Korea’s SK Innovation Q1 pre-tax profit up 57% on strong petchem ops

(adds details on petrochemical spreads)

SINGAPORE (ICIS)–SK Innovation’s first-quarter pre-tax profit increased 57.2% year on year to Korean won (W) 1,163bn ($1.03bn), on strong performance from its petrochemical business, the energy and chemical producer said on Tuesday.

Sales for the three months to March 2017 grew 20.4% to W11,387bn, with operating profit up 18.8% at W1,004bn, based on a slide presentation posted on its website.

Its petrochemical segment posted a first-quarter operating profit of W454.7bn, more than double the W224.3bn profit recorded in the same period in 2016, offsetting lower earnings from the refining segment.

On a quarter-on-quarter basis, SK Innovation’s olefin spreads improved to $722/ton in the first three months of 2017 from $610/ton amid plant maintenance at regional plants.

PX spread increased to $391/ton from $365/ton over the same period, while benzene spread rose to $423/ton from $270/ton – on the back of “robust downstream demands and delayed capacity additions”, the company said.

SK Innovation expects petrochemical spreads to remain steady on reduced supplies, despite weakening demand.

The company’s polypropylene (PP) and paraxylene (PX) plants ran at full capacity in the first quarter, while its NCC (naphtha cracking centre) posted a 99% run rate and its polyethylene plants were running at an average of 97%.

SK Innovation had announced in February this year that it – through subsidiary, SK Global Chemical – will acquire the ethylene acrylic acid (EAA) business of US producer Dow Chemical.

The acquisition includes two manufacturing facilities, manufacturing technology, intellectual property and trademark rights for Dow Chemical’s global production facilities in Freeport, Texas, and in Tarragona, Spain.

Meanwhile, SK Innovation’s refining segment posted a March-quarter operating profit of W453.9bn, down by 7.4% from the same period last year.

Refining margin weakened in the first quarter to $6.4/bbl from the previous quarter’s $6.7/bbl, but should be robust in the second quarter “on strong demand as we enter the driving season”, the company said.

Its lube and exploration & production (E&P) registered operating profits of W94.9bn and W57.3bn, respectively, in the first quarter.

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($1 = W1,134)