SK Innovation Battery Business income exceeds 1.15 trillion won in the first half of the year, the battery business will be spun off in October.

According to Yonhap News Agency, SK Innovation said on Aug. 4 that at a board meeting held on the 3rd, the company decided to set up two wholly-owned independent legal persons, "SK Battery" and "SKE&P" (tentatively named), to further enhance the value of the enterprise by deeply ploughing the battery and oil development business.

It is reported that the newly established SK battery will be mainly responsible for medium and large batteries for electric vehicles, battery rental service (BaaS) and energy storage system (ESS), while SKE&P will be responsible for oil development, production and exploration projects, carbon capture and storage (CCS) business.

According to public data, SK Innovation has taken the lead in developing power batteries for medium and large new energy vehicles since 1991, and has launched its battery business worldwide since 2010.

In terms of capacity, SK Innovation has battery production bases in the United States, Hungary, China and South Korea, and the current annual battery production capacity is about 40GWh. Recently, SK Innovation has also significantly raised its production capacity target: to achieve the goals of 2023 85GWh, 2025 200GWh and 2030 500GWh.

On May 21, Ford announced that the company and SK Innovation had signed a joint venture memorandum to jointly form a joint venture company called "BlueOvalSK" in the United States and produce batteries and battery packs locally, Battery Network noted. BlueOvalSK plans to achieve mass production around 2025, producing a total of about 60GWh cells and battery packs each year, with the possibility of capacity expansion.

According to SK Innovation overseas plant construction plan, its second plant in Hungary plans to put into operation in 2022, the third plant will start construction in Q3 this year, and Q3 will start operation in 2024; the factories in Yancheng and Huizhou in China will be put into operation in Q1 this year; the first plant in the United States will be put into operation in Q1 in 2022 and the second plant will be put into operation in Q1 in 2023.

On the performance side, SK Innovation released its financial results for the second quarter of 2021 on August 3rd. Benefiting from the rise in oil prices, petrochemical prices and the improvement in battery sales, SK Innovation's sales in the second quarter reached 11.12 trillion won, an increase of 55.91% over the same period last year, and operating profit reached 506.5 billion won, an increase of 962.8 billion won over the same period last year.

Judging from the results in the first half of the year, SK innovation sales increased to 20.36 trillion won from 18.17 trillion won in the same period last year, while operating profit turned to a surplus of 1.09 trillion won from a loss of 2.27 trillion won in the same period last year. It is also the first time since 2018 that the operating profit of SK Innovation in the first half has exceeded 1 trillion won.

Battery Network learned that in the battery business, due to the expansion of sales, the battery business of SK Innovation achieved revenue of 630.2 billion won in the second quarter, an increase of about 86 per cent compared with the same period in 2020 (338.2 billion won). After 523.6 billion won in the first quarter, SK's innovative battery business exceeded 500 billion won for two consecutive quarters. In the first half of this year, sales of SK's innovative battery business also exceeded 1 trillion won in the first half of the year, reaching about 1.15 trillion won.

At the same time, due to the increase in sales at the Yancheng plant in China, which began operation this year, the operating loss of SK Innovation's battery business in the second quarter reduced to 97.9 billion won, about 78.8 billion won less than in the first quarter of this year. SK Innovation said its operating loss fell below 100 billion won for the first time in three quarters, increasing the likelihood of improved earnings in SK's innovative battery business in the second half of this year.

In addition, due to the addition and increased sales of the lithium-ion battery separator (LiBS) plant in China, the SK innovative materials business achieved an operating profit of 41.4 billion won, an increase of 9.7 billion won over the previous quarter.

In terms of competitiveness, according to data released by SNE Research, the cumulative installed capacity of electric vehicle batteries worldwide in the first half of this year was 114.1 GWH, a year-on-year increase of 153.7%. Among them, South Korean battery giants-- LG New Energy, Samsung SDI and SK Innovation-- reached 30.9% of the global power battery installed market share in the first half of the year (basically the same as 34.5% in the same period last year), ranking second, fifth and sixth, respectively.

Specifically, in the global ranking of cumulative electric vehicle battery installations in the first half of this year, LG New Energy ranked second in the world with a market share of 24.5 per cent, while Samsung SDI and SK Innovation ranked fifth and sixth with 5.2 per cent market share respectively.

Battery network believes that SK innovation intends to spin off the battery business, perhaps to prepare for the change of business independent IPO. At present, LG New Energy, a chemical spin-off from LG, has officially launched the listing process, with a valuation of 100 trillion won (about 573.3 billion yuan), which is expected to set a new record for South Korea's largest IPO.

It is reported that LG New Energy applied to the Korean Stock Exchange for a preliminary review of the listing of the securities market on June 8 and is expected to go public in the third quarter of this year, raising more than 10 trillion won (about 57.3 billion yuan).