Worst-Ever Record

SK Innovation announced its worst quarterly performance ever, raising concerns about 4 trillion won in losses by the four Korean refineries in the first quarter.
SK Innovation announced its worst quarterly performance ever, raising concerns about 4 trillion won in losses by the four Korean refineries in the first quarter.

SK Innovation recorded the worst-ever quarterly performance with operating losses hitting 1.75 trillion won in the first quarter.

SK Innovation announced on MAY 6 that it recorded 11.163 triillion won in sales and 1.775 trillion won in operating loss in the first quarter. Sales decreased by 1.614 trillion and operating profit by 2.103 trillion compared to the same period in 2019, putting the company into red. Compared to the previous quarter, sales shrank by 625.5 billion won, and operating profit by 1.898 trillion won.

Inventory-related losses estimated by SK Innovation amounted to 941.8 billion won. The Petroleum Business Division alone posted a deficit of 1.636 trillion won due to a reverse margin in which commodity prices such as aviation oil and gasoline prices were lower than crude oil prices.

The pre-tax loss amounted to 247.2 billion won with the adding of non-operating losses of 270 billion won due to exchange rate loss caused by a strong exchange rate. “We posted the worst-ever business results in the worst situation as we suffered a quadruple whammy – a weak refining margin since 2019, sluggish demand stemming from the COVID-19 crisis, a sharp drop in oil prices and foreign exchange losses,” an SK Innovation official said. "The company was faced with the worst-ever business environment since the beginning of the oil refining business in 1962."

S-Oil and Hyundai Oilbank, which announced their earnings earlier, incurred operating losses of 1.007 trillion won and 563.2 billion won, respectively. These figures were also the worst-ever quarterly record since their establishment. Oil refining industry insiders forecast that Korea’s four major oil refiners’ combined operating losses will surpass four trillion won in the first quarter with a forecast that GS Caltex's operating loss will exceed 700 billion won in the first quarter. It has become more likely that the four’s combined operating loss in the first quarter will eclipse heir total operating profit of 3.100 trillion won in 2019.

Following S-Oil and Hyundai Oilbank, SK Innovation announced its worst quarterly performance ever, raising concerns about 4 trillion won in losses by the four Korean refineries in the first quarter. Industry experts say that as oil prices will make a slow recovery, and demand will continue to remain sluggish in the second quarter, the four oil refiners will record dismal business performances in the second quarter, too. As a result, their utilization rates are expected to sink further.

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