SK Innovation returns to profit in Q1
Company suffers some loss from LG settlement payment
SK Innovation said on Thursday that it recorded sales of 9.23 trillion won and operating income of 502.5 billion won in the first quarter of 2021.
It is return to profitability in operating income from a year ago.
The company said it benefited from the recovery of oil prices following their decline last year due the COVID-19 pandemic.
However, the settlement payment to LG Energy Solution over the pair’s legal battle over electric car batteries cost SK Innovation 527.6 billion won profits before taxes.
SK Innovation needs to pay a total of 1 trillion won in damages to LG Energy Solution by 2022. It is planning to pay in two installments of around 500 billion won.
Operating income of SK Innovation’s oil business saw higher margin due to problems in supply caused by the blistering cold weathers in the US earlier this year.
The increase in oil price and profit from its stocks helped the unit post 416.1 billion won in operating income.
Its chemical business also saw improved spread in the quarter and recorded profits. The lubricant business, however, saw shipment drop due to the cold weathers in the US but increase in oil prices still helped the unit record a profit.
The battery business recorded 526.3 billion won in sales, an increase of 80% year-on-year. The business recorded operating loss of 176.7 billion won, however, due to initial cost of starting its overseas factory. Its separator business also marked a slight profit from increased productivity and reduced cost.
SK Innovation is planning to secure battery production capacity of 85GWh a year by 2023, and 125GWh and 2025. The company has factories in South Korea, Hungary and China.
It is also planning to expand its separator production from 1.36 billion meter-square by end of this year and to 2.73 billion meter-square by 2024.