SK Innovation obtained its best-ever ratings of “Baa1” from Moody’s Investors Service as its ratings outlook was upgraded to stable. The latest upgrade of SK Innovation’s ratings came on Feb. 6 following Standard & Poor’s awarding the best-ever  BBB+ ratings, equivalent to those of Korean heavyweights Samsung Electronics, Hyundai Motor and Kia Motors. The ratings reflect the outcomes of the restructuring of SK Innovation’s business portfolios that underwent, with a focus on chemicals, crude development, batteries and information electronics. 

SK Innovation chalked up about 2 trillion won in operating profit in the non-refinery sector including chemicals and lubricants last year. In a consolidated financial statement, the company posted 39.5205 trillion won in sales and 3.228 trillion won in operating profit in 2016. 

SK Innovation became the first Korean refinery and chemical company to surpass 3 trillion won in operating profit. 

SK Innovation Redoubles EV Battery Production Capacity

SK Innovation plans to redouble its EV battery production capacity. The company has unveiled an ambitious scheme to become a global top-three EV battery maker. 

SK Innovation will raise the capacity of its EV battery plant in Seosan, Chungcheongnam-do, from the current annual 1.9GWh to 3.9GWh, the company said on March 6. Investments amount to hundreds of billions won, reports said. 

When the expansion is completed, SK Innovation will be able to supply batteries for the production of 140,000 EV units annually. The company plans to employ smart factory concepts using big data to raise the productivity of the newly expanded facilities. The expansion comes amidst a strategy to land orders before the expansion takes place, the company said. 

SK Innovation has already secured a backlog of seven years’ work based on a 100 percent operation rate. Its major clients include Hyundai Motor, Kia Motors and Daimer-Benz. The latest investments are part of SK Innovation’s strategy to nurture future growth engines. 

SK Innovation, Korea’s biggest refinery company, can earn steady revenues, but the company is vulnerable to the implications of international crude oil price fluctuations, so it has seen its price earnings ratio (PER) stand at less than 1. In 2014, SK Innovation suffered a setback when it posted losses for the first time in 37 years due to a plunge in international crude oil prices. 

The company has been accelerating efforts to restructure business portfolios since then. It is focusing on fostering its non-refinery segments, including EV battery and lithium-ion battery separators, on top of the refinery business. SK Innovation focuses on the EV battery, whose future outlooks are rosy. A report, released by the research and consulting company SNE Research, showed that the global EV battery market is predicted to maintain explosive growth by surging from 51GWh last year to 185GWh in 2018 and 430GWh in 2020. 

SK Innovation President Kim Joon said the company will make inroads into the Korean and foreign Eva battery markets to rise to a global top-three EV battery maker. 

The company has hurdles to overcome, however. SK Innovation is an EV battery late-comer, making the company an underdog. There are strong Korean and foreign contenders, including LG Chem, Samsung SDI, Panasonic of Japan, BYD and ATL of China. LG Chem has begun building an EV battery plant in Polang following existing ones in Ochang, Chungchengbuk-do, and Nanjing, China. Counting the upcoming Polish plant, LG Chem will see its capacity surge to a combined 17 to 18GWh. Samsung SDI is expanding its EV battery production capacity by building a new plant in Hungary on top of the existing ones in Ulsan, Gyeongsangbnam-do, and China.

Although SK Innovation is a late-comer, it will likely see its presence in the global EV battery market surge, an SK innovation official predicted.