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'We surpassed business targets despite tough conditions' – CEO, SK Energy

22 Jan '09

5 min read

SK Energy, Koreas leading energy provider, today announced 2008 fourth quarter and full year earnings results. The quarterly sales revenue marked KRW 9.87 trillion, a 20.3% increase from the KRW 8.2 trillion reported a year ago. Operating profit for the quarter rose by 44.7% from the previous years KRW 186 billion to KRW 269 billion in 2008 owing to strong performance in the petroleum and lubricants business.

Petroleum business operating profit for the fourth quarter reached KRW 281 billion, a 345.7% increase compared to the same period in 2007. The jump is mainly due to the increased production and export volume from the full operation of the No 2 RFCC and merger with SK Incheon oil. SK Energy's petrochemicals division recorded the sales of KRW 1.95 trillion with operating loss of KRW 148billion as deteriorating global market conditions reduced demand and narrowed spreads leading to lower product prices.

The E&P division's sales and operating profit for the 4th quarter increased by 39.3% and 5.4% year-on-year, to KRW 140 billion and KRW 59 billion respectively, thanks to the additional crude oil production volume from the Vietnam 15-1, Brazil BMC-8, and Peru 56 blocks.

Average daily production in the fourth quarter increased by 10,000 barrels quarter-on-quarter, helping SK Energy to achieve a daily production of 36,000 barrels in the quarter. The lubricants business recorded the fourth quarter sales and operating profit of KRW 494 billion and KRW 81 billion, respectively. The results show a 47.4% and 108.7% year-on-year increase respectively, largely due to the 12% increase in base oil export volume from LBO plant in Indonesia.

Mr. Heon-Cheol Shin, Vice Chairman and CEO of SK Energy, said, “SK Energy was able to surpass its business target despite the volatile market conditions.” He added, “There are still lots of uncertainties in the economic outlook, however, in the year ahead, SK Energy will continue to make strides in developing future growth engines.” SK Energy reported quarterly net profit loss of KRW 67 billion largely as non-operating profit decreased mainly due to F/X losses and decrease in equity-method earnings following the split-off into a holding company structure and merger with SK Incheon Oil.

Due to such factors as the continued unfavorable business environment, management's priority to improve financial structure and the need to secure resources for future growth in 2009, the Company has decided to maintain the 2008 cash dividend at the same level as 2007.

FULL YEAR 2008 RESULTS:
Results for SK Energy's fiscal year ending December 31, 2008 included an operating profit of KRW 1.93 trillion on sales of KRW 45.75 trillion. Total sales recorded a 64.6% year-on-year increase, owing to the increase in crude oil and product prices, additional petroleum sales volume from the new No.2 RFCC facility, and increased production volume in the E&P business. On the operatingside, the Company's profit increased by 30.7% year-on-year, due to increased petroleum profits and higher E&P earnings. However, the Company's net profit decreased compared to the previous year.

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