SK Innovation turns red, battery unit fails to make profit in Q2

SK Innovation Vice Chairman Kim Jun speaks at a forum held in California in June. [YONHAP]

SK Innovation turned red in the second quarter due to falling oil prices, with its battery-making business again failing to turn a profit.

SK Innovation reported 106.8 billion won ($833 million) in operating losses in the second quarter from 2.3 trillion won in operating profit in the same quarter last year. It fell far short of the market consensus of 136.2 billion won of operating profit compiled by market tracker FnGuide.

Revenues fell 6 percent to 18.7 trillion won, slightly beating the market consensus of 18.4 trillion won.

Net turned red with 120 billion won of losses compared to 1.3 trillion won during the same period last year. But it overshot analyst expectations of 196.3 billion won of net losses.

"Falling oil prices and shrinking refining margins caused a decline in profit," said SK Innovation's Chief Financial Officer Kim Yang-seob said at a conference call Friday morning. "Demand will likely improve in the second half."

In the first three months, the oil refining business generated 411.2 billion won of operating losses. It reported 2.33 trillion won only in the oil refining business in the same period last year, helped by high oil prices impacted by the Russia-Ukraine war.

The average price of Dubai crude oil was on average $75 in the first half, compared to the same period last year when it peaked at $127.86.

SK On, its fully-owned battery subsidiary, narrowed the losses while quarterly sales hit an all-time high again.

SK On posted an operating loss of 131.5 billion won, while sales hit 3.7 trillion won.

"SK On's annual sales will double this year from last year with increased sales and production volume," Kim said. "We are in negotiations with various automakers for our factories in North America."

BY SARAH CHEA [chea.sarah@joongang.co.kr]