SK Innovation posted record operating profit in the third quarter, fueled by soaring refining margins amid Middle East tensions and an unprecedented earnings surge at its lubricants business.
The South Korean energy giant said Thursday its quarterly operating profit jumped 532.5 percent on-year to 3.07 trillion won ($2.3 billion) in the July-September period, while revenue climbed 39.7 percent to 28.77 trillion won.
The standout performer was lubricants subsidiary SK Enmove, which generated a record 1.09 trillion won in quarterly operating profit, surpassing its previous full-year record of 1.07 trillion won set in 2022. Global base oil supply disruptions helped boost margins.
Refining affiliate SK Energy posted operating profit of 1.03 trillion won, up 117.7 percent from a year earlier, benefiting from stronger refining margins as geopolitical tensions in the Middle East disrupted oil markets.
SK Innovation E&S also delivered a sharp earnings rebound, with operating profit surging 631.3 percent to 774.4 billion won. The improvement was driven by seasonal electricity demand, competitively priced LNG secured through long-term contracts and initial production from Australia's Barossa gas field.
Petrochemical subsidiary SK geo centric returned to profit with 86.7 billion won in operating earnings, supported by wider paraxylene and benzene spreads.
Oil exploration unit SK Earthon reported operating profit of 31.4 billion won, alongside the start of production at the Golden Camel oil field in Vietnam's Block 15-1/05.
Meanwhile, battery subsidiary SK On posted operating profit of 80.5 billion won on revenue of 1.53 trillion won, as the company continued restructuring its operations amid uneven electric vehicle demand.
SK On said underlying profitability was improving after excluding one-off factors, supported by fixed-cost reductions, portfolio restructuring and efforts to improve asset efficiency.
With EV demand remaining uncertain, the battery maker is accelerating its shift toward energy storage systems, particularly in North America, where AI data centers and power grid upgrades are driving demand.
Rather than investing heavily in new factories, SK On plans to convert existing EV battery production lines in South Korea and North America to manufacture ESS batteries, aiming to expand capacity while limiting capital expenditure.
The company also expects to benefit from US restrictions on battery supply chains involving foreign entities of concern, which could strengthen demand for non-Chinese suppliers.
"We are seeing increased inquiries from US system integrators on battery product specifications, pricing and long-term supply," said Kim Young-kwang, SK On's head of financial management, during an earnings conference call.
SK On is also working with SK Telecom to develop energy storage solutions tailored to AI data centers.
The collaboration focuses on analyzing data center electricity consumption patterns and developing integrated ESS products that can help manage power demand and improve grid stability.
The initiative reflects SK On's efforts to diversify beyond EV batteries and capture new growth opportunities in AI infrastructure.
hyejin2@heraldcorp.com
