SEOUL, July 28 (Korea Bizwire) — SK Innovation Co. said Friday it turned to the red in the second quarter as falling oil prices and thinner margins hurt its profitability.
The company logged an operating loss of 106.8 billion won (US$83.2 million) in the April-June period, compared with the 2.32 trillion-won operating profit a year ago, the energy unit of SK Group said in a regulatory filing.
Revenue fell 5.9 percent to 18.72 trillion won. It reported a net loss of 120.4 billion won, turning around from a profit of 1.34 trillion won a year earlier.
The loss was 10.7 percent lower than the average estimate, according to a survey by Yonhap Infomax, the financial data firm of Yonhap News Agency.
“The petroleum sector was hit by a decline in oil prices and the refining margin, but the loss was minimized by a sound performance in petrochemicals and improved yields from battery manufacturing,” SK Innovation said.
The refinery segment posted an operating loss of 411.2 billion won, down 686 billion won from the previous quarter. The petrochemical division registered an operating profit of 170.2 billion won, up 61.3 billion won from three months ago.
Its battery business, led by SK On Co., narrowed the operating loss to 131.5 billion won from the first quarter’s 344.7 billion won, as sales increased with improved productivity at its new factories that began operations last year.
SK On’s revenue came to 3.7 trillion won in the second quarter.
SK Innovation said SK On’s quarterly earnings included 167 billion won in tax credits expected to be received under the U.S. Advanced Manufacturing Production Credit (AMPC), or tax credits eligible companies can receive under the Inflation Reduction Act (IRA).
The AMPC gives subsidies to electric vehicle component makers for manufacturing products in North America using minerals mined or processed in the region or from countries that have free trade agreements with Washington.
SK Innovation said it expects the AMPC benefits to significantly increase in the second half, improving SK On’s bottom line.
Shares in SK Innovation rose 1.34 percent to 189,500 won on the main Seoul bourse Friday, outperforming the broader KOSPI’s 0.17 percent gain. The earnings results were released after the market opened.