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• Total Sales: KRW17,657 billion, a decline of KRW1,142.2 billion quarter on quarter.

• Operating Profit: Loss of KRW423.3 billion, a decrease of KRW377.5 billion QoQ.

• Non-Operating Loss: KRW306.3 billion, with FX related gains of KRW118.7 billion and product derivative gains of KRW73.9 billion.

• Total Assets: KRW85,173.9 billion as of the end of the third quarter.

• Liabilities: KRW53,176 billion, with borrowings increased by KRW3.3 trillion.

• Debt Equity Ratio: 166%, decreased by 3 percentage points from the end of 2023.

• Petroleum Business Operating Profit: Loss of KRW616.6 billion, a decrease of KRW760.8 billion QoQ.

• Petrochemical Business Operating Profit: Loss of KRW14.4 billion, a decrease of KRW113.8 billion QoQ.

• Lubricant Business Operating Profit: KRW174.4 billion, an increase of KRW22 billion QoQ.

• E&P Business Operating Profit: KRW131.1 billion, a decrease of KRW11 billion QoQ.

• Battery Business Revenue: KRW1,430.8 billion, a decrease of KRW122.7 billion QoQ.

• Battery Business Operating Profit: Turnaround of KRW24 billion in quarterly profit.

• AMPC: KRW60.8 billion, decreased due to recalls and temporary production halts.

• Warning! GuruFocus has detected 6 Warning Signs with XKRX:096770.

Release Date: November 04, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• SK Innovation Co Ltd (XKRX:096770) successfully completed its merger with SK E&S, which is expected to strengthen its energy portfolio and enhance competitiveness in the global market.

• The company announced corporate value enhancement plans targeting a 10% ROE and a 35% total shareholder return by 2027.

• Despite internal and external uncertainties, SK Innovation reached break-even on an operating profit basis due to improved profitability and reconciliation activities with customers.

• The battery business showed improvement in profitability, with a turnaround in quarterly profit driven by cost structure improvements and client payments.

• SK Innovation plans to leverage synergies from its integrated LNG value chain to maintain competitive fuel supply and generate stable profits.

Negative Points

• The company's total sales declined by KRW1,142.2 billion quarter-on-quarter due to weaker sales from the refinery business driven by lower oil prices.

• Operating profit fell by KRW377.5 billion quarter-on-quarter, resulting in a loss of KRW423.3 billion, primarily due to inventory-related losses and weaker petrochemical spreads.

• The petroleum business faced a challenging macroeconomic backdrop, with decreased refining margins and inventory-related losses leading to a significant drop in operating profit.

• The battery business experienced a decline in revenue due to a downward trend in battery ASP guided by metal price declines.

• The materials business saw its losses widen due to a decline in sales volume to major customers, although gradual improvement is expected in the fourth quarter.