SK Innovation confident of setting new record in Q2
[THE INVESTOR] SK Innovation, South Korea’s top oil refiner, said on June 19 it is expected to reach another record operating profit in the second quarter with its oil refining business thriving and market prospects building on its new businesses.
The company posted record-high operating profit of 1 trillion won ($883 million) this year, a 19 percent increase from a year before. Market expectations are high, with some analysts predicting the oil refiner would see around 3.4 trillion won of operating profits in the April-June period.
SK Innovation is the nation’s largest oil refiner, capable of refining 1.15 million barrels of oil a day. The segment is expected to bring more profit due to its solid demand base and that it produces a relatively high margin with oil prices in a stable price range, the company said.
The size of profits in the non-oil refining business is also expected to grow upon its investment plan announced last month.
Kim Jun, SK Innovation CEO, said last month the company would reshape its business portfolio and nurture new revenue sources in the chemical and battery sectors.
The company plans to spend 10 trillion won in the battery and other non-refining sectors by 2020. The investment will help the company solidify its market position as a leader in energy and chemical segments in the world.
Since 2011, the company spent 4 trillion won on the chemicals and lubricants sectors by upgrading its petrochemical plant in Incheon and Ulsan, and forging a joint venture with Spanish oil company Repsol to build an oil base lubricant plant said to be the largest in Europe. Through the investment, SK Innovation became the world’s sixth-largest paraxylene producer and the first in the oil lubricant sector, the company said, adding that it also helped diversify its business portfolio from an oil refining company to an energy and chemical firm.
The company’s efforts to improve its financial structure have also received market recognition in and out of the country.
It significantly downsized its debt from 9 trillion won at the end of 2014 to 3 trillion won as of late last year, securing solid financial structure enough to resist market flexibility.
Standard and Poor’s upgraded SK Innovation’s credit rating from BBB to BBB+ with a stable outlook in January, while Moody’s gave it a Baa1 with stable outlook.
The credit rating given for SK Innovation is the highest among local refiners and on par with global companies such as Samsung Electronics and Hyundai Motor Group, the company added.
SK Innovation also plans to have more of a shareholder-friendly policy.
The company set June 30 as its record date for interim dividends, meaning holders of shares on that date will be eligible for the payment.
The company’s board of directors still has to decide on whether a payment will be made, based on its second-quarter performance. The date for its board meeting has not been decided. If it goes ahead, it will be SK Innovation’s first-ever interim dividends, the company said.
By Cho Chung-un/The Korea Herald (email@example.com)