o Strong oil prices led to 13% year-over-year increase in revenue to a record KRW 6,514.7 billion
o Balanced performance from all business divisions helped raised third quarter operating profit 5% year over year, to KRW 349.5 billion.
o Lubricant division nearly doubled its operating profit by an increase of 91% year-over-year, to KRW 56.2 billion.
o Petrochemical division showed a strong quarter with a 30% year-over-year increase in its operating profit, in spite of regular maintenance shutdowns.
o Petroleum division’s quarterly export sales volume (56%) surpassed quarterly domestic sales (44%) for the first time.
SEOUL, October 24, 2006 ?SK Corporation, [KS 003600] today announced record quarterly revenue of KRW 6,514.7 billion, up 13% compared to KRW 5,754.9 billion reported for the third quarter a year ago. Sales revenue was primarily driven by increased oil prices and higher product prices. The company’s overall operating profit was up 5% year-over-year supported by strong performance by both the lubricant and petrochemical divisions.
Commenting on the results, the Head of Investor Relations Seung-Hoon Lee said: “We are pleased with the increase in operating profit this quarter compared to a year ago, especially given the fact that we achieved record profit in last year’s third quarter.?
Mr. Lee continued, “With a diversified business portfolio that allows the company to hedge against cyclical nature of the energy business, SK Corporation is well positioned to continue its solid performance through the fourth quarter. Improved refining margins coupled with solid performances from other business divisions will help the company achieve its 2006 operating guidance of KRW 1.41 trillion.?
The company’s non-operating profit decreased by 45% year-on-year, due to a KRW 134.5 billion write-back of provisions for allowances of exchangeable bonds (EB) in the 3rd quarter of 2005. Excluding this one-off write-back, non-operating profits are considerably stronger year-on-year.
Business Sector Performance
Lubricant
Third quarter lubricant division sales and operating profit increased 51% and 91% year-over-year to KRW 262.8 billion and KRW 56.2 billion respectively.
This improved operating profit was attributed to many factors, including the increased capacity of the Lube Base Oil plants, resulting from the change of de-waxing catalysts earlier this year. In addition, tight supply market conditions and increased demand for Group III VHVI base oil, contributed to the increase in sales and operating profit.
Petrochemicals
The petrochemicals division’s third quarter total sales and operating profit increased by 27% and 30%, to KRW 1,565.5 billion and KRW 139.4 billion, respectively. The increase was propelled by the New Reforming Center’s (NRC) successful operation, coupled with favorable market conditions.
During the quarter, many companies in North East Asia scheduled regular maintenance shutdowns for their naphtha crackers, which resulted in tightened supply. SK Corporation was able to leverage the market conditions and achieved another strong quarterly performance, despite shutting down its own number two naphtha cracker center for regular maintenance.
Exploration and Production
The E&P division’s sales and operating income for the third quarter of 2006 decreased by 3% and 9 % year-over-year, to KRW 95.8 billion and KRW 62.8 billion respectively.
The company continued to be an active E&P player during the third quarter, preparing its exploration activities in Kazakhstan where it has a 50% share in Kazakhstan Block 8.
The division expects additional oil production from Brazil BMC-8 from the second half of 2007, along with LNG production from Yemen LNG and Peru LNG projects from the end of 2008 and 2009, respectively. The company’s average daily production and operating profit for E&P division in 2009 is expected to a
Source : SK
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