South Korea's SK Innovation plans to split business into separate units

515
2

SEOUL, Aug 4 - SK Innovation Co Ltd, owner of South Korea's top refiner SK Energy, said on Wednesday its expects refining margins to gradually improve in the second half as COVID - 19 retreats and demand rebounded and confirmed plans to make its battery business a stand-alone unit.

The company tallied an operating profit of 506 billion won in the April-June quarter, compared to an operating loss of 456 billion won in the same period a year earlier.

SK Innovation said it plans to separate its battery business and oil production business into individual units by October 2016. The new entities will continue to be wholly 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, Kim Jong Hoon, SK Innovation Board Chairman said in a statement.

In July, SK Innovation said it was considering separating its growing battery business unit, which provides an electric car battery to Volkswagen and Ford Motor Co among others, to better secure resources as the electric vehicle market continues to grow.

The unit that is aiming to turn profitable next year at the end of the season, accounted for nearly 6% of the company's revenue in the second quarter.

SK Innovation's battery business rival LG Energy Solution Ltd, which was carved out from LG Chem Ltd of last year, plans to go public this year.

LGES counts Hyundai Motor Co, Tesla Inc as its customers.

Revenue rose 56% from one year earlier to 11.1 trillion won. That compares with the forecast for 11 trillion won by analysts in the Refinitiv SmartEstimate.

SK Innovation, which has a total refining capacity of 1.115 million barrels the day at plants in Ulsan and Incheon, said it operated it 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, S-Oil Corp said that refining margins are expected to rebound in the third quarter following high demand for transport fuels because of an increase in global economic activity and mobility.