|SK INNOVATION REPORTS 2nd QUARTER 2011 EARNINGS RESULTS:Jan. 06, 2012|
|no | 389||count | 3303||attachment ||
For Immediate Release
SK INNOVATION REPORTS 2nd QUARTER 2011 EARNINGS RESULTS:
● 2nd quarter 2011 revenue increased by 20% year-over-year(YoY), to KRW 17,177.9 billion showing similar performance from the previous quarter
● Operating profit and net income for the quarter decreased by 32% and 29% YoY, to KRW 451.3 billion and 262.8 billion, respectively
* Please note that earnings results for 2Q 2011 are subject to further verification by independent auditors.
SEOUL, July 29, 2011 – SK Innovation [KS 096770], Korea’s leading energy provider, today announced 2nd quarter earnings results for 2011. 2nd quarter revenue increased by 20% year-over-year(YoY) to stand at KRW 17,177.9 billion while operating profit and net income decreased by 32% and 29% to KRW 451.3 billion and KRW 262.8 billion respectively from the same period in 2010.
The company’s revenue growth resulted from the rising oil price and adaption of new accounting standards, the K-IFRS (International Financial Reporting Standards).
SK Innovation’s quarterly operating profit decreased by 32% YoY to KRW 451.3 billion, mainly due to the domestic price-cut for gasoline and diesel and weakened market conditions for chemical products.
The quarter’s net income decreased by 29% YoY to KRW 262.8 billion, mainly due to the weak performance of SK Energy, a subsidiary running petroleum business, and net non-operating loss.
The company’s financial structure remained stable in the 2nd quarter of 2011. The debt-to-equity ratio decreased by 8% points YoY to 147%, and the net debt-to-equity ratio decreased by 8% points YoY to 59% as of the end of June 2011.
Mr. Jin Seok Cha, CFO of SK Innovation, said, “SK Innovation showed weak performance during the 2nd quarter because of domestic price-cut for gasoline and diesel and weakened market conditions for chemical products, while E&P business marked solid performance and lubricants business achieved record-high performance. The company, however, cautiously forecast the improvement in the business’s performance in the 3rd quarter, because solid petroleum product demand may continue throughout next quarter and one-off expense such as price-cut was gone.” He added, “By managing four companies independently, we look forward to having stronger competitiveness and growth in the changing business environment.”
BUSINESS DIVISION PERFORMANCE
SK Innovation (Exploration & Production business and others)
· SK Innovation (E&P business and others) marked revenue of KRW 305.8 billion with operating profit of KRW 94.3 billion for the 2nd quarter.
· SK Innovation’s E&P business showed favorable performance compared to the same period of year 2010, marked revenue of KRW 245.2 billion with operating profit of KRW 131.4 due to the higher oil price and increasing oil production. However, its operating profit slightly decreased QoQ from KRW 160.1 billion due to the delaying shipments from Peru caused by bad weather conditions and naturally decreased output in Vietnam.
· The average daily production in the quarter was approximately 65,000 barrels of oil equivalent per day (BoE/D) which is a rise of 1,500 BoE/D from previous quarter resulting from a stable operation of key blocks.
· SK Innovation recently received Brazil government’s final confirmation in its disposal of ‘SK do Brazil’ to Denmark’s ‘Maersk Oil’ and completed the deal closing on July 21st. Based on the liquidity secured from the sale of SK do Brazil, the E&P business aims to strengthen its business portfolio and continue to seek operatorship.
SK Energy (Petroleum business)
· The 2nd quarter revenue of SK Energy (petroleum business) recorded KRW 12,012.9 billion, with operating profit of KRW 97.1 billion.
· SK Energy’s operating profit’s sharp decrease from KRW 715.4 billion QoQ amid the favorable market conditions during this quarter was due to reduced domestic prices in gasoline and diesel, and one-off costs including a Korea Fair Trade Commission’s fine.
· SK Energy forecasts that operating profit for the 3rd quarter will increase due to improving refining margin from stable demand within the Asian region as well as one-off items reflected in the 2nd quarter profit.
SK Global Chemical (Petrochemical business)
· SK Global Chemical (petrochemical business) recorded revenue of KRW 4,186.3 billion with operating profit of KRW 129.4 billion for the 2nd quarter.
· The slightly decreased QoQ operating profit for this quarter was attributable to slowing demand by China’s austerity policy and power limit coupled with easing supply conditions on new capacity additions and rising operation rate of facilities damaged by Japanese earthquake.
· Although Chinese government’s austerity policy may still cause concern in the latter half of this year, SK Global Chemical expects favorable turnaround in the petrochemical market due to imminent peak season for chemical products as well as restocking demands expected from China.
SK Lubricants (Lubricants business)
· During the 2nd quarter, SK Lubricants posted quarterly revenue of KRW 672.9 billion and operating profits of KRW 130.5 billion. The record-high performance of SK Lubricants was mainly due to the rise in both base oil spreads and demands for base oil from U.S. and Europe markets.
· Base oil spreads and sales were maximized this quarter due to U.S.’s rising demands for premium base oil. High base oil prices are expected to continue due to global demands for high efficiency, environmentally friendly engine oil coupled with limited supply capacity.
· SK Lubricants is accelerating its global marketing efforts for continued growth. Notably, SK Lubricants is building a lubricants plant with annual production capacity of 80,000 tons in Tianjin, China with a goal of completing construction at the end of this year. SK Lubricants is also planning to build, together with Spain’s Repsol oil company, a No.4 LBO (Lube base oil) plant with annual production capacity of 650,000 tons. This is to secure a Group 3(III) base oil production site within Europe so as to ensure its exclusive position in the base oil market.
Note1: SK Innovation’s lubricant business has been spun off as of October 1, 2009. The business’s sales revenue and operating profits are excluded in 2010.
Note2: The results of 2010 and this quarter are based on different accounting standards. 2010 results are based on K-GAAP, while those of 1st and this quarter are based on K-IFRS.
About SK Innovation
Founded in 1962 as Korea’s first oil refiner, SK Innovation, formerly SK Energy, is one of the world’s leading energy and petrochemical companies. SK Innovation employs nearly 5,600 people and posted KRW 43.9 trillion in sales in 2010.
In January 2011, the former SK Energy transformed into SK Innovation with its three subsidiaries of SK Energy, SK Global Chemical and SK Lubricants. The independent management structure will enable each company to respond rapidly to the changes in the business environment and expedite growth through fast decision-making process. Each company will execute its own business strategy, consistent with its vision and optimized for its unique environment.
Based on its R&D capabilities, SK Innovation will emerge as a leading technology company focusing on lithium-ion batteries for electric vehicles, I/E(information electronic) materials, and E&P(exploration & development) business. SK Energy will evolve into a major trading company as it strengthens its position as the largest oil refiner and marketer in Korea. SK Global Chemical will become a leading chemical company in Asia by entering the burgeoning Chinese market. SK Lubricants will continue to grow in the base oil market, as well as the lubricant market through affiliation with major European, North American and Asian companies.
Contact at SK Innovation
Public Relations Team
Email. thchung @sk.com
|SK INNOVATION REPORTS 3rd QUARTER 2011 EARNINGS RESULTS|
|SK INNOVATION REPORTS 1st QUARTER 2011 EARNINGS RESULTS|