored Report] SK Innovation finds success by branching out

SK Innovation’s market capitalization has been inching closer to the 20 trillion won ($17.8 billion) mark.

The company’s recent success is in part thanks to the growth of SK Innovation’s diverse business portfolio. The market is especially responsive to the oil refiner’s move away from its traditional industry, and its other business interests are expected to form the core of its income this year.

For the past few years, SK Innovation has been pushing the growth of its businesses outside the oil industry in an attempt to establish itself as an energy and chemical company, not just an oil refiner. Recent results clearly show the impact of this shift.

Last year, 64 percent, or 2 trillion won, of SK Innovation’s sales came from outside the oil industry, with the company’s chemical businesses leading in terms of performance.

In fact, the oil refiner’s non-oil-related businesses led SK Innovation to record its biggest performance ever, at 3.23 trillion won.

While SK Innovation’s oil business struggled in the first quarter as oil prices increased, the success of the company’s energy and chemical businesses continued.

SK Innovation’s oil sales fell 36 percent compared to a year earlier, a decline seen across the industry. Yet despite the fall, the company continues to do well, evidence of the success of its other chemical and energy businesses.

The international oil price, which is a crucial external variable in the energy and chemical industries, is also rising, placing even more importance on other industries that are less constrained by external variables.

The growing market for olefin products is also expected to boost SK Innovation’s chemical businesses. Regulations on plastic recycling in China are also expected to boost the company’s chemical output.

SK Innovation has recently been included on a list of approved suppliers for CATL, China’s biggest electric car battery manufacturer, paving the way for an increase in the oil refiner’s chemical sales.

“Due to CATL’s list, there is a possibility of Korean companies’ value being higher. Value evaluation on CATL will bring a reexamination on global secondary battery companies,” said Jang Jeong-hoon, a researcher at Samsung Securities.

SK Innovation has continued to achieve solid performance even in an unfriendly business environment through various policies including interim dividends and buying shares, practicing management that is important to shareholders.

Last year, based on performance expectations, SK Innovation determined its first interim dividend since its establishment. The company decided on a 1,600 won interim dividend, which is 20 percent of the whole dividend, to implement a stockholder-return policy. The result is expected to be positive, and the company is continuously examining interim dividends.

Following the interim dividend, SK Innovation bought back stock at 5.6 percent of market value in April. The company is continuously working to enhance shareholder value.

BY KIM MIN-JI [kim.minji4@joongang.co.kr]