SK Innovation (096770) Q2 2026 earnings summary

Executive summary

• Q2 2026 saw strong revenue growth across all energy businesses, with notable performance in lubricants, batteries, and premium base oils, 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 consolidated revenue of ₩53.4 trillion and operating income of ₩5.65 trillion for H1 2026, a significant turnaround from prior year losses.

• Completed merger with SK E&S in November 2024, expanding the energy value chain and future growth drivers.

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, with H1 2026 revenue at ₩53.4 trillion.

• Operating profit increased to KRW 3,487.3 billion in Q2, up KRW 1,325.1 billion quarter-over-quarter and KRW 3,888.9 billion year-over-year; H1 2026 operating income was ₩5.65 trillion.

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

• Net income attributable to controlling interests was ₩1.18 trillion, reversing a net loss of ₩3.35 trillion in H1 2025.

• EBITDA reached KRW 4,252.9 billion in Q2; net debt increased by KRW 1.1 trillion to KRW 23.7 trillion.

Outlook and guidance

• Crude prices and refining margins expected to remain volatile due to geopolitical tensions and supply disruptions, with oil prices and refining margins expected to ease in Q3 2026.

• SK On anticipates further profitability improvements in H2 2026, leveraging cost reductions and operational efficiency.

• SK E&S expects higher power demand and oil prices in Q3, with LNG price volatility as a key variable.

• Focus on strengthening electrification and total energy solutions post-merger, with continued investment in battery/ESS, LNG, and renewables.