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Title SK Innovation Reports 2nd Quarter 2017 Earnings Date 2017-07-27
Contents * Sales of KRW 21.9481 trillion and an operating profit of KRW 1.4255 trillion were announced for the first half of 2017, which is the highest recorded half-period profit
* Consolidated sales and operating profit for the 2nd quarter amounted to KRW 10.5610 trillion and KRW 421.2 billion, respectively


 

The 1st quarter performance data included in this press release has not undergone the external audit process and thus, may be subject to change.

 

SK Innovation (CEO: Jun Kim) announced on December 27, 2017 that its consolidated sales and operating profit for the first half of the year amounted to KRW 21.9481 trillion and KRW 1.4255 trillion, respectively. These figures are roughly half of the previous year’s record sales figure.

The company’s chemical and lubricant businesses generated more than 70% of the operating profit for the first half of the year.

In the chemical business, the preemptive investments that were made in the Incheon paraxylene facility, China’s Wutan Petrochemical, Ulsan Aromatics, and Nexlene paid off in the steady increase of profit, resulting in a historical operating profit of KRW 784.4 billion.

Likewise, the lubricant business showed the effects of the successful global partnerships with Spain’s Ilboc and Indonesia’s Patra SK, contributing significantly to the growth of the nonoil businesses with an operating profit of KRW 215.2 billion.

With these successes, SK Innovation has plans for the further enhancement of the chemical, lubricant, and battery industries in place.

SK Innovation’s chemical business is making a bid toward joining the “Global Top 10” petrochemical firms with a China-driven growth and an M&A, while the lubricant business is focusing on expanding its presence in the market with the dominance of group III lubricants in the world market. The battery division has set a goal of developing a battery that is capable of providing enough power for 700 km with a single charge by 2020 and achieving a 30% market share in the global battery market through intensive investment.

Business results for the 2nd quarter

The petrol business recorded a total sales of KRW 7.3876 trillion and an operating profit of KRW 12.5 billion. Despite the excellent refining profit margin, the losses in inventory due to low oil prices and an expenditure that is related to regular maintenance reduced the operating profit by KRW 414.4 billion.

In terms of the chemical business, the operating profit decreased by KRW 121 billion to KRW 333.7 billion amid decreases in product spread, decreases in production due to regular maintenance, and a decrease of sales price.

In the lubricant business, the improvements in profit margin and seasonal high sales contributed to the KRW 25.3-billion increase in operating profit, resulting in a total operating profit of KRW 120.2 billion.

For the oil prospecting business, the decrease of global oil prices and sales resulted in a KRW 22.1-billion decrease in operating profit and a total operating profit of KRW 35.2 billion. The average daily production for the 2nd quarter amounted to 53,000 barrels, which is a 1,000-barrel decrease compared with the previous quarter.

A representative of SK Innovation has commented: “Our nonoil businesses have shown a historical record in sales figures, showing the effects of our efforts at improvement” and “for the latter half, we expect that we will have a robust result for the year with the prospect of stable oil prices and the improvements in our business model.”