Getting out of the red, SK Innovation will seek radical reform in the future.
According to the first quarter results published by SK Innovation on April 30, low oil prices had positive effects on the company. SK Innovation recorded operating losses for the first time in 37 years as international oil prices plunged last year. However, the refining margin improved as the oil prices remained low, and the company became profitable again in the first quarter.
SK Innovation, which thinks that the worst may already be over, plans to seek new business opportunities at full strength. For the electric vehicles battery business, in which the company is recently putting effort, SK Innovation decided to steadily increase investment according to market demand. An SK representative said, “The sales of electric vehicles this year will reach 2 million units in the global market, and more than 6 million units in 2020. With the supply and demand of electric vehicles expected to be significantly improved in 2017 to 2018, we are making a strategy focused on securing profitability in consideration of the fact.” SK is currently expanding its factories to produce batteries for electric vehicles. Once construction is completed, its battery production capacity will double.
SK Innovation’s performance in the first quarter is better than the expectations in the market. The company recorded 12.0455 trillion won (US$11.21 billion) in sales and 321.2 billion won (US$298.99 million) in operating profits in the first quarter. Compared with the fourth quarter last year, sales decreased 25.2 percent, but the operating profits turned into profit-making. It posted 470.2 billion won (US$437.68 million) in losses in the fourth quarter last year. Compared with the first quarter last year, profits increased as well. Sales dropped 28.2 percent, but operating profits grew 38.2 percent.
The petroleum industry, which recorded nearly 1 trillion won (US$930.84 million) in operating losses last year, saw sales of 8.9851 trillion won (US$8.36 billion) and operating profits of 152.6 billion won (US$142.05 million) in the first quarter.