South Korea’s largest oil refiner SK Innovation Co. saw its operating profit fall 12.7 percent on year in the third quarter on weak refinery business, but still managed to fare better than expectations through non-refinery businesses.
SK Innovation in a regulatory filing on Friday said its operating profit reached 835.8 billion won ($757 million) in the July-September period, down 1.9 percent on quarter and 12.7 percent from a year ago but above the market consensus of 790.7 billion won. Sales rose 11.3 percent on quarter and 27.6 percent on year to 14.96 trillion won, beating the market estimate of 14.28 trillion won, while net income dropped 10.4 percent on quarter and 34 percent to 459.4 billion won.
On Friday, SK Innovation shares gained 2.22 percent to end at 207,000 won in Seoul.
Its oil refinery business was hit by higher operating expenses and falling inventory-related profits on top of plateauing crude oil prices. Operating profit at its oil refinery business plunged by 125 billion won to 408.4 billion won from a quarter ago.
Despite a profit decrease in the third quarter, SK Innovation is confident that it could deliver an operating profit of over 3 trillion won for full 2018 as its cumulative profit up to September this year added 18.4 billion won to total 2.4 trillion won from a year ago thanks to non-refining businesses, which contributed 66 percent to SK Innovation’s total profit in the third quarter.
Operating profit from its chemical business soared 45.4 percent to 345.5 billion won in the July-September period from the previous quarter thanks to the booming polyester market. Market analysts also noted that the company’s preemptive investment in the paraxylene (PX) plant in Ulsan jointly run by SK Global Chemical and Japan’s JX Nippon Oil & Energy, as well as another PX production facility run by SK Incheon Petrochem have helped the company maximize profits when the PX market boomed.
Profit from lubricants division was up 5.9 billion won to 132 billion won, and crude oil exploration and production business up 12.5 billion won to 71.8 billion won.
By Park Eui-myung and Lee Ha-yeon
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