Published : Oct. 31, 2019 - 11:42
SK Innovation Co., South Korea's top refiner, said Thursday that its third-quarter net profit tumbled 62 percent from a year earlier on inventory losses.
Net profit stood at 174.2 billion won ($149 million) on a consolidated basis in the July-September period, compared with 459.4 billion won a year earlier, the company said in a regulatory filing.
(SK Innovation)
Operating income plunged 60.5 percent on-year to reach 330 billion won in the third quarter, with sales falling 17.3 percent on-year to 12.3 trillion won over the cited period.
SK Innovation said fluctuating international oil prices hit by rising global economic uncertainties like the US-China trade dispute caused inventory losses in its mainstay refining business.
International oil prices in the third quarter dropped roughly $10 per barrel compared with a year earlier.
SK Innovation's refining business only posted 65.9 billion won of operating profit in the third quarter, compared with a profit of 408.4 billion won a year ago.
The company said its petrochemical business logged an operating profit of 193.6 billion won in the third quarter, down 44 percent from a year earlier, while its lubricant unit's operating income dropped 29 percent on-year to 93.6 billion won during the three-month period.
SK Innovation's battery business suffered an operating loss of 42.7 billion won in the third quarter. SK Innovation said it suffered 47 billion won in currency losses in the third quarter due to the Korean won's weakness against the US dollar. The local currency surpassed the 1,200-won threshold against the greenback during the third quarter, burdening the refiner when purchasing crude or other commodities from overseas.
The company said its earnings in the fourth quarter are expected to improve on higher refining margins and increasing demand for low-sulfur fuel oils ahead of tightened international regulations.
The International Maritime Organization will lower the sulfur cap on marine fuels from 3.5 percent to 0.5 percent on Jan. 1, 2020.
SK Innovation said in a conference call that its vacuum residue desulfurization facility in Ulsan, which can produce low-sulfur fuels, could begin commercial operation as early as March 2020, adding that the company expects to see around 200 billion won in profit a year by operating that system.
Construction of its electric vehicle battery plants in China and Hungary, both with a production capacity of 7.5-gigawatt hour, are in the final phase, according to SK Innovation, with commercial operations set for early next year.
Shares in SK Innovation rose 0.63 percent to 160,000 won on the Seoul bourse, outperforming the broader KOSPI's 0.15 percent increase. The earnings results were released before the market closed. (Yonhap)