By Joyce Lee and Heekyong Yang
SEOUL (Reuters) -SK Innovation Co Ltd, owner of South Korea’s top refiner SK Energy, said on Thursday it expected third-quarter refining margins to improve after losses grew in the second quarter.
“Sales and operating profit fell compared to the previous quarter due to the difficult external environment such as global economic uncertainty, tariff impact, and falling oil prices,” SK Innovation said.
“Further improvements in refining margins are expected in the third quarter (and) easing tariff risks and increasing sales volumes in Europe in the battery business will positively affect earnings improvement,” it added in a statement.
The company posted an operating loss of 418 billion won ($301.20 million) for the period from April to June, compared with a loss of 45.8 billion won a year earlier.
The results were worse than an average analyst forecast for a loss of 140 billion won compiled by LSEG SmartEstimate.
Battery subsidiary SK On, which supplies automakers such as Hyundai Motor, Kia Corp, Ford Motor and Volkswagen, booked an operating loss of 66 billion won, improved from a year-earlier loss of 460 billion.
SK On will issue new shares worth 2 trillion won ($1.44 billion) in a capital increase, the parent said on Wednesday, and merge with oil and lubricant-producing affiliate SK Enmove to improve the battery maker’s financial position.
With this move, the company said previous IPO plans for SK On had been cancelled.
The United States struck a trade deal with South Korea on Wednesday including an auto tariff rate of 15%, officials said.
In an earnings call SK On said it would strive to mitigate risk as tariffs keep automakers’ production and cost strategies in flux.
($1=1,389.5000 won)
(Reporting by Joyce Lee and Heekyong Yang; Editing by Neil Fullick and Clarence Fernandez)
