SK Innovation Revamps Operation, Posts over 3 Tln Won in Operating Profit
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SK Innovation Revamps Operation, Posts over 3 Tln Won in Operating Profit
SK Group close to selling lubricant business due to sluggish business, but recanted and saw operating profit rise to 3.228 tln won, up 63 pct YoY thanks to high refining margin

26(Sun), Feb, 2017




President Kim Joon of SK Innovation.


SK Innovation has been able to turn itself around form a year ago, ending the 2016 with an earnings surprise with operating profit coming in at 3.228 trillion won, up 63 percent YoY on sales of 39.520 trillion won, down 18 percent YoY. 

The company attributed the surprising operating profit figures to high refining margins and excellent performances in its other sectors, including petrochemical and lubrication oil, posting over 2 trillion won in operating profit.

SK Innovation reported more than 3 trillion won in operating profit for the first time. 

SK Group announced on Feb. 3 that its 2016 operating profit was 3,228.6 billion won on sales of 39,520.5 billion won. Although sales revenue fell 18 percent from 2015 due to lower product prices, its operating profit shot up 63 percent year on year thanks to a jump in refining margins. This is higher than the previous high of 2,959.5 billion won set in 2011. SK Innovation's other divisions, such as petrochemical and lubricant also reported good results in excess of 2 trillion won in operating profit.

Thanks to the good performance, the companies are set to pay out record-high dividends. SK Innovation plans to pay a total of 596.5 billion won in dividends, or 6,400 won per share. The company paid 447.4 billion won in dividends (4,800 won per share) in 2015.

SK Innovation, Korea¡¯s leading energy provider, announced its financial results for the 3rd quarter ending Sept. 30, 2016. Revenue in the 3rd quarter was 9.703 trillion won, down by 22 percent, or 2.7443 trillion won, and operating profit was 414.9 billion won, up by 12 percent, or 44.4 billion won year-on-year. Revenue for the 3rd quarter was down by 5.6 percent, or 577.2 billion won, and operating profit was down by 62.9 percent, or 704.6 billion won quarter-on-quarter due to maintenance carried out during the 3rd quarter.

The cumulative operating profit from the 1st to 3rd quarters stood at 2.3792 trillion won, surpassing the full-year operating profit of 1.9796 trillion won last year.

The petroleum business recorded revenues of 7.0252 trillion won and an operating profit of 91.9 billion won in the 3rd quarter, achieving similar results to the same period last year. However, the operating profit fell from the previous quarter due to lower refining margins and the extinction of inventory gains.

The refining margins are likely to improve following a glut in global inventory and a seasonal pick-up in demand.

The petrochemical business posted revenue of 1.8343 trillion won and an operating profit of 215.4 billion won in the 3rd quarter as strong product spreads for ethylene and paraxylene boosted profit despite lower sales volume due to regular maintenance activities. The 4th quarter could be affected by the completion of maintenance activities in cracker facilities, scheduled maintenance activity of downstream facilities, and an increase in production capacities in the region.

The lubricants business posted revenue of 598.9 billion won and an operating profit of 117 billion won in the 3rd quarter, which is down from the previous quarter due to a drop in sales volume.

The market condition for lubricants is forecast to be stable due to growing demand for premium base oil products.

SK innovation¡¯s E&P business recorded revenues of 139.7 billion won with an operating profit of 36.6 billion won in the 3rd quarter. The operating profit is up by 20 billion won from the previous quarter and by 38.4 billion won from a year earlier.




A view of the SK Innovation Ulsan Oil Refinery Complex in Ulsan.(Photos: SK Innovation)


   
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