SK Innovation (096770) Q1 2026 earnings summary

Executive summary

• Q1 2026 saw significant revenue and operating profit growth, driven by higher crude and petroleum product prices, inventory gains, and successful LNG project milestones, including the first LNG cargo from Australia's CB/Barossa Gas Field and selection as operator for Vietnam's Quynh Lap LNG power project.

• The company secured major LNG supply and infrastructure projects in Australia and Vietnam, reinforcing its global LNG value chain and energy security.

• Battery and ESS businesses showed improved sales mix and narrowed losses, with SK On securing over 50% of a government ESS bid and strategic wins in government tenders.

Financial highlights

• Q1 2026 revenue rose to KRW 24.21 trillion, up KRW 4.54 trillion quarter-over-quarter and KRW 3.07 trillion year-over-year.

• Operating profit increased to KRW 2.16 trillion, up KRW 1.87 trillion sequentially and KRW 2.21 trillion year-over-year, mainly from inventory-related gains.

• EBITDA increased to KRW 2.94 trillion, a rise of KRW 1.81 trillion quarter-over-quarter.

• Profit before tax rebounded to KRW 1.39 trillion from a loss of KRW 4.41 trillion in the previous quarter.

• Non-operating loss narrowed to KRW 767.3 billion, with FX and derivative losses partially offset by other income.

• Corporate-wide inventory gain was KRW 1.02 trillion, with SK Energy contributing KRW 776 billion.

Outlook and guidance

• Continued volatility expected in oil prices and refining margins due to Middle East conflict and Strait of Hormuz closure.

• Battery business aims for profitability improvement via cost reduction, portfolio diversification, and Europe sales growth, with ESS expansion targeted in North America.

• ESS long-duration business expected to contribute to profits starting 2027, with further government tender participation planned.

• City gas segment anticipates seasonal slowdown but plans inventory buildup and maintenance for summer demand.