SK Innovation Co., the energy and chemical affiliate of South Korean conglomerate SK Group, said Friday it swung to the black in the fourth quarter from a year earlier on strong petrochemical demand and electric vehicle (EV) battery sales.
Net income came to 163.4 billion won ($135.7 million) in the October-December period, a turnaround from a loss of 232.6 billion won a year earlier, the company said in a regulatory filing.
It continued to post an operating loss of 47.3 billion won but far less than the on-year corresponding figure of 198.7 billion won, due largely to one-off costs, the company said. Sales rose 76 percent to 13.72 trillion won.
The upbeat performance came as its core petrochemical and EV battery businesses fared well on the back of solid global demand despite the prolonged pandemic, the company said in a press release.
By sector, the company's petroleum division posted 8.59 trillion won in quarterly sales, with the chemical business logging 2.57 trillion won. The lubricant oil sector booked 1.04 trillion won in sales.
Its battery business registered 1.06 trillion won in sales, with that of the materials division coming in at 71.2 billion won.
SK Innnovation said it expects 6 trillion won in annual sales from the battery business this year, as the sales volume will likely increase significantly once its U.S. and Hungary plants start operating. It projected the battery sector will achieve the break-even point by the fourth quarter of this year.
With the new plants, its global production capacity will rise to 77 gigawatt hours (GWh), from the current 40 GWh, the company said. It aims to further boost the capacity to 220 GWh by 2025.
SK Innovation said it will review its no-dividend policy for last year following a rejection by the board, suggesting it will shift to paying dividends. No dividends were paid to shareholders in 2020.
The company is not considering a public listing of its newly established battery unit, SK On Co., at this stage.
"We'd need to continue to monitor the growth and the overall profitability, and we have no intention to hurry this process," a company official said during the conference call.
The capital expenditure for this year is expected to be between 6 and 6.5 trillion won, with about 4 trillion won to be spent on its battery business and 1 trillion won on the battery separator sector, SK Innovation said.
It plans to raise its capital spending through more joint ventures or partnering up with strategic or financial investors, rather than increasing debts.
On the annual basis, SK Innovation also turned to black in 2021, driven by its battery business that posted a nearly twofold on-year growth in sales of 3.04 trillion won on strong overseas demand.
The cumulative net income for the year reached 509.5 billion won, from a loss of 2.14 trillion won a year earlier.
The 2021 operating income came to 1.76 trillion won, compared with a loss of 2.42 trillion won from the previous year, the company said. Annual sales rose 35.6 percent to 46.84 trillion won. (Yonhap)