In a disclosure on May 13, SK Innovation announced that it achieved revenues of 24.2 trillion won (approximately $18.3 billion) and an operating profit of 2.16 trillion won (about $1.6 billion) for the first quarter. These figures represent increases of 4.54 trillion won and 1.87 trillion won, respectively, compared to the previous quarter. Year-over-year, revenues rose by 3.19 trillion won, and the company returned to profitability.
The improvement in first-quarter results was significantly influenced by the lagging effect between crude oil imports and petroleum product sales, as well as increased inventory-related profits. SK Innovation stated, "The operating profit of SK Energy, which operates in the refining sector, saw a substantial increase compared to the previous quarter due to the lagging effect of rising oil prices and increased inventory-related profits. However, these gains are reflected as accounting figures and may diminish or disappear in the event of falling oil prices in the future."
The company revealed that approximately 60% of SK Energy's total operating profit of 1.28 trillion won (around $960 million) for the first quarter came from inventory-related profits, amounting to about 780 billion won (approximately $580 million). SK Energy's operating profit increased by 1.05 trillion won compared to the previous quarter, largely due to the surge in oil prices resulting from the blockade of the Strait of Hormuz amid regional conflicts.
SK Geo Centric also returned to profitability in the first quarter, benefiting from inventory effects due to rising naphtha prices. The profitability of aromatic products improved due to scheduled maintenance of regional paraxylene facilities and the partial resumption of benzene exports.
Despite a decline in margins due to rising oil prices, SK Enmove reported a 7.4 billion won increase in operating profit compared to the previous quarter, thanks to inventory effects. SK Earth On saw a 39 billion won increase in operating profit due to improved composite selling prices driven by rising oil and gas prices.
The battery division continued to experience losses, with SK On reporting first-quarter revenues of 1.79 trillion won (approximately $1.35 billion) and an operating loss of 349.2 billion won (about $260 million). The company plans to enhance long-term profitability by stabilizing operations at its European production base and expanding orders for North American energy storage systems (ESS), anticipating favorable conditions from local production incentives and strengthened subsidies in Europe.
Additionally, SK Incheon Petrochemicals reported revenues of 3.15 trillion won and an operating profit of 647.1 billion won; SK On Trading International reported revenues of 15.11 trillion won and an operating profit of 156 billion won; SK IE Technology reported revenues of 359 billion won and an operating loss of 732 billion won; and SK Innovation E&S reported revenues of 36.96 trillion won and an operating profit of 283.2 billion won.
Looking ahead to the second quarter, SK Innovation plans to operate flexibly in response to global uncertainties stemming from the Middle East conflicts. The chemical industry will address oil price volatility risks through strategic inventory management and optimized marketing.
Despite uncertainties from the Middle East conflicts, the lubricants business is expected to see improved spreads due to supply disruptions among competitors and raw material supply issues. With heightened interest in supply stability amid geopolitical risks, the company aims to secure profitability based on its differentiated competitiveness from multiple production bases.
Seo Geon-ki, head of SK Innovation's finance division, stated, "With the expansion of global geopolitical risks, the volatility and uncertainty in the energy market are greater than ever. We will strive to secure stable profitability based on operational optimization and competitive business portfolio while continuing to play a responsible role in ensuring stable supply of domestic petroleum products and maintaining energy supply chains."
Looking ahead to the second quarter, SK Innovation plans to operate flexibly in response to global uncertainties stemming from the Middle East conflicts. The chemical industry will address oil price volatility risks through strategic inventory management and optimized marketing.
Despite uncertainties from the Middle East conflicts, the lubricants business is expected to see improved spreads due to supply disruptions among competitors and raw material supply issues. With heightened interest in supply stability amid geopolitical risks, the company aims to secure profitability based on its differentiated competitiveness from multiple production bases.
Seo Geon-ki, head of SK Innovation's finance division, stated, "With the expansion of global geopolitical risks, the volatility and uncertainty in the energy market are greater than ever. We will strive to secure stable profitability based on operational optimization and competitive business portfolio while continuing to play a responsible role in ensuring stable supply of domestic petroleum products and maintaining energy supply chains."
* This article has been translated by AI.
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