South Korea’s SK innovation on Wednesday reported a swing to operating profit for June quarter and said it will split-off its battery, and oil and gas businessed by October.
The company reported quarterly operating profit of KRW506.5bn ($442.2m), swinging from operating loss of KRW439.7bn a year ago.
SK innovation said one of the purposes of the planned split-off of the battery business was to ensure that the unit can raise investments when needed. The two new entities will be wholly-owned by the company.
'Nothing determined yet'
In July, the South Korean petrochemical firm had said that it is considering spinning off and listing its battery business.
On Wednesday, SK innovation said that in terms of the size or method of initial public offering (IPO), “nothing has been determined yet.”
“Any equity financing that would include an IPO would only take place after certain pre-conditions have been satisfied, such as us being able to realise the performance that we want,” added SK innovation when asked about plans of listing its battery unit in the earnings conference call.
Battery metal recycle (BRM) business is one of its “future growth drivers,” said the firm. It also expressed plans to build BRM production facilities to cater to markets in China, US and Europe.
The BRM business will focus on extracting lithium and nickel cobalt manganese oxides from waste batteries and scrap materials, the company added.
“For this business model, at the core of it, is whether you will be able to extract the lithium. For SK innovation right now, we do have the technological competitiveness to be able to extract highly pure lithium,” SK innovation said in the earnings call.
Improved refining margins
SK innovation said average quarterly refining margins rose to $66.9/barrel from $66/barrel a quarter ago, on rising crude oil prices and demand recovery in the first half of 2021.
The company said that refining margin in the second half will gradually improve.
In the June quarter, SK innovation’s battery division narrowed its operating loss by about 45% from a quarter ago on improved profitability and rising sales volume.