■ Achieved the highest quarterly revenue in 10 quarters, driven by the first full-quarter inclusion of E&S results; however, despite improvements in the battery business, declining oil prices and weaker margins in the refining sector led to a transition to an operating loss
■ Battery business secured new orders from Nissan (Japan) and Slate (U.S.) for two consecutive quarters (Q1 and Q2), while the E&P business plans to begin full-scale development of the Vietnam 15-2/17 Block following evaluations in the second half of the year
■ Q2 Outlook: Refining and petrochemical margins are expected to improve gradually; E&P, lubricants, and E&S businesses are projected to maintain stable profit generation; battery and materials businesses anticipate continued growth and increased sales throughout the year
SK Innovation today announced its financial results for the first quarter of 2025, reporting revenue of KRW 21.15 trillion and an operating loss of KRW 44.6 billion.
The company achieved its highest quarterly revenue in 10 quarters, driven by a KRW 1.7 trillion increase from the first-time full inclusion of SK Innovation E&S’s business results following the merger. However, despite improved performance in the battery segment, weaker refining margins and lower international oil prices contributed to the operating loss.
The B30 blended marine fuel offers approximately 25% carbon reduction compared to conventional marine fuel, aligning with the carbon neutrality policies of the shipping industry and driving anticipated growth in demand. It has received official recognition for its environmental benefits and carbon reduction effects through the globally recognized International Sustainability and Carbon Certification (ISCC EU) for biofuels.
Key Business Updates
Battery Business: SK Innovation highlighted its progress in the battery segment, noting the signing of a 99.4 GWh supply deal with Nissan in March for 1 million mid-sized electric vehicles and a subsequent 20 GWh order from U.S.-based EV startup Slate. The company emphasized the significance of these orders in diversifying its customer base and expanding its footprint in the key North American EV market. SK Innovation expects significant improvements in battery production rates and sales volumes in North America this year, supported by operational efficiencies and cost reductions.
Exploration and Production (E&P): SK Earthon, the E&P subsidiary of SK Innovation, confirmed the presence of high-quality crude oil at the Vietnam 15-2/17 Block, achieving production of up to 10,000 barrels per day. SK Earthon plans to conduct further evaluations in the second half of the year to confirm reserves and initiate full-scale development. According to global research firm Wood Mackenzie, this block is considered one of the most promising discoveries in Vietnam over the past decade in terms of crude oil commerciality and oil-to-gas ratio, among other factors.
Q1 2025 Performance by Business Segment
• Refining business: Revenue of KRW 11.92 trillion; operating profit of KRW 36.3 billion. Operating profit decreased by KRW 306.1 billion compared to the previous quarter due to weaker international oil prices and refining margins, driven by concerns over a global economic slowdown and eased production cuts by OPEC+. SK Innovation plans to maintain a cautious operational stance in response to the weaker margins while continuing efforts to optimize operations, streamline supply chains, and reduce costs.
• Petrochemical business: Revenue of KRW 2.48 trillion, operating loss of KRW 114.3 billion. The segment continued to record an operating loss due to weak market conditions for paraxylene (PX) and olefin products. Operating profit declined by KRW 30.1 billion compared to the previous quarter.
• Lubricants business: Revenue of KRW 972.2 billion, operating profit of KRW 121.4 billion. Operating profit decreased by KRW 18.1 billion compared to the previous quarter due to reduced margins and lower sales volumes, driven by an economic slowdown in key markets.
• E&P business: Revenue of KRW 383.1 billion, operating profit of KRW 120.4 billion. While revenue saw a slight increase in the first quarter, operating profit declined by KRW 25.4 billion compared to the previous quarter, primarily due to reduced sales volumes from the Peru blocks.
• Battery business: Revenue of KRW 1.61 trillion, operating loss of KRW 299.3 billion. Operating profit improved by KRW 60.1 billion compared to the previous quarter, driven by increased sales volumes in North America. This growth was supported by higher EV production rates and improved factory utilization as major customers prepared for new vehicle launches. Additionally, the business benefited from KRW 170.8 billion in Advanced Manufacturing Production Tax Credit (AMPC) under the U.S. Inflation Reduction Act (IRA), representing a 110% increase from KRW 81.3 billion in the prior quarter.
• Materials business: Revenue of KRW 23.8 billion, operating loss of KRW 54.8 billion. Operating profit improved by KRW 19.3 billion compared to the previous quarter, driven by increased sales volumes and the absence of one-time costs, which provided a favorable base effect.
• SK Innovation E&S: Revenue of KRW 3.75 trillion, operating profit of KRW 193.1 billion. Operating profit increased by KRW 78.9 billion quarter-on-quarter, primarily due to higher city gas sales volumes driven by increased winter heating demand.
Q2 2025 Outlook
For the second quarter of 2025, SK Innovation expects a gradual improvement in refining margins, supported by seasonal demand drivers such as the summer driving season and increased cooling needs.
In the petrochemical business, aromatics spreads are anticipated to improve due to reduced regional PX supply and the scheduled operation of new high-purity terephthalic acid (PTA) facilities in the second half of the year. However, uncertainties stemming from U.S.-China trade tensions may temper these gains. Meanwhile, olefin spreads are projected to strengthen, driven by declining naphtha prices, despite concerns over long-term supply growth.
The lubricants business is expected to maintain stable profitability, underpinned by robust demand for SK Enmove’s premium Group III base oils, even amid global capacity expansions.
SK Innovation’s E&P business successfully completed drilling operations for two additional wells in China’s 17/03 block this March, initiating production. Based on the strong productivity of these new wells, discussions are underway with partner companies to drill additional production wells.
The battery business expects continued growth in sales volumes in North America starting in the second quarter, driven by increasing demand for EV batteries. With changes in U.S. tariff policies further emphasizing the importance of local production capabilities, SK On plans to improve performance by enhancing utilization rates at U.S. battery plants to meet this rising demand. The company will also focus on diversifying its customer base and product portfolio through new battery orders.
In the materials business, sales volumes are expected to grow significantly compared to the first quarter, driven by increased sales to major customers and the launch of separator film sales targeting the North American market.
SK Innovation E&S plans to secure stable and competitive LNG supplies by leveraging various sources, including equity gas fields, long-term contracts, and spot markets. Through optimized operations of power plants utilizing LNG, the company aims to continue enhancing profitability, even during the seasonally slower second quarter.
Seo Kun-ki, CFO (Head of Finance Division) of SK Innovation, stated, “SK Innovation plans to strengthen financial soundness this year by improving the operational rates and sales volumes of its North American battery plants, advancing development in Vietnam’s oil fields, and optimizing operations across its businesses.” Seo continued, “Going forward, SK Innovation will leverage its comprehensive energy portfolio—spanning oil, chemicals, LNG, and power—to enhance its core competitiveness. Through the unified ‘One Innovation’ approach, the company remains committed to securing both profitability and sustainable growth.”
[Attached]
1. SK Innovaion quarterly earnings (based on K-IFRS) (Unit: KRW hundred million)
| Q1 2024 | Q4 2024 | Q1 2025 | YoY | QoQ | |
|---|---|---|---|---|---|
| Revenue | 188,551 | 194,057 | 211,466 | +22,915 | +17,409 |
| Operating income | 6,247 | 1,599 | -446 | -6,693 | -2,045 |
2. 2025 Q1 performance by business (based on K-IFRS) (Unit: KRW hundred million)
| Refining* | Petrochem* | Lubricants | E&P | Battery | Materials** | E&S | Staff | Total | |
|---|---|---|---|---|---|---|---|---|---|
| Revenue | 119,181 | 24,770 | 9,722 | 3,831 | 16,054 | 238 | 37,521 | 149 | 211,466 |
| Operating income | 363 | -1,143 | 1,214 | 1,204 | -2,993 | -548 | 1,931 | -474 | -446 |
(**) Materials: Based on consolidated financial statements of SK Innovation, which removed internal transactions of SK Innovation affiliates
