SK Networks(001740) saw its results worsen from a year earlier due to intensified rental competition in the water purifier business institutional sector and a decline in mobile handset sales volume.
SK Networks said in a filing on Aug. 14 that its consolidation operating profit in the second quarter was 24.8 billion won, down 42.3% from 43.0 billion won a year earlier on a provisional basis.
Revenue was 1.4444 trillion won, down 4.7% from 1.5163 trillion won a year earlier. Net profit was 49.6 billion won, up about 90.4% from 26.0 billion won a year earlier.
SK Networks engages in mobile handset distribution; water purifier and air purifier rentals through subsidiaries; vehicle maintenance; and chemical and materials trading.
As a factor behind the deterioration in second-quarter results this year, the operating profit decline of subsidiary SK intellix, which focuses on the home appliance rental business, is cited. SK intellix's second-quarter operating profit this year was 9.9 billion won, down 49% from 19.5 billion won a year earlier. On this, SK Networks said operating profit fell due to intensified competition in the rental market and ad spending for new product launches.
SK Networks' information and communications business institutional sector results also fell. The information and communications institutional sector's operating profit in the second quarter was 21.4 billion won, down 40.8% from 36.2 billion won a year earlier.
The second-quarter decline in operating profit in the information and communications institutional sector resulted from the disappearance of a temporary operating profit boost due to deferred marketing execution in the second quarter of last year. An SK Networks official said, "After the incident of SK Telecom's USIM personal information leak occurred last year, the part of not executing ads for handset sales was reflected."
A decrease in mobile handset sales volume due to a supply shortage stemming from higher memory chip prices in the second quarter this year also affected results. Second-quarter mobile handset sales volume this year was 7.22 billion units, down 23% from 9.45 billion units a year earlier.
Second-quarter results this year for the remaining subsidiaries, including Walkerhill and SK Speedmate, improved. Second-quarter operating profit for Walkerhill and SK Speedmate increased 26% and 28%, respectively, from the same period last year.
Net profit increased as valuation gains on investment equity occurred. An SK Networks official said, "The portions invested in the startups Upstage and Phynx Lab generated valuation gains, which were reflected as non-operating profit and loss."
An SK Networks official said, "Based on maintaining a stable financial structure, we will raise efficiency by pushing an artificial intelligence transformation (AX) across all business institutional sectors."