SK Innovation (096770) Q4 2025 earnings summary

Executive summary

• Q4 2025 revenue declined to KRW 19,671.3 billion, down KRW 747.5 billion quarter-over-quarter, mainly due to weaker crude prices and lower battery sales after U.S. EV subsidy removal.

• Operating profit dropped to KRW 294.7 billion, down KRW 291 billion quarter-over-quarter, with non-operating losses widening to KRW 4,657.3 billion, primarily from battery business impairments.

• Strengthened battery business fundamentals through China and US JV restructuring and portfolio rebalancing for financial stability.

• Achieved first LNG shipment from Australia CB Gas Field, enhancing LNG supply competitiveness.

• Strategic focus is on transitioning to a total energy company, expanding LNG value chain, electrification, and investments in power generation, AI data center solutions, and global LNG sourcing.

Financial highlights

• Q4 operating profit: KRW 294.7 billion, down KRW 291 billion quarter-over-quarter; EBITDA for the quarter was KRW 1,123.3 billion.

• Non-operating losses: KRW 4,657.3 billion, including KRW 4.2 trillion in battery asset impairments.

• Total assets at end-2025: KRW 105.6 trillion, down KRW 4.9 trillion year-over-year.

• Net debt at year-end 2025 was KRW 22.5 trillion, down from KRW 28.5 trillion at 2024 year-end, reduced by KRW 6,015.6 billion year-over-year through asset reclassification and divestment.

• FY 2025 revenue reached KRW 80.3 trillion.

Outlook and guidance

• 2026 focus on strengthening financial fundamentals, sustainable growth, electrification, and global expansion of LNG and power businesses.

• CapEx for 2026 set at KRW 3.5 trillion, with KRW 1.3 trillion for batteries and KRW 0.9 trillion for E&S.

• No dividend for 2025 due to subdued earnings and high CapEx; dividend policy to be reassessed in 2026.

• Battery business expects continued uncertainty in 2026 but aims for cost optimization, ESS order growth, and portfolio reshaping.

• Crack spreads in refining expected to remain strong; PX spread in petrochemicals to strengthen, while polymer spreads may weaken.