SK Innovation Posts 5.8 Trillion Won Loss on BlueOval Impairment, Suspends Dividend

SK Innovation (096770.KS) recorded a loss of 5.82 trillion won ($4.3 billion) last year after booking a 3.7 trillion won impairment charge from its U.S. joint venture BlueOval SK. Despite exceeding 80 trillion won in revenue and posting double-digit growth in operating profit, the company decided not to pay dividends this year due to the loss.

SK Innovation announced Wednesday that its consolidated revenue reached 80.3 trillion won with operating profit of 448.1 billion won on a preliminary basis. Revenue increased 8.2% year-on-year while operating profit rose 25.8%.

Although operating profit grew amid strong refining margins, the company posted a pretax loss of 5.82 trillion won. This reflects impairment losses related to BlueOval SK, the U.S. battery joint venture between SK On and Ford Motor. The two companies terminated their joint venture structure in December and are proceeding with follow-up procedures.

Following the revaluation of the Kentucky battery plant and assets that Ford will operate, SK Innovation recognized a 3.7 trillion won impairment charge in the fourth quarter. The company described this as a temporary accounting adjustment arising from the joint venture separation process. The asset value was adjusted according to accounting standards, with no actual cash outflow.

The company emphasized that the one-time impairment charge allowed it to dispose of assets with low future profitability while establishing a foundation for medium- to long-term operational efficiency.

"Until now, BlueOval SK's assets, liabilities, and profits and losses were reflected at 100%, so the impairment loss was recognized at twice our actual 50% stake," an SK Innovation official said. "In the battery industry, asset optimization and partner restructuring have become the 'new normal' as the industry slowdown continues."

The official added: "When SK On fully operates the Tennessee plant with a single capacity of 45 GWh, utilization rates and profitability will significantly improve compared to before, enabling improvement of the medium- to long-term profit structure."

However, SK Innovation decided not to pay dividends for fiscal year 2025, considering the accounting loss. The company had previously announced in its corporate value enhancement plan that it would pay a minimum dividend of 2,000 won per share this year. After skipping dividends in 2023, the company paid 2,000 won per common share in 2024, but will now miss dividends again after just two years.

SK Innovation's stock reacted immediately. Even as the KOSPI and KOSDAQ surged 1.69% and 4.70% respectively, SK Innovation shares fell 3,300 won (2.96%) to close at 108,200 won.

SK Innovation's 2024 business segment results were: petroleum business with revenue of 47.19 trillion won and operating profit of 349.1 billion won; chemical business with revenue of 8.92 trillion won and operating loss of 236.5 billion won; lubricants business with revenue of 3.84 trillion won and operating profit of 607.6 billion won; oil development business with revenue of 1.37 trillion won and operating profit of 399.7 billion won; battery business with revenue of 6.98 trillion won and operating loss of 931.9 billion won; materials segment with revenue of 84 billion won and operating loss of 233.8 billion won; and E&S segment with revenue of 11.86 trillion won and operating profit of 681.1 billion won.

The petroleum business recorded losses of 120 billion won through the third quarter due to falling global oil prices but achieved 474.9 billion won in profit in the fourth quarter alone, achieving annual profitability. The battery business, however, recorded an operating loss of 441.4 billion won in the fourth quarter alone. As a result, SK Innovation's fourth-quarter operating profit was 294.7 billion won, down 49.7% from a year earlier.

SK Innovation announced plans to develop "electrification" and energy as new growth engines. The company aims to increase power generation by securing various power generation assets with stability, economic viability, and sustainability.

"To transform into an electricity business operator, we will pursue business from three perspectives: production, consumption, and solutions," an SK Innovation official said. "We will procure competitive liquefied natural gas from the United States, Southeast Asia, and Australia, and pursue combined heat and power generation projects in areas with growing electricity demand both domestically and overseas, including the Yongin semiconductor cluster and Vietnam."