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SK Innovation's Net Profit Dropped 36% in 2013
Energy Profits
SK Innovation's Net Profit Dropped 36% in 2013
  • By matthew
  • February 4, 2014, 08:28
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SEOUL, Feb. 4 (Yonhap) -- SK Innovation Co., which owns the country's top refiner SK Energy Co., said Tuesday its net profit tumbled 36 percent last year from a year ago due to decreased margin in the refining business.

Net profit came to 757.03 billion won (US$695.7 million) in 2013, compared with 1.18 trillion won (US$) a year earlier, the company said in a regulatory filing.

Sales fell 9.1 percent to 66.67 trillion won in the period, and operating profit dropped 18.7 percent to 1.38 trillion won.

The figures reflected earnings from SK Innovation and its subsidiaries such as SK Energy, SK Global Chemical Co. and SK Lubricants Co.

"Last year's performance was sluggish as volatile oil prices and decreased demand for oil products caused the average refining margin to drop," the company said.

In the October-December period, the company posted a net loss of 84.37 billion won, down from 262.20 billion won a year ago. The operating loss was 25.13 billion won compared with 210.39 billion won of the previous year.

The company's fourth-quarter sales fell 7.6 percent on-year to 15.86 trillion won.

The weak quarterly earnings stemmed from a stronger won that lowered the value of exporters' dollar earnings, the company said.

Shares of SK Innovation closed at 126,000 won, down 0.79 percent from Monday's close on the Korea Exchange.

The narrowing refining margin led SK Energy's operating profit to tumble 79 percent to 57.8 billion won last year from a year ago, marking the second-lowest level since 2009 when it was 42.9 billion won. However, SK Energy is expected to see its earnings improve this year thanks to an improvement in refining margin from the shutdown of plants in Japan and Australia, as well as from growing demand for oil products.

SK Global Chemical, which logged 846.1 billion won in operating profit, will gain profits as its plants in Wuhan, China, and Ulsan, 410 kilometers southeast of Seoul, are set to begin operations this year.

SK Lubricants is also predicted to improve its earnings this year on strong rise in demand for high-grade lubes and the operation of SKSOL, a joint plant with Repsol S.A., a Spanish oil and gas firm, in the second half of the year. SK Lubricants logged an operating profit of 155.1 billion won last year, down 50 percent from the previous year.

SK Innovation posted an operating profit of more than 500 billion won in 2013 for the third consecutive year in its oil exploration sector. Its 2013 operating profit in the sector was 554.6 billion won, accounting for 40 percent of the entire operating profit of SK Innovation and its subsidiaries.

Despite its ailing performance, SK Innovation plans to pay a cash dividend of 3,200 won per ordinary share and 3,250 won per preferred share, totaling 298.27 billion won.