To Enhance Enterprise Value

SK Innovation CEO Kim Jun announces the company's green growth strategy during the Story Day event held on July 1.

SK Innovation has decided to spin off the battery and exploration and production (E&P) businesses into independent companies. The company said the decision is intended to enhance its corporate value.

The company's board of directors approved the spin-off plan on Aug. 3, saying that the two businesses have been fully recognized for their growth potential and competitiveness. The plan will be presented to an extraordinary general shareholders' meeting on Sept. 16 to win approval.

The two envisioned companies are tentatively named “SK Battery Co., Ltd.” and “SK E&P Co., Ltd,” respectively. They will officially come into existence on Oct. 1 and 100 percent owned by SK Innovation.

Under the reorganization scheme, SK Innovation will become a holding company that plays the role of the “green portfolio designer and developer” and puts greater emphasis on the improvement of the enterprise value.

For this, the company will focus on green businesses and utilize various means  to discover the second and third battery and lithium-ion battery separator (LiBS) businesses and create new values. It is also planning to grow the battery metal recycle (MBR) business, which is currently being promoted, in full swing. 

SK Battery Co. will be responsible for the medium-to-large-sized EV batteries, battery as a service (BaaS), and energy storage system (ESS). SK E&P Co. will be in charge of the oil exploration and production business, and the carbon capture and storage (CCS) business.

SK Innovation’s chairman of the Board Kim Jong-hoon said, “The upcoming spin-off will allow the businesses to create a management system that fits their business characteristics, and the decision was made to raise the overall expertise and competitiveness.” He added, “Attracting investment and increasing business value in each business will provide more flexibility to quickly and comprehensively respond to various management environments.”

SK Innovation said the spin-off will be a turning point for securing global competitiveness in the battery business. The company announced at the Story Day event on July 1 that it aims to grow the battery business into a global top player based on its battery order backlogs of “1 Terawatt + α.”

Currently, the company's annual battery production capacity is 40 GWh, with production bases established in South Korea, the United States, China and Hungary. The company revealed its plan to quickly expand its production capacity to 85 GWh by 2023, 200 GWh by 2025, and 500 GWh by 2030. The company is growing at a rapid pace, with the recent announcement to form a joint venture with the US automaker Ford.

The company also plans to expand the battery application market to products such as energy storage system (ESS), flying cars, robots, and others, and also provide services such as the battery as a service (Baas) platform business.

SK Innovation's battery plant in Seosan, South Chungcheong Province

Regarding the E&P business spin-off, SK Innovation said it made the decision to create a more detailed and specific strategy for its green transformation.

It plans to ensure growth by innovating the business model to be more eco-friendly, wherein the carbon will not be emitted during the oil production stage, and the emitted carbon of the usage stage would be permanently captured and stored below the earth.

Through this spin-off, SK Innovation plans to promote the transition to a green business model with the goal of minimizing carbon emissions by utilizing the experience and capabilities of the E&P business accumulated over a long period of time. 

The E&P business signed an agreement with a state company to develop CCS technology in May, ramping up its efforts to change its business course to a green one.

SK Innovation CEO Kim Jun said, “The spin-off, which will take us towards green growth, is highly significant in the sense that it will secure fundamental competitiveness in each business and create and accelerate new growth. We will accomplish our green growth strategy and create enterprise values that will satisfy every stakeholder.”

 

Copyright © BusinessKorea. Prohibited from unauthorized reproduction and redistribution