South Korea's SK Innovation confirms refining margins to rise

SEOUL, Aug 4 - SK Innovation Co Ltd, owner of South Korea's top refiner SK Energy, confirmed its expected refining margins to gradually improve in the second half as COVID - 19 retreats and demand rebounded, and said plans to make its battery business a stand-alone unit. The company posted an operating profit of 506 billion won in the April-June quarter, compared with an operating loss of 456 billion won in the same period a year earlier. SK Innovation says it plans to separate its battery business and oil production facilities into individual units by October. The new entities will remain 100% owned by SK Innovation. These split-offs are meant to preemptively strengthen fundamental competitiveness by building a management system suitable for the characteristics of each business, said Kim Jong Hoon, SK Innovation's board chairman in a statement. In July, SK Innovation said it considered separating and listing its growing battery business unit, which supplies electric car batteries to Volkswagen and Ford Motor Co among others, to better secure resources as the global EV market continues to grow. The unit, which is seeking to turn profitable next year, accounted for nearly 6% of the company's revenue in the second quarter. SK Innovation's battery business rival LG Chem Ltd, which was placed on publicly by LG Energy Solution Ltd from where it was acquired last year, plans to go public this year. LGES counts Hyundai Motor Company among its customers: Tesla Inc General Motors Co., LGES CARTON Motor Co. Revenue rose by 56% to 11.1 trillion won from one year earlier. That compares the predictions of analysts in Refinitiv SmartEstimate at 11 trillion won by analysts. SK Innovation, which has a total refining capacity of 1.115 million barrels per day at plants in Ulsan and Incheon, said it operated facilities at 66% of capacity on average in the quarter, down from 77% during the same period a year earlier, according to the company statement. Last week, South Korean's third-largest refiner S-Oil Corp said that refining margins are expected to rebound in the third quarter, driven by an increase in global economic activities and mobility.