Solid performance of SK Energy's petrochemical biz

23 Jul '10

3 min read

SK Energy, Korea's leading energy provider, announced 2nd quarter earnings results for 2010. 2nd quarter revenue and operating profit increased by 27% and 227% year-over-year(YoY) to stand at KRW 11,303.6 billion and KRW 580.8 billion respectively, while net income increased by 21% to KRW 362.1 billion from the same period 2009.

• 2nd quarter 2010 revenue increased 27% year-over-year(YoY), to KRW 11,303.6 billion, mainly driven by higher product prices from rise in crude oil prices
• Operating profit for the quarter increased 227% YoY, to KRW 580.8 billion, while net income increased by 21% YoY, to KRW 362.1 billion, in the same period
• 1st half revenue and operating profit increased by 26% and 14% to KRW 21,504.7 billion and KRW 938.6 billion, respectively

SK Energy's revenue for the 2nd quarter increased 27% YoY owing to higher product prices from rise in crude oil prices and higher operating rate from the favorable performance of its petroleum business.

SK Energy's quarterly operating profit increased significantly by 227% YoY to KRW 580.8 billion, also driven by the petroleum business's improved performance from significant increase in the diesel cracking margin and rising exchange rate as well as robust performance of its exploration and production (E&P) business.

The quarter's net income increased by 21% YoY to KRW 362.1 billion, mainly led by higher operating profit and favorable equity method earnings from the company's subsidiaries, despite the net foreign exchange loss on the non-operating side.

Mr. Joon-Sung Choi, Head of Treasurer and Investor Relations at SK Energy, said, “SK Energy's aggressive efforts to improve profitability and its export strategy, centered on premium light distillate petroleum products, led favorable petroleum business performance.” He added, “In the second half, we will continue to strengthen competitiveness of our existing businesses, and expand our influence in future growth engines such as rechargeable batteries for electric vehicles and materials for information technology and electronics.”

Petrochemical

• SK Energy's petrochemical business marked revenue of KRW 3,207.7 billion, 26% YoY and 1% QoQ increase, with operating profit of KRW 149.5 billion, 42% YoY and 2% QoQ decrease.
• The business continued to show solid performance, following that of previous quarter, largely due to sustained olefin spreads, including ethylene and butadiene, despite deteriorating market conditions.
• As product prices and spread show a downward trend since June, the company's petrochemical business forecasts weak 2nd half market conditions, due to over-supply caused by capacity additions in China and Middle East.

Founded in 1962 as Korea's first oil refiner, SK energy is one of the world's leading energy and petrochemical companies with nearly 5,500 employees, KRW 35.82 trillion in sales, overseas branch offices and subsidiaries in 19 countries as of the end of year 2009. The company is strategically positioned as Korea's largest and Asia's fourth largest refiner with a refining capacity of 1.12 million barrels per day.

SK Energy Co LTD

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