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SK Innovation flags steady Q4 growth in refining margins

Heekyong Yang and Joyce Lee
Updated ·2-min read
FILE PHOTO: The logo of SK Innovation is seen in front of its headquarters in Seoul

By Heekyong Yang and Joyce Lee

SEOUL (Reuters) - SK Innovation Co Ltd, owner of South Korea's top refiner SK Energy, said on Friday that it expects steady fourth-quarter growth in refining margins as the COVID-19 pandemic recedes and demand returns.

The company posted an operating profit of 619 billion won ($528.95 million) in the July-September quarter, swinging from an operating loss of 54 billion won in the same period a year earlier.

Revenues rose 48% to 12.3 trillion won from a year earlier. That compares with the 12.6 trillion won forecast of analysts in the Refinitiv SmartEstimate.

"The third quarter operating profit of petrochemical business edged up marginally as upward swing in crude prices and key product crack concentrated mostly in September," SK Innovation said in a statement.

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SK Innovation, which has a total refining capacity of 1.115 million barrels per day (bpd) at plants in Ulsan and Incheon, said it operated 68% of its capacity on average in the third quarter, down from 72% a year earlier.

Peer S-Oil Corp, whose main shareholder is Saudi Aramco, on Thursday predicted a continued uptrend in Asia's refining margins in the fourth quarter as demand grows ahead of winter and COVID-19 restrictions ease.

SK Innovation's wholly-owned battery subsidiary SK On, which was split off on Oct. 1 https://www.reuters.com/business/autos-transportation/sk-innovation-shareholders-approve-plan-split-off-battery-business-2021-09-16, accounted for nearly 7% of the company's revenue in the third quarter.

The battery unit, which counts Ford Motor Co and Kia Corp among its customers, aims to turn profitable next year.

SK On said it has an order backlog of about 1.6 terawatt hours (TWh)of batteries worth about 220 trillion won, reflecting the battery joint venture with Ford https://www.reuters.com/business/autos-transportation/ford-sk-invest-114-bln-add-electric-f-150-plant-three-battery-factories-2021-09-27, which could power about 23 million electric vehicles.

In July, the company said its battery order backlog would be worth about 130 trillion won.

Shares of SK Innovation were trading up 0.2%, versus the benchmark KOSPI's 0.5% fall as of 0227 GMT.

($1 = 1,170.2500 won)

(Reporting by Heekyong Yang and Joyce Lee; Editing by Sam Holmes & Shri Navaratnam)