SK Innovation succeeded in returning to operating profit in the fourth quarter of last year. This is partly due to the performance of SK E&S, which merged on Nov. 1 last year, and improved refining margins. Starting this year, SK Innovation's E&S business performance will be reflected annually.
On the 6th, SK Innovation announced that its revenue for the fourth quarter of last year was 19.4 trillion won, and it achieved an operating profit of 159.9 billion won. The annual revenue last year was 74.7 trillion won, with an operating profit of 315.5 billion won.
Looking at the fourth-quarter results by business segment: ▲ oil business revenue was 11.7 trillion won with an operating profit of 342.4 billion won ▲ chemical business revenue was 2.4 trillion won with an operating loss of 84.2 billion won ▲ lubricants business revenue was 970.7 billion won with an operating profit of 139.5 billion won ▲ oil development business revenue was 379.2 billion won with an operating profit of 145.8 billion won ▲ battery business revenue was 1.6 trillion won with an operating loss of 359.4 billion won ▲ materials business revenue was 31.2 billion won with an operating loss of 74.2 billion won. ▲ SK Innovation's E&S business (November to December) recorded revenue of 2.4 trillion won and an operating profit of 123.4 billion won.
The oil business returned to profit compared to the previous quarter due to increased demand for petroleum products such as heating oil and the effect of a rising exchange rate, which improved refining margins and inventory gains. Despite an increase in sales volume, the chemical business recorded an operating loss due to inventory effects from declining spreads (margins) of key products.
The lubricants business saw a decrease in operating profit compared to the previous quarter due to seasonal off-peak periods and margin declines from weak selling prices. The oil development business expanded its operating profit compared to the previous quarter despite a drop in international oil prices due to increased sales volume and the rise in exchange rates and gas prices.
SK On's battery business, which recorded its first profit in the third quarter of last year, saw sales revenue increase by 167.9 billion won compared to the previous quarter due to increased sales volume; however, it returned to a loss again due to one-time expenses such as base effects and inventory valuation losses. The benefit from the Advanced Manufacturing Production Tax Credit (AMPC) under the U.S. Inflation Reduction Act (IRA) for the fourth quarter was approximately 34% higher than the previous quarter, totaling 81.3 billion won.
Annual results were: ▲ oil business revenue of 49.8 trillion won with an operating profit of 461.1 billion won ▲ chemical business revenue of 10.4 trillion won with an operating profit of 125.3 billion won ▲ lubricants business revenue of 4.2 trillion won with an operating profit of 686.7 billion won ▲ oil development business revenue of 1.5 trillion won with an operating profit of 573.4 billion won ▲ battery business revenue of 6.3 trillion won with an operating loss of 1.1 trillion won ▲ materials business revenue of 133.4 billion won with an operating loss of 282.7 billion won ▲ SK Innovation's E&S business (November to December) recorded revenue of 2.4 trillion won with an operating profit of 123.4 billion won.
This year, the oil market outlook indicates that countries like the United States and Canada, excluding Organization of the Petroleum Exporting Countries (OPEC+) nations, are expected to increase crude oil production. However, due to increased demand for certain petroleum products like jet fuel, refining margins are expected to remain stable.
The chemical business anticipates a reduction in global paraxylene (PX) facility expansion and an improvement in demand. However, amid concerns over economic slowdowns in major countries, it is expected that spread improvements will be limited.
The oil development business successfully confirmed oil reserves and test production at the Vietnam 15-2/17 block this month. Future exploration and evaluation efforts will be carried out to confirm reserves in the 15-2/17 block and proceed with full-scale development.
The battery business is expected to achieve double-digit revenue growth annually. Sales volume expansion in North America, the core strategic market, and the resultant increase in AMPC are anticipated to improve annual revenue and profitability.
Seo Geon-gi, head of SK Innovation's finance division, noted that "this year, due to changes in the global situation, uncertainties in the management environment are expected as the energy business environment, such as oil and gas, is changing, but we plan to accelerate securing the entire energy value chain and creating synergies through the merger with SK E&S." He added, "We will continue to challenge ourselves to grow into a world-class energy company in the global market."
Meanwhile, the SK Innovation board of directors approved a dividend payment of 2,000 won per share. This is expected to receive final approval at the regular shareholder meeting scheduled for March.