SK Innovation (096770) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue rose KRW 1,740.9 billion quarter-over-quarter to KRW 21,146.6 billion, reflecting the full consolidation of SK Innovation E&S post-merger.

• Operating profit declined by KRW 204.5 billion, resulting in an operating loss of KRW 44.6 billion, due to weak crude prices and spreads in refinery, petrochemical, and lubricants.

• Major battery supply agreements were signed, including a 99.4 GWh contract with Nissan for 1 million EVs and a 20 GWh order from Slate, supporting customer diversification and future growth.

• SK Earthon confirmed oil reserves and completed successful crude oil test production in Vietnam Block 15-2/17, with test production ongoing and further appraisal drilling planned.

• US battery plant utilization rates increased, with expectations for improved profitability through higher sales and operational efficiency.

Financial highlights

• Q1 revenue: KRW 21,146.6 billion, up KRW 1,740.9 billion quarter-over-quarter.

• Operating loss: KRW 44.6 billion, down KRW 204.5 billion from previous quarter.

• Non-operating loss: KRW 287.8 billion, improved by KRW 1,013 billion quarter-over-quarter, driven by equity method and FX gains.

• EBITDA decreased to KRW 751.6 billion from KRW 873.2 billion in the previous quarter.

• Profit before tax improved to KRW -332.4 billion from KRW -1,140.8 billion quarter-over-quarter.

Segment performance

• Refinery: Q1 operating profit KRW 36.3 billion, down KRW 306.1 billion quarter-over-quarter, pressured by lower crude prices and refining margins; sales rose to KRW 11,918.1 billion.

• Petrochemical: Operating loss of KRW 114.3 billion, continuing losses due to weak PX and polymer markets; sales increased to KRW 2,477.0 billion.

• Lubricants: Operating profit KRW 121.4 billion, down KRW 18.1 billion, impacted by lower margins and sales volume.

• E&P: Operating profit KRW 120.4 billion, down KRW 25.4 billion, affected by lower gas demand in Peru.

• Battery: Q1 revenue KRW 1,605.4 billion, operating loss improved by KRW 60.1 billion to KRW 299.3 billion loss, driven by higher North American sales.

• Materials: Operating loss improved by KRW 19.4 billion to KRW 54.8 billion, aided by sales growth and absence of prior one-off costs.

• SK Innovation E&S: Q1 operating profit up KRW 78.9 billion to KRW 193.1 billion, led by increased city gas sales.