SK Innovation posted a sharp earnings rebound in the first quarter of the year, recording more than 2 trillion won in operating profit as rising global oil prices significantly improved refining margins while its chemical and battery businesses also showed signs of recovery.
The company announced on May 13 that it posted consolidated first-quarter revenue of 24.2 trillion won and operating profit of 2.16 trillion won. Compared with the previous quarter, revenue increased by more than 4.5 trillion won while operating profit rose by roughly 1.9 trillion won. The company also returned to profitability on a year-over-year basis.
The strongest contributor to the earnings recovery was its refining business. Subsidiary SK Energy recorded operating profit of 1.28 trillion won during the quarter, leading the company’s overall performance.
Industry analysts said the improvement was largely driven by the so-called “lagging effect” and inventory valuation gains triggered by rising crude oil prices. In the refining industry, there is typically a time gap between crude oil purchases and refined product sales. When oil prices surge, refiners benefit because previously purchased lower-cost crude is reflected in production costs while refined product prices rise.
At the same time, the value of existing oil inventories increases, generating substantial inventory-related profits.
Average Dubai crude prices reportedly climbed to around $128 per barrel during the first quarter, rising sharply from the previous quarter amid prolonged geopolitical tensions in the Middle East. Concerns over supply disruptions also pushed up prices for key petroleum products including diesel and jet fuel.
SK Innovation said refining profitability improved significantly due to higher oil prices and increased inventory-related gains. However, the company also cautioned that inventory gains are highly volatile and could reverse if crude prices decline in the future.
Its chemical business also returned to profitability. SK Geo Centric benefited from inventory gains linked to higher naphtha prices and improved margins for aromatic products. Analysts said recent global supply adjustments and price increases for certain petrochemical products contributed to the recovery.
Battery subsidiary SK On also reduced losses during the quarter, supported by recovering electric vehicle battery demand in North America and Europe as well as improved production efficiency.
Industry observers noted that the benefits of the U.S. Inflation Reduction Act and expanding North American battery supply chains are gradually becoming more visible.
SK Innovation also highlighted progress in future growth businesses. The company recently imported its first LNG cargo from the Barossa gas field project in Australia and was selected as a project operator for the Quynh Lap LNG project in Vietnam, strengthening its global energy development portfolio.
The company is also expanding its presence in the energy storage system market. SK On recently secured more than half of the market share in South Korea’s central ESS contract bidding market, reinforcing its position in the sector.
SK Innovation said it expects ESS demand to rise rapidly in line with the expansion of AI data centers and renewable energy infrastructure.
Market analysts say investors are increasingly focusing on SK Innovation’s efforts to diversify beyond its traditional refining-centered business structure into batteries, LNG, and broader energy solutions. However, volatility in global oil prices and uncertainty surrounding the pace of electric vehicle market growth remain key risks.
An industry official said the latest earnings reflected strong benefits from higher oil prices, but also demonstrated improving momentum in the company’s battery and energy businesses. The official added that future improvements in profitability from new growth businesses could become more important to the company’s long-term valuation than refining market conditions alone.
