SK Innovation reported its financial results for the first quarter of 2025, achieving revenue of KRW 21.15 trillion and incurring an operating loss of KRW 44.6 billion. This revenue figure represents the highest quarterly performance in the past ten quarters, primarily driven by a KRW 1.7 trillion increase from the full inclusion of SK Innovation E&S’s business results following a recent merger. Despite a stronger performance in the battery sector, the overall operating loss was influenced by declining oil prices and reduced refining margins.
The company introduced B30 blended marine fuel, which offers an approximate 25% reduction in carbon emissions compared to traditional marine fuel. This product aligns with the shipping industry’s carbon neutrality goals and has been officially recognized by the International Sustainability and Carbon Certification (ISCC EU) for its environmental benefits.
Key Business Updates
- Battery Business: SK Innovation secured a 99.4 GWh supply agreement with Nissan for 1 million mid-sized electric vehicles and a 20 GWh order from U.S.-based EV startup Slate. These agreements are significant for diversifying the customer base and expanding into the North American electric vehicle market. The company expects enhanced operational efficiencies and cost reductions to improve battery production and sales rates in North America.
- Exploration and Production (E&P): SK Earthon, the E&P subsidiary, reported high-quality crude oil at the Vietnam 15-2/17 Block, with current production reaching up to 10,000 barrels per day. Further evaluations are planned for the second half of the year to confirm reserves and initiate full-scale development.
Q1 2025 Performance by Business Segment:
- Refining: Revenue was KRW 11.92 trillion with an operating profit of KRW 36.3 billion. The operating profit declined due to global economic slowdown concerns and lower oil prices.
- Petrochemical: Generated KRW 2.48 trillion in revenue and an operating loss of KRW 114.3 billion, impacted by weak market conditions for paraxylene and olefins.
- Lubricants: Revenue stood at KRW 972.2 billion with an operating profit of KRW 121.4 billion, experiencing decreased margins and lower sales volumes amid economic slowdowns.
- E&P: Achieved KRW 383.1 billion in revenue and an operating profit of KRW 120.4 billion, with slight revenue increases offset by reduced sales from Peru blocks.
- Battery: Reported KRW 1.61 trillion in revenue and an operating loss of KRW 299.3 billion, though showing improvement from the previous quarter due to higher EV production rates.
- Materials: Revenue was KRW 23.8 billion with an operating loss of KRW 54.8 billion, benefiting from increased sales volumes.
- SK Innovation E&S: Recorded KRW 3.75 trillion in revenue and an operating profit of KRW 193.1 billion, driven by higher gas sales from increased winter heating demand.
Q2 2025 Outlook:
SK Innovation anticipates gradual improvements in refining margins supported by seasonal demand. The petrochemical sector may benefit from better aromatics spreads despite potential U.S.-China trade tensions. The lubricants business is expected to sustain stable profitability, and the battery sector forecasts continued sales growth in North America.
CFO Seo Kun-ki stated, “SK Innovation plans to strengthen financial soundness this year by improving the operational rates and sales volumes of its North American battery plants, advancing development in Vietnam’s oil fields, and optimizing operations across its businesses.” Seo continued, “Going forward, SK Innovation will leverage its comprehensive energy portfolio—spanning oil, chemicals, LNG, and power—to enhance its core competitiveness. Through the unified ‘One Innovation’ approach, the company remains committed to securing both profitability and sustainable growth.”
This report highlights SK Innovation’s efforts to optimize operations across various business sectors while navigating current market challenges.
Source: Skinno News
