SK Innovation reports mixed results in Q4, expects better 2024

South Korea’s SK Innovation reported fourth quarter 2023 results on February 6th with varied segment-level profitability changes. Overall, the company anticipates improved market dynamics this year across oil refining, chemicals and lubricants.

In the fourth quarter of 2023, SK’s oil refining unit swung to a loss as margins weakened and oil price declines caused inventory write downs. Petrochemical profits decreased on lower product spreads and volumes amid maintenance.

The lubricants business saw steady demand but also recorded lower earnings on oil-related inventory impacts. Exploration and production profits rose with expanded China oil field output.

For the full year of 2023, SK’s refining business recorded sales of KRW47 trillion (USD35.2 billion) and operating profit of KRW810.9 billion (USD608 million). Its petrochemicals business recorded sales of KRW 10.74 trillion (USD8 billion) and operating profit of KRW516.5 billion (USD387.3 million). Its lubricants business recorded sales of KRW4.69 trillion (USD3.5 billion) and operating profit of KRW 997.8 billion (USD748.3 million).

Looking to 2024, refining tailwinds are expected from potential OPEC cuts and China stimulus. Petrochemical spreads should increase as large facilities remain online and gasoline blending recovers. The lubricants business is also expected to experience a gradual improvement of spreads after the winter and off-peak months.

“Market uncertainty slowed segments like refining and petrochemicals in 2023, but macro trends point positive this year,” said SK Innovation CEO Ji Won. “We are strategically positioned across the energy value chain.”

SK Innovation operates globally with energy, materials and battery businesses. Headquartered in Seoul, South Korea, it recorded over KRW77 trillion (USD57.7 billion) in sales during 2023. Its battery business achieved record sales of KRW12.9 trillion (USD9.6 billion), up 70% year-over-year.