(Add company statement, background)
By Heekyong Yang and Joyce Lee
SEOUL, Aug.4 (Reuters) – SK Innovation Co Ltd, owner of South Korea’s leading refiner SK Energy, said on Wednesday it expects refining margins to gradually improve in the second half of the year as COVID- 19 is declining and demand is rebounding, and has confirmed its intention to make its battery business a stand-alone unit.
The company posted operating profit of 506 billion won ($ 441 million) in the April-June quarter, compared with an operating loss of 456 billion won in the same period a year more early.
SK Innovation has announced plans to separate its battery and oil and gas production business into individual units by October. The new entities will continue to be 100% owned by SK Innovation.
“These splits aim to preventively strengthen fundamental competitiveness by creating a management system tailored to the characteristics of each company,” Kim Jong Hoon, chairman of the board of SK Innovation, said in a statement.
In July, SK Innovation said it plans to separate and list its growing battery business unit, which supplies electric car batteries to Volkswagen and Ford Motor Co, among others, to better secure resources then. as the global electric vehicle market continues to grow.
The unit, which aims to become profitable next year, accounted for nearly 6% of the company’s revenue in the second quarter.
SK Innovation’s battery rival LG Energy Solution Ltd (LGES), 100% owned by LG Chem Ltd from which it was separated last year, plans to go public this year.
LGES counts Tesla Inc General Motors Co, Hyundai Motor Co among its customers.
Revenue increased 56 percent to 11.1 trillion won from a year earlier. This compares to the 11 trillion won forecast by analysts in Refinitiv SmartEstimate.
SK Innovation, which has a total refining capacity of 1.115 million barrels per day (bpd) at the Ulsan and Incheon plants, said it was operating its facilities at 66% of capacity on average at during the quarter, up from 77% in the same period a year earlier, according to the company statement.
Last week, South Korea’s third-largest refiner, S-Oil Corp, said refining margins are expected to rebound in the third quarter, driven by strong demand for transportation fuels due to increased economic activity and global mobility.
($ 1 = 1,148.5,800 won) (Reporting by Heekyong Yang and Joyce Lee; Editing by Stephen Coates and Richard Pullin)