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Title SK INNOVATION ANNOUNCES 4th QUARTER 2017 EARNINGS Date 2018-01-31
Contents ㆍRevenue in the 4th quarter ended December 31, 2017 recorded KRW 13.12trillion
ㆍOperating profit in the 4th quarter was KRW 845.2 billion


*Please note that the earnings results for the fiscal fourth quarter of 2017 are subject to further audit by independent auditors.

 

 

SEOUL, January 31, 2018 – SK Innovation, Korea’s first and largest energy∙chemical company, today announced its financial results for the fourth quarter ending December 31, 2017.
Revenue in the fourth quarter was KRW 13.12 trillion, up by 11.6% from KRW 11.76 trillion from the previous quarter. The fourth quarter revenue rose driven by rising oil prices and higher sales volume.

 

The total assets registered KRW 34.16 trillion at the end of the fourth quarter of 2017, up from KRW 32.58 trillion the year before due to the increase in accounts receivable and inventory.

Global oil prices showed steady growth during the fourth quarter boosted by strong demand on the back of favorable global economic situations and OPEC’s decision to extend output cuts.

Refining margins during the fourth quarter were slightly down from the previous quarter as refineries in hurricane-hit regions came to normal operations.

Demand for gasoline products have ped due to the impact of the cold spell, but demand for diesel products have remained steady with strong margins.

 

4th QUARTER BUSINESS ANALYSIS

 

Petroleum
• Petroleum business recorded an operating profit of KRW 509.3 billion, slightly down from KRW 526.4 billion of the previous quarter due to weakening refining margins.
• Petroleum business registered inventory-related gains of KRW 250 billion in the fourth quarter, up by KRW 150 billion from the previous quarter.
• Demand for petroleum products is expected to be strong helped by favorable global economic conditions in 2018.
• Given the limited capacities of new refineries, tight supply and strong margins are expected this year.

 

Petrochemical
• Despite inventory-related gains from the rising prices of naphtha, petrochemical business posted an operating profit of KRW 262.8 billion down by KRW 63.2 billion from the previous quarter due to the decreased spreads of main products including paraxylene (PX) caused by increased supply because of new capacities addition.
• As for the olefin spread, the demand in the region is expected to remain strong but may slightly fall once polyethylene (PE) is imported to the region after new ethane cracking centers (ECC) in the U.S. come on line.
• Spread for ethylene during the fourth quarter was strong due to delayed operations of ECC in hurricane-hit regions in the U.S. and steady demand in the downstream sector.

 

Lubricants
• Lubricants business posted an operating profit of KRW 145.7 billion up by KRW 1.6 billion from the previous quarter helped by efforts to increase sales volume despite rising oil prices pushing down margins.
• The market for oil is expected to see relief in tight supply following operation of a new plant this year despite the decline in supply caused by regular maintenance in the first half.

 

Exploration & Production
• SK Innovation’s E&P business recorded revenue of KRW 173.7 billion up by KRW 23.6 billion from the previous quarter and an operating profit of KRW 51.2 billion up by KRW 6.5 billion from the previous quarter.

 

 

Quarterly Performance (based on K-IFRS, unit: KRW in one hundred millions)

 

4Q 2016

3Q 2017

4Q 2017

YoY

QoQ

Revenue

100,791

117,589

131,195

30.2%

11.6%

Operating Profit

8,492

9,636

8,452

0.5%

12.3%

 

4Q 2017 Business Performance (based on K-IFRS, unit: KRW in one hundred millions)

 

Petroleum

Petrochemical

Lubricants

Exploration & Production

Revenue

94,571

25,500

8,119

1,737

Operating Profit

5,093

2,628

1,457

512

 

 

Annual Performance (based on K-IFRS, unit: KRW in one hundred millions)

 

 

Petroleum

Petro-chemical

Lubricants

Exploration & Production

Other

Total

Revenue

333,368

93,392

30,474

6,358

4,673

468,265

Operating Profit

15,021

13,772

5,049

1,884

3,383

32,343