Image: Reuters Berita 24 English - South Korean energy company SK Innovation Co. Ltd. said on Friday that its battery unit is on track to ...
 |
| Image: Reuters |
Berita 24 English - South Korean energy company SK Innovation Co. Ltd. said on Friday that its battery unit is on track to break even in the fourth quarter because the market is getting better. This was a change from what it had said before, and its shares went up by as much as 5 percent.
In April, the company said that it could take longer than expected to turn around its loss-making battery unit SK On, which supplies Ford Motor Co. and Hyundai Motor Co., because raw material prices were going up and there was a long-term chip shortage.
"As we move into the second half of the year, we expect that the overall business environment will start to improve compared to the first half of the year," SK On Head of Battery Strategy and Planning Office Sunmi Jean said during an earnings call.
"In particular, we expect our new facilities that started up at the start of 2022 to ramp up in a stable way."
Jean said that efforts to negotiate terms with auto customers to pass on rising raw material costs would also help the battery unit's profitability, putting it on track to break even by the end of the year.
In the second quarter, SK On, which was split off from SK Innovation last year but is still owned by SK Innovation in its entirety, made up about 6.5% of the parent company's revenue.
"The worst of the global chip shortage seems to be over for now," said Kang Dong-jin, an analyst at Hyundai Motor Securities. "This will help automakers stabilise their vehicle production, which will help SK On's battery sales."
When asked about a new deal between Ford and China's CATL to sell batteries, Yu Jinsuk, vice-president of SK On's Corporate Strategy Office, said that the deal wouldn't have much of an effect on SK On. She said that Ford's low-end electric vehicles (EVs), which are different from the Ford EVs that use batteries from the Korean company, would use lithium iron batteries made by CATL.
Last week, Ford announced that it will buy cheaper lithium iron batteries from CATL for its electric pickup trucks and SUVs in North America. This is part of its plan to work with CATL and other companies to make sure it has batteries and materials for batteries for the next ten years.
Even though they cost less, nickel and cobalt batteries usually last longer than lithium iron batteries.
In the second quarter that ended in June, SK Innovation's operating profit jumped from 556 billion won a year earlier to 2.3 trillion won ($1.77 billion).
Refinitiv SmartEstimate says that oil product exports helped push revenue up by 77% to 19.9 trillion won, which is just below the average analyst estimate of 20.4 trillion won.
SK Energy's plants in Ulsan and Incheon have a total refining capacity of 1.115 million barrels per day (bpd). The company said it ran its plants at an average of 74 percent of capacity in the third quarter, which is up from 66 percent a year ago.
As of 02:58 GMT, shares of SK Innovation were trading up 3.0%, while the KOSPI as a whole was up 0.7%.
($1=1,297.6600 won)
