SK Innovation said Thursday that it recorded revenue of 28.7738 trillion won and an operating profit of 3.7043 trillion won in the third quarter of this year. Revenue increased by 39.7% and operating profit rose by 532.5% compared to the same period last year.
The refining and lubricant businesses drove this strong performance. Global petroleum product supplies tightened due to declining utilization rates of refining facilities in the Middle East and Russia's restrictions on diesel exports, leading to higher export margins. Increased demand for transportation fuels during the summer driving season also boosted refining margins.
SK Energy's operating profit reached 1.2058 trillion won, an increase of 554.6 billion won from the previous quarter. This was driven by increased production volumes due to a base effect from regular maintenance in the second quarter, in addition to supply disruptions caused by geopolitical instability and rising refining margins.
Lubricant subsidiary SK Enmove posted a record-high quarterly operating profit of 1.0906 trillion won. This represented an increase of 398.7 billion won from the previous quarter. The result was attributed to base oil spreads maintaining high levels due to global lubricating base oil supply disruptions. Operating profit for a single quarter surpassed the company's record annual operating profit of 1.0712 trillion won set in 2022.
SK Innovation E&S also contributed to improved performance. Its third-quarter operating profit was 774.4 billion won, up 668.5 billion won from the previous quarter. Power plant profitability improved as long-term contract liquefied natural gas (LNG) and commissioning volumes from Australia's Barossa gas field were secured stably amid rising spot market prices (SMP) driven by seasonal increases in electricity demand.
Conversely, battery subsidiary SK On turned to a loss compared to the previous quarter. Revenue was 1.5263 trillion won, and operating loss was 80.5 billion won. The decline was influenced by reduced sales volumes and a base effect from one-time gains in the previous quarter. However, the company explained that profitability excluding one-time factors improved thanks to cost reductions and operational efficiency enhancements.
SK On is expanding its business structure, which has been skewed toward electric vehicles, into energy storage systems (ESS). The company signed a supply contract for approximately 9 GWh of lithium iron phosphate (LFP) pouch cells for ESS with NeoVolta in the United States. It also signed an LFP cathode material supply contract for ESS with LG Energy Solution and POSCO Future M, strengthening its materials supply chain to target the North American market.
SK Innovation forecast that the favorable trend in the refining business would continue into the fourth quarter. It expected supplies to decrease due to regular maintenance of major refining facilities and export restrictions by some countries, while winter demand would increase. Regarding lubricants, the company predicted that high-level base oil spreads could gradually decline as global supply disruptions ease.
For the battery business, the company anticipated a gradual recovery in line with increased sales volumes from key customers. Its strategy is to boost profitability by continuing production and supply efficiency improvements and cost reductions, while securing additional ESS orders in North America.
An SK Innovation official said, "Uncertainty and price volatility continue in the energy market," adding, "We will focus on improving operational efficiency for each business and strengthening our fundamental competitiveness."
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