SK Innovation (096770) Q4 2024 earnings summary

Executive summary

• Completed merger with SK E&S (also referred to as SKI E & S) in November 2024, consolidating the energy value chain and aiming for enhanced profitability through business synergies.

• Confirmed oil discovery in Vietnam Block 15-2/17, with ongoing exploration and development projects expected to drive future growth.

• Board approved a dividend of KRW 2,001 per share for FY2024, pending shareholder approval, with a commitment to increase shareholder returns post-2027.

Financial highlights

• Q4 2024 revenue rose KRW 1,748.7 billion QoQ to KRW 19,405.7 billion, driven by the SK E&S merger; full-year 2024 revenue reached KRW 74.7 trillion.

• Operating profit turned positive at KRW 159.9 billion in Q4 2024, a KRW 583.2 billion improvement from the previous quarter.

• Non-operating income declined KRW 994.3 billion QoQ to a loss of KRW 1,300.6 billion, mainly due to FX losses and other expenses.

• EBITDA for Q4 2024 was KRW 873.2 billion, up KRW 713.6 billion sequentially.

• Net loss before tax widened to KRW -1,140.7 billion in Q4 2024, mainly due to non-operating losses.

Outlook and guidance

• 2025 business environment expected to remain uncertain; focus on synergy and global competitiveness.

• Oil prices projected in the high $70s until March 2025; refining margins expected flat or slightly weaker in Q1.

• Battery business expects double-digit sales growth and improved profitability in 2025, driven by North American market growth and new plant ramp-ups.

• Lubricants segment expects stable profitability in 2025 despite new capacity additions, supported by strong demand.

• CapEx for 2025 planned at KRW 6 trillion, with a decline expected after major JV completions.