S Korea's SK Innovation pre-tax profit falls 12%, sales up 20%

29 July 2011 10:53  [Source: ICIS news]

SINGAPORE (ICIS)--South Korea’s SK Innovation reported on Friday a 12% year-on-year fall in its pre-tax profit to won (W) 407.9bn ($387.7m) in the second quarter of 2011.

Sales, meanwhile, grew 20% year on year to W17,178bn in the April-June period but while operating profit declined by 32% to W451.3bn, SK Innovation said in a report posted on its website.

SK Innovation‘s earnings before interest, tax, depreciation and amortisation (EBITDA) also fell 27% year on year to W583.4bn in the second quarter, the company said.

Compared to the first quarter, SK Innovation’s pre-tax profit slumped 66% in the three months ending June because of weaker margins and sales volume of petrochemical products.

Operating profit declined 62% quarter on quarter, while EBITDA plunged 56%, it said.

Product spreads at SK Global Chemicals - SK Innovation’s petrochemicals division - fell during the second quarter of this year on the back of higher feedstock costs.

The polyethylene (PE)-naphtha spread was 15% lower quarter-on-quarter at $359/tonne (€251/tonne), while the paraxylene (PX)-naphtha spread slumped 28% over the same period to $516/tonne.

Paraxylene spreads were bearish in the second quarter owing to the normalisation of quake-hit facilities in Japan, regional capacity additions and delayed purchases by PTA producers in anticipation of lower PX prices, SK Innovation said.

In its outlook, the company said that it expects olefin spreads to improve in the third quarter of 2011 on the back of turnarounds at regional crackers.

Increased utilisation rates at its downstream facilities on easing power shortages in China will also improve olefin spreads in the July-September quarter, it added.

($1 = W1,052 / $1 = €0.70)

By: Nurluqman Suratman

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