Shares of SK Innovation, the South Korean energy company, experienced a significant increase on Friday following the release of its above-consensus quarterly earnings and return to profit in the third quarter. The company’s stock rose by 7.5% to close at 137,100 Korean won ($102.75), outperforming the benchmark Kospi’s 1.1% gain.
Impressive Financial Performance
SK Innovation reported a net profit of KRW729.61 billion for the quarter ended September, which quadrupled compared to the same period last year. This figure exceeded the FactSet-compiled consensus forecast of KRW557.84 billion. The company’s operating profit also more than doubled for the quarter, despite experiencing a 13% decline in revenue from a year ago.
Factors Behind the Strong Results
The solid outcome was primarily driven by SK Innovation’s oil-refining and petrochemical units, which benefited from higher oil prices and wider refining margins. Additionally, the company’s battery business showed improvement, contributing to the positive financial performance. SK On, the battery-making affiliate of SK Innovation, narrowed its operating loss to KRW86 billion in the third quarter, compared to KRW132 billion in the second quarter. This progress was partly attributed to a U.S. tax credit of KRW209.9 billion.
Positive Outlook for SK On
During an earnings conference call, SK executives expressed optimism about SK On’s future prospects, stating their expectation for the battery business to turn profitable in the fourth quarter.