SK Innovation (096770) Q3 2025 earnings summary

Executive summary

• Achieved a turnaround in operating profit, moving from a loss of KRW 417.6 billion in Q2 to a profit of KRW 573.5 billion in Q3 2025, driven by strong refining and E&S performance.

• Signed a 1 GWh ESS supply agreement with Flatiron Energy Development, securing up to 7.2 GWh supply rights through 2030 and expanding LFP battery portfolio.

• SK On and SK Enmove merger effective November 1, 2025, expected to strengthen financials and create new business synergies, including immersion cooling and battery package businesses.

• Secured first mass production and supply of LFP batteries, diversifying the product lineup.

Financial highlights

• Q3 sales rose KRW 1,226.6 billion QoQ to KRW 20,533.2 billion, driven by refinery and petrochemical revenue growth.

• Operating profit turned positive at KRW 573.5 billion, up KRW 991.1 billion QoQ, due to higher crude prices and refining margins.

• EBITDA rose to KRW 1,366.8 billion from KRW 379.2 billion in the previous quarter.

• Profit before tax swung from a loss of KRW 1,260.8 billion to a profit of KRW 69.0 billion QoQ.

• Non-operating loss narrowed to KRW 504.5 billion, with FX-related and product derivative losses reduced.

Outlook and guidance

• Refining margins expected to remain firm due to OPEC+ production, geopolitical risks, and seasonal factors.

• Battery business anticipates continued European sales growth but U.S. sales may decline due to subsidy removal and tariffs; will accelerate ESS business expansion.

• Lubricants demand expected to soften in Q4 due to seasonality.

• Petrochemical market to remain weak amid U.S.-China trade conflict, with focus on optimizing capacity and operations.

• Capex for 2026 projected to be about 50% lower than 2025 as major investments conclude.