SK Innovation Co., South Korea’s leading refiner and parent firm of battery maker SK On Co., said Thursday its second-quarter net losses deepened due to lower refining margins and a slowdown in electric vehicle (EV) markets.

Net losses for the three months to June widened to 639.71 billion won (US$467 million) from 120.44 billion won in the same period of last year, the company said in a statement.

“Declining refining margins weighed on the bottom line despite a steady flow of production at the company’s overseas oil fields. Increased fixed costs deriving from a lower utilization rate at its battery affiliate (SK On) amid an EV slowdown also affected it,” the company said.

SK Innovation holds an 89.5 percent stake in SK On.

SK On posted an operating loss of 460 billion won in the April-June period, posting operating losses for 11 consecutive quarters since it began operations in October 2021.

Looking ahead, SK Innovation expects refining margins and EV battery sales will begin recovering late this year,
helped by seasonal demand and new EV models scheduled by carmakers.

Operating losses narrowed to 45.84 billion won in the second quarter from 106.8 billion won a year ago. Sales rose 0.4 percent to 18.86 trillion won from 18.73 trillion won.

In the long term, “SK Innovation’s planned merger with energy affiliate SK E and S will help enhance business synergies and improve the profitability of the combined entity,” SK Innovation’s Chief Financial Officer Kim Jin-won said in the company’s earnings conference call.

Last month, the boards of the two firms approved the merger plan, which will create the country’s largest energy company with combined assets exceeding 100 trillion won and 88 trillion won in sales.

The integrated entity, set to be launched Nov. 1, aims to achieve 20 trillion won in earnings before interest, taxes, depreciation and amortization (EBITDA) in 2030, up from 6 trillion won in 2023, by focusing on profitability, the CFO said.

From January to June, net losses widened to 737.33 billion wo
n from 172.39 billion won in the year-ago period.

Operating profit more than doubled to 578.89 billion won in the first six months from 268.2 billion won a year earlier. Sales fell 0.6 percent to 37.65 trillion won from 37.87 trillion won.

Source: Yonhap News Agency