■ Revenue of KRW 29.16 trillion and operating profit of KRW 3.49 trillion, driven by improved performance at SK Enmove and SK On
■ SK Energy’s operating profit declined by KRW 632 billion QoQ, reflecting falling oil prices since June
■ Committed to ensuring a stable supply of petroleum products amid ongoing uncertainty in the Middle East, while continuing to enhance operational efficiency and improve profitability
SK Innovation (Co-CEOs Jang Yong-ho and Choo Hyeong-wook) achieved operating profit in the KRW 3 trillion range for the second quarter, driven by improved profitability in its lubricants and battery businesses.
SK Innovation announced on July 30 that it recorded consolidated revenue of KRW 29.16 trillion and operating profit of KRW 3.49 trillion for the second quarter (Q2) of 2026. Compared to the previous quarter, revenue increased by KRW 4.87 trillion and operating profit rose by KRW 1.33 trillion. On a year-over-year (YoY) basis, revenue increased by KRW 9.7 trillion, while operating profit returned to profit.
The strong Q2 operating profit was largely driven by improved performance in the lubricants and battery businesses. SK Enmove’s operating profit rose by KRW 503.4 billion QoQ to KRW 691.9 billion. As supply disruptions among major Middle Eastern competitors pushed up base oil margins, performance expanded on the back of sales in key global markets. Despite recent geopolitical risks, SK Enmove has continued to strengthen its stable supply capabilities by leveraging its competitiveness in Group III premium base oils and its global production and sales network.
SK On’s battery business posted operating profit of KRW 821.8 billion, marking a QoQ improvement of KRW 1.17 trillion and returning to profit. This was driven by expanded sales volume in Asia, receipt of customer compensation, and an increase in tax credits under the U.S. Inflation Reduction Act (IRA).
In Q2, SK On completed the process of dissolving its BlueOval SK joint venture with Ford Motor Company and launched “SK On Tennessee” as a standalone plant, advancing its battery business restructuring to ease financial burdens and strengthen profitability. The company plans to continue rebalancing its portfolio to achieve structural cost reductions, improve profitability, and expand its energy storage system (ESS) order backlog, pursuing a qualitative shift in its business portfolio to drive further earnings improvement.
The refining business maintained solid performance in Q2, supported by lagging effects and inventory valuation gains from rising oil prices. However, overall profit narrowed QoQ as oil prices declined following the June memorandum of understanding (MOU) on a ceasefire between the United States and Iran, which eased expectations around geopolitical risk. SK Energy, which operates the refining business, posted Q2 operating profit of KRW 651.2 billion, of which approximately KRW 560 billion was attributable to inventory-related gains.
SK Innovation stated, “Lagging effects and inventory-related gains from rising oil prices in April and May had a positive impact on SK Energy’s performance, but as oil prices fell toward the end of the quarter, these gains narrowed and turned into a loss in June.” The company added, “During periods of falling oil prices, higher-cost crude purchased earlier is reflected in costs with a delay, resulting in reverse lagging effects and negative inventory effects, which can also lead to inventory valuation losses at the end of the period.”
■ Q2 2026 Business Performance
On a consolidated basis, Q2 results by subsidiary were as follows:
- SK Energy: Revenue of KRW 13.21 trillion, operating profit of KRW 651.2 billion. Operating profit decreased by KRW 632.0 billion QoQ due to falling oil prices amid easing expectations around Middle East geopolitical risk. The average Dubai crude price fell from USD 128.5 per barrel in March to USD 79.5 per barrel in June. Reduced utilization rates resulting from scheduled maintenance at some facilities in May and June also weighed on profitability.
- SK Geo Centric: Revenue of KRW 3.73 trillion, operating profit of KRW 43.7 billion. Operating profit decreased by KRW 83.9 billion QoQ due to a narrower spread between paraxylene (PX) and naphtha feedstock prices. Lower product sales volume resulting from adjusted utilization rates amid changing feedstock conditions also contributed to the decline.
- SK Enmove: Revenue of KRW 1.98 trillion, operating profit of KRW 691.9 billion. Operating profit increased by KRW 503.4 billion QoQ, driven by higher margins resulting from supply disruptions among Middle Eastern competitors, as well as inventory effects.
- SK Incheon Petrochem: Revenue of KRW 3.53 trillion, operating profit of KRW 821.8 billion.
- SK Earthon: Revenue of KRW 75.4 billion, operating profit of KRW 29.9 billion. Operating profit decreased by KRW 34.8 billion QoQ due to lower sales volume resulting from the shipment schedule for its equity crude oil production in China.
- SK On (Battery Business): Revenue of KRW 2.95 trillion, operating profit of KRW 821.8 billion. Battery business returned to profit, supported by one-time factors such as customer compensation, along with cost reduction efforts, expanded sales volume in Asia, and increased tax credits under the IRA.
- SK On Trading International: Revenue of KRW 23.23 trillion, operating profit of KRW 313.2 billion.
- SK IE Technology: Revenue of KRW 39.5 billion, operating loss of KRW 63.5 billion. Operating loss narrowed by KRW 9.7 billion QoQ, as sales volume increased on the back of recovering demand following the completion of inventory adjustments at major customers, along with improved utilization rates.
- SK Innovation E&S: Revenue of KRW 2.60 trillion, operating profit of KRW 105.9 billion. Operating profit decreased by KRW 177.3 billion QoQ, due to lower city gas demand entering the seasonal off-peak period and scheduled maintenance at power plants ahead of the summer season to ensure stable electricity supply.
■ Q3 2026 Outlook
In the refining business, oil prices and refining margins are expected to see a more moderate upward trend in Q3, as OPEC+ production increases and rising utilization rates among Asian refiners weigh on the market. However, significant volatility is anticipated depending on developments such as changes in transit volumes through the Strait of Hormuz and the Red Sea, the extent of damage to Russian refining facilities, and shifts in crude oil and petroleum product supply and demand. The company plans to respond with flexible and optimized operations tailored to these changing market conditions.
The petrochemical business is expected to see a delayed recovery in PX demand in Q3. However, performance is projected to remain similar to Q2 levels, supported by improved spreads for key aromatic products such as benzene as the market enters its seasonal peak.
In the lubricants business, while there may be some volatility depending on the timing of any resolution to disruptions around the Strait of Hormuz, base oil spreads are expected to gradually decline in Q3 as supply disruptions among competitors show signs of resolving. The company plans to further strengthen its leadership in the Group III base oil market, supported by stable supply capabilities across its multiple production bases.
In the petroleum development business, the company plans to maintain daily production and improve profitability amid ongoing geopolitical uncertainty by drilling additional production wells at its own operated blocks in China and Vietnam.
The battery business is expected to see improved profitability in the second half, supported by fixed cost reductions from ongoing portfolio rebalancing and continued operational efficiency initiatives. The company also plans to expand sales of electric vehicle (EV) batteries and secure additional energy storage system (ESS) orders, with a particular focus on accelerating order growth among customers such as AI hyperscalers and power utilities, in order to build mid- to long-term profitability momentum.
The power and liquefied natural gas (LNG) business is expected to benefit in Q3 from seasonally higher electricity demand and a rise in the system marginal price (SMP) driven by higher oil prices, although volatility in LNG spot market prices stemming from geopolitical instability remains a variable to watch. In addition, the Barossa gas project in Australia, in which the company holds an equity stake, is in the final stages of commissioning and is expected to begin full commercial operations in the second half of the year.
A representative from SK Innovation stated, “Amid ongoing uncertainty in the Middle East, we will continue to do our utmost to ensure a stable supply of petroleum products, while responding flexibly to market changes and continuing our efforts to enhance operational efficiency and improve profitability.”
[Attached]
1. SK Innovation quarterly earnings (based on K-IFRS) (Unit: KRW hundred million)
| Q2 2025 | Q1 2026 | Q2 2026 | YoY | QoQ | |
|---|---|---|---|---|---|
| Revenue | 194,532 | 242,910 | 291,572 | +97,040 | +48,662 |
| Operating income | -4,016 | 21,622 | 34,873 | +38,889 | +13,251 |
2. Q2 2026 performance by business (based on K-IFRS) (Unit: KRW hundred million)
| SK Energy | SK Geo Centric | SK Enmove | SK Incheon Petrochem | SK Earthon | |
|---|---|---|---|---|---|
| Revenue | 132,106 | 37,331 | 19,831 | 35,312 | 754 |
| Operating income | 6,512 | 437 | 6,919 | 8,218 | 299 |
| SK On (Battery) | SK On Trading International | SK IE Technology | SK Innovation E&S | Others* | Total |
|---|---|---|---|---|---|
| 29,460 | 232,285 | 395 | 25,961 | -221,863 | 291,572 |
| 8,218 | 3,132 | -635 | 1,059 | 714 | 34,873 |
