SK On logs record quarterly loss on sluggish EV market

SK On Co., the world’s fifth-largest battery maker, on Thursday reported a record quarterly loss on the prolonged weakness in the electric vehicle (EV) industry while at the same time reiterating its goal of a turnaround in the second half.

The South Korean company said its operating loss more than tripled to 460.1 billion won ($336.5 million) in the second quarter from a 131.5 billion won deficit a year earlier, as sales more than halved to 1.6 trillion won from 3.7 trillion won. The company has been in the red for 11 consecutive quarters.

The battery supplier to Hyundai Motor Co. and Ford Motor Co. earned 111.9 billion won from the US advanced manufacturing production credit (AMPC) in the second quarter while its operating loss a year ago reflected tax benefits of 167 billion won for the first half of 2023.

Under the AMPC program, eligible battery makers can receive tax benefits that include a $35 tax credit per 1 kilowatt-hour produced by a battery cell and a $10 tax credit per 1 kWh of battery module manufactured in North America.

SK On said its quarterly loss grew as it cut runs of factories worldwide and spent more on commercial operations of a new plant in Hungary.

TURNAROUND IN H2

The company, to be merged in November with other units of Korea’s No. 2 conglomerate SK Group, aims to profit from the battery business in the second half despite the global EV industry's sluggishness. Its key customer Ford has cut investments in vehicle electrification.

“Sales of the Ford F-150 Lightning pickup kept growing,” said an SK On official.

“We are in talks with multiple global automakers, in addition to existing clients, for new supply deals,” the official said. “We are also discussing with customers to supply them prismatic batteries we've developed.”

SK On’s parent SK Innovation Co. expected battery demand to increase in response to new EV models in the second half.

SK INNOVATION NARROWS LOSS

SK Innovation, Korea’s top energy company, said its operating loss more than halved to 45.8 billion won in the second quarter on a consolidated basis from the 106.8 billion won deficit a year earlier. Sales edged up 18.8 trillion won.

The operator of the country’s largest refinery reported operating profits in the previous three straight quarters.

Lower crack spreads — the differentials between the prices of crude oil and petroleum products — hurt refining margins, while profits from the petrochemicals, lubricants and oil exploration and production businesses slid, according to the company.

Write to Hyung-Kyu Kim and Woo-Sub Kim at khk@hankyung.com
 
Jongwoo Cheon edited this article.