SK Innovation to split off battery unit, shares fall



© Reuters. FILE PHOTO: The logo of SK Innovation is seen in front of its headquarters in Seoul, South Korea, February 3, 2017. REUTERS/Kim Hong-Ji/File Photo

By Heekyong Yang and Joyce Lee

SEOUL (Reuters) – SK Innovation Co Ltd confirmed plans to make its battery business a stand-alone unit, sending its shares down as much as much as 7.9% in morning trade to hit a near four-month low.

Analysts said investors were concerned that SK Innovation would be left with its less attractive conventional petrochemical business once the battery business is separated.

The owner of South Korea’s top refiner SK Energy posted an operating profit of 506 billion won ($441 million) in the April-June quarter, compared with an operating loss of 456 billion won in the same period a year earlier.

The company said it expected refining margins to gradually improve in the second half as COVID-19 retreats and demand rebounded.

It would separate out its battery business and oil and gas production business into individual units by October. The new entities would continue to be wholly owned by SK Innovation.

“These split-offs are meant to preemptively strengthen fundamental competitiveness by building a management system suitable for the characteristics of each business,” Kim Jong Hoon, SK Innovation’s board chairman, said in a statement.

In July, SK Innovation said it was considering separating and listing its growing battery business unit, which supplies electric car batteries to Volkswagen (DE:) and Ford Motor (NYSE:) Co among others, to better secure resources as the global EV market continues to grow.

See also  Elon Musk Suggests Tesla’s Headcount Could Surge 35% This Year

The battery unit, which is aiming to turn profitable next year, accounted for nearly 6% of the company’s revenue in the second quarter.

Rival LG Energy Solution Ltd (LGES), wholly owned by LG Chem Ltd’s from which it was carved out last year, plans to go public this year. LGES counts Tesla Inc, General Motors Co (NYSE:) and Hyundai Motor Co among its customers.

Revenue rose 56% to 11.1 trillion won from a year earlier. That compares with the 11 trillion won forecast of analysts in the Refinitiv SmartEstimate.

SK Innovation, which has a total refining capacity of 1.115 million barrels per day (bpd) at plants in Ulsan and Incheon, said it operated it facilities at 66% of capacity on average in the quarter, down from 77% during the same period a year earlier.

Last week, South Korea’s third-largest refiner S-Oil Corp said refining margins are expected to rebound in the third quarter, driven by high demand for transport fuels because of an increase in global economic activities and mobility.

($1 = 1,148.5800 won)

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

See also  Italy central bank to spurn firms that don't go green

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





READ SOURCE

LEAVE A REPLY

Please enter your comment!
Please enter your name here