SK Innovation is gradually increasing scale of its battery business hoping that it will pay off in the coming years.
SK Innovation, the South Korean conglomerate mostly focused on its Refining, Petrochem and Lubricants divisions - but also a manufacturer of lithium-ion EV batteries and battery materials, announced its third-quarter financial results.
The company improved its position compared to the previous quarter, but the situation is still difficult compared to a year ago.
- sales: 8,419.2 billion KRW ($7.42 billion), down 32% year-over-year
- operating profits: -29.0 billion KRW (-$25.6 million)
- pre-tax income: 12.2 billion KRW ($10.8 million)
The category named "Other", which includes electric vehicle batteries and battery materials is only a small part of the entire company, but it's expanding (from 6.2% of revenues in Q2 to 7.0% in Q3). So far it's also not profitable yet.
- sales: 589.4 billion KRW ($520 million)
- operating profits: -102.8 billion KRW (-$90.7 million)
- pre-tax income: -79.2 billion KRW (-$69.9 million)
The EV battery business is probably the fastest-growing part of SK Innovation. Revenues in Q3 increased by 155% year-over-year to 486.0 billion KRW ($428.6 million).
EV batteries are still not yet profitable for SK Innovation, but thanks to the growing scale, operating losses are decreasing - to 98.9 billion KRW ($87.2 million) in Q3.
With all the new plants listed on the slide below, we guess that it's just a matter of time to make profits:
An important thing is that the SK Innovation is also producing EV battery materials and this part is profitable for quite some time: operating profits decreased in Q3 though to 29.9 billion KRW ($26.4 million).
According to the latest news, SK Innovation will significantly expand its battery material production in the coming years, both for own needs and for other manufacturers.