■ Returned to profit in two quarters, driven by improved refining business results from higher oil prices and margin recovery, and strong E&S business performance.
■ SK On signed an ESS supply contract with Flatiron Energy Development in September, marking its full-scale entry into the North American market.
■ On November 1, the merged entity of SK On and SK Enmove will officially launch, strengthening the foundation for future growth.
SK Innovation announced its financial results for the third quarter of 2025, recording revenue of KRW 20.53 trillion and operating profit of KRW 573.5 billion. This marks a significant improvement in operating profit compared to the previous quarter, with an increase of KRW 991.1 billion.
This turnaround was led by the refining business returning to profit supported by strong oil prices and refining margins, and solid results from the E&S business due to the seasonal peak in LNG power generation.
As a third-quarter highlight, SK On signed a contract last September with Flatiron Energy Development in the United States to supply 1GWh of LFP battery energy storage system (ESS). The company also secured the preferential negotiation rights for an additional 6.2GWh project.
In addition, the merged entity of SK On and SK Enmove will officially launch on November 1. Through this integration, SK On aims to create synergy between the immersion cooling and battery businesses, further strengthening is foundation for independent growth.
SK Innovation noted that the battery business recorded its highest-ever cumulative benefit from the Advanced Manufacturing Production Credit (AMPC) as of the third quarter, with tangible results expected from further diversification of its North America-centered ESS portfolio.
■ Q3 2025 Business Performance by Segment
• Refining business: Revenue of KRW 12.44 trillion, operating profit of KRW 304.2 billion. Operating profit in the refining business rose by KRW 770.5 billion QoQ, driven by higher refining margins and inventory gains from rising oil prices.
• Petrochemical business: Revenue of KRW 2.41 trillion, operating loss of KRW 36.8 billion. Despite weaker conditions in the benzene and olefin markets, a rebound in paraxylene spreads drove an improvement in operating profit of KRW 81.8 billion compared to the previous quarter.
• Lubricants business: Revenue of KRW 980.5 billion, operating profit of KRW 170.6 billion. Proactive responses to peak seasonal demand led to higher sales volumes, and inventory gains from rising raw material prices further boosted operating profit by KRW 36 billion compared to the previous quarter.
• E&P business: Revenue of KRW 320 billion, operating profit of KRW 89.3 billion. Operating profit declined by KRW 19.7 billion QoQ due to lower gas export prices and a greater proportion of gas sales from the Peru block.
• Battery business: Revenue of KRW 1.81 trillion, operating loss of KRW 124.8 billion. On a consolidated* basis, SK On recorded an operating profit of KRW 17.9 billion, marking a second consecutive quarter in the black. Notably, benefits from the Advanced Manufacturing Production Credit (AMPC) amounted to KRW 173.1 billion in the third quarter, with a cumulative total of KRW 617.3 billion for the year. *Consolidated entity includes SK On, SK Trading International, and SK Enterm.
• Materials Business: Revenue of KRW 23.5 billion, operating loss of KRW 50.1 billion. Company-wide cost optimization led to a sequential improvement in operating loss by KRW 3.6 billion compared to the previous quarter.
• SK Innovation E&S: Revenue of KRW 2.53 trillion, operating profit of KRW 255.4 billion. Operating profit rose by KRW 140.4 billion from the previous quarter, mainly due to high power plant utilization rates supported by enhanced competitiveness in securing summer energy cargoes.
■ Q4 2025 Outlook
The refining business is expected to face downward pressure on oil prices due to increased OPEC+ supply, but refining margins are likely to remain solid, supported by ongoing geopolitical uncertainties in major oil-producing regions.
In the petrochemical business, a decrease in regional paraxylene supply and continued volatility in the benzene market are expected to weigh on the market. Olefin spreads are projected to narrow due to a slow recovery in demand; the company will focus on operational efficiency to support profitability.
The lubricants business is expected to face subdued market conditions due to lower demand during the seasonal low.
As for the E&P business, two new production wells in China’s Block 17/03 have been completed and are set to begin production. Commercial production from Vietnam’s 15-1/05 development block is targeted for the fourth quarter of next year, while two new exploration wells in Malaysia’s SK427 block are scheduled for early 2026.
In the battery business, greater uncertainty is anticipated amid weaker demand for EVs in the United States and higher initial costs associated with new plant operations. SK On will focus on expanding its U.S. ESS business to improve utilization and protect profitability.
The materials business is expected to narrow its losses through cost improvements and increased orders from ESS customers.
SK Innovation E&S plans to maintain stable profitability by commencing production at Australia’s Caldita-Barossa (CB) gas field and expanding city gas sales during the winter.
Seo Kun-ki, CFO (Head of Finance Division) of SK Innovation, commented, “Our earnings showed significant improvement from the previous quarter, led by the rebound in our core businesses. We will further strengthen SK Innovation’s growth platform and enhance corporate value by expanding our ESS business within the battery segment, while leveraging the business synergies from the merger of SK On and SK Enmove, officially launching on November 1.”
[Attached]
1. SK Innovation quarterly earnings (based on K-IFRS) (Unit: KRW hundred million)
| Q3 2024 | Q2 2025 | Q3 2025 | YoY | QoQ | |
|---|---|---|---|---|---|
| Revenue | 176,570 | 193,066 | 205,332 | +28,762 | +12,266 |
| Operating income | -4,233 | -4,176 | 5,735 | +9,968 | +9,911 |
2. Q3 2025 performance by business (based on K-IFRS) (Unit: KRW hundred million)
| Refining* | Petrochem* | Lubricants | E&P | Battery | Materials** | E&S | Others | Total | |
|---|---|---|---|---|---|---|---|---|---|
| Revenue | 124,421 | 24,152 | 9,805 | 3,200 | 18,079 | 235 | 25,278 | 162 | 205,332 |
| Operating income | 3,042 | -368 | 1,706 | 893 | -1,248 | -501 | 2,554 | -343 | 5,735 |
(**) Materials: Based on consolidated financial statements of SK Innovation, which removed internal transactions of SK Innovation affiliates
