SEOUL, July 28 (Reuters) – SK Innovation Co Ltd (096770.KS), owner of South Korea’s top refiner SK Energy, said on Friday it expects refining margins to gradually improve in the second half thanks to favourable market conditions backed by solid travel season demand.
The company posted a worse-than-expected operating loss of 107 billion won ($83.41 million) for the second quarter ended June, versus a 2.3 trillion won profit a year earlier.
That compared with an average analyst forecast of a 25 billion won loss compiled by Refinitiv SmartEstimate.
Analysts said SK Innovation’s refining business had been hit by declines in the refining margin and oil prices, while its battery business had continued generating losses due to costs related to its newly set up U.S. battery plants.
SK Innovation’s battery unit SK On, which was split off last year, accounted for about 20% of the company’s revenue in the second quarter.
SK Innovation said it expects its battery unit’s profitability to improve in the second half thanks to the U.S. tax subsidies from the Inflation Reduction Act.
SK On’s cross-town rival LG Energy Solution (373220.KS) on Thursday warned of sluggish electric vehicle (EV) demand in Europe in the second half of this year due to economic uncertainties, such as high inflation.
($1 = 1,282.8300 won)
Reporting by Heekyong Yang and Joyce Lee; Editing by Jamie Freed
Our Standards: The Thomson Reuters Trust Principles.
SK Innovation expects refining margins to gradually improve in H2
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