SK Innovation (096770) Q2 2026 earnings summary

Executive summary

• Q2 2026 saw strong revenue growth across all energy businesses, with notable performance in lubricants, premium base oils, and batteries, despite ongoing geopolitical risks and supply chain uncertainties.

• Major restructuring included the unwinding of the BlueOval SK JV with Ford, resulting in SK On fully owning the Tennessee factory and Ford the Kentucky factory, leading to significant annual cost savings.

• An equity swap with EVE Energy will give SK On 100% of SKOJ and divest EUE, enhancing business flexibility and profitability.

• Achieved strong global sales in premium base oils, reinforcing supply competitiveness and stable profits amid supply chain uncertainty.

Financial highlights

• Q2 revenue rose to KRW 29,157.2 billion, up KRW 4,866.2 billion quarter-over-quarter and KRW 9,704.0 billion year-over-year, driven by all energy segments.

• Operating profit increased by KRW 1,325.1 billion to KRW 3,487.3 billion, mainly from lubricants and battery businesses, and up KRW 3,888.9 billion year-over-year.

• EBITDA reached KRW 4,252.9 billion, up KRW 1,317.6 billion quarter-over-quarter.

• Non-operating losses were significant due to PRS derivative valuation losses (KRW 1.2 trillion) and SKIET impairment losses (KRW 1.4 trillion).

• Inventory-related gains company-wide were KRW 1,194.9 billion, with SK Energy contributing KRW 562.3 billion.

Outlook and guidance

• Oil prices and refining margins expected to remain volatile due to geopolitical tensions and supply disruptions, with some easing anticipated in Q3 2026 from higher OPEC+ output and Asian operating rates.

• SK On targets further profitability improvements in H2 2026 through cost reductions, operational efficiency, and expanding EV and ESS orders.

• Power generation segment expects higher operating profit on maximized output during peak electricity demand.

• SK E&S expects improved performance in Q3 as power demand peaks and Barossa gas field enters commercial operation.