South Korea’s SK Innovation Co. saw its first-quarter operating profit halved from a year earlier amid volatility in the commodities market, but improved from red figures in the previous three months due to higher international oil prices.
The Korean energy and petrochemical company said Thursday its consolidated operating profit in the quarter ended March was 331.1 billion won ($285.8 million), down 53.5 percent from the year-ago period.
Sales totaled 12.4 trillion won, up 1.9 percent on year but down 11.1 percent on quarter. Net profit plummeted 55.3 percent on year and 20.2 percent on quarter to 211.5 billion won.
Shares of SK Innovation Thursday fell 2.58 percent to close at 188,500 won.
While international oil prices have surged from OPEC production cuts and tightened U.S. sanctions on Iranian oil, petroleum and chemical product margins remained weak amid growing concerns of a global economic slowdown.
The company’s mainstay refining business posted an operating loss of 6.3 billion won in the first quarter, narrowing from the 557.8 billion won loss in the previous three-month period. Earnings from its chemical business gained 70.8 billion won on quarter to 320.3 billion won.
The lubricant sector’s operating profit was 26.9 billion won lower at 47.1 billion won due to reduced sales from seasonality fluctuations.
Earnings in the petroleum development sector were down 25.6 billion won at 55.4 billion won as increased U.S. shale output pushed down overall gas prices.
Its battery business did better, with operating loss narrowed 23.8 billion won to 86.9 billion won, thanks to company efforts to pare down operation costs.
Operating profit in the materials sector gained 5 billion won to 30.5 billion won.
SK Innovation expected industry outlook to improve for the petroleum and lubricant sectors in the second quarter from a seasonal upturn in demand. But prospects for the chemical business remained grim given China’s slowing economy and an expected increase in output from Chinese rivals.
By Kim Hyo-jin
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