SK's Historic Record
Oil refiner registers 20.9 tln won in sales, 1.69 tln won in net profit last year

SK Corp. recorded the largest level of sales and profit last year, opening the age of 20 trillion won in sales, the company announced recently.
The largest oil refiner and oil product exporter said its sales last year amounted to 21.9 trillion won and net profit 1.69 trillion won. The sales figure represented a 26 percent increase from the previous year and 3 percent increase in net profit on year-on-year comparison.
The company said its 4th quarter sales totaled 6.22 trillion won and net profit 481.6 billion won. Company officials said increased exports and crude oil production helped sales to increase all across its business sectors. The company said the operating profit fell from the previous year due to the thinner profit margin in oil refining, and increased raw material cost. But decreases in interest rate expenses, and income from investment firms for its shares contributed to an upswing in net profit.
Income by sector showed that the oil business sector expanded its sales by 33 percent owing to increased exports of refined oil totaling 15.74 trillion won with 459.1 billion won in operating profit.
The chemical sector's sales amounted to 4.83 trillion won up 10 percent from the previous year, with operating profit coming in at 428.7 billion won. The lube oil sector saw its sales rise to 680.6 billion won and net profit 1.27 billion won, up 27 percent each respectively, on the strength of the second lube oil production plant coming online last year. The oil exploration sector recorded sales of 335.4 billion won and 209.6 billion won in operating profit last year.
The company said its debt was cut to 4.4 trillion won, down 122.3 percent from the end of 2004 with the debt ratio down to 114.6 percent. SK said its sales target for this year would be identical with last year's at 21.3 trillion won with operating profit at 1.41 trillion won, up 220.4 billion won from last year on the strength of the recovery of oil refining profit margin and profitability. The company set the budget for this year at 1.010 billion won including 340 billion won to be invested in the oil exploration business, 9.6 billion won in MDU, and 7.6 billion won in refining operations.
Without question, the company was able to register such a record-breaking performance last year amid high oil prices was owed to rising exports, the expansion in the crude oil production, reductions in interest expenses and returns from investments, company officials said.
They pointed especially at increased exports of light oil products, including aviation fuel, diesel, and among others, although domestic oil market had been sluggish, energy and chemical sectors in particular. They said exports of oil, chemicals, lube oil totaled around $10 billion, up $1.9 billion from the previous year. The expansion of oil markets in such countries as Indonesia, Vietnam and others in Southeast Asia also helped the company increase its exports, bringing its total sales to over 20 trillion won. Exports of oil products amounted to 15.7 trillion won, up 11 percent over the preceding year, pushing up total annual sales to increase 33 percent over the preceding year.
The chemical sector saw its sales increase 10 percent to 4.82 trillion won last year, but its operating profit fell short of the targeted amount of 4.7 trillion won at 4.28 trillion won, due to cost-push effect of the prices of other oil products including Naptha and additives. In the case of the lube oil business, sales increased 27 percent over the previous year at 680.6 billion won and operating profit rose 38 percent to 102.7 billion won last year, breaking for the first time, the 100 billion won barrier, due to the operation of the second lube oil plant.
The oil exploration business sector recorded 335.4 billion won in sales, up 22 percent and its operating profit totaling 209.6 billion won, up 6 percent, due to long-term sales contracts for its natural gas fields in Yemen and Peru and the expansion of its oil fields overseas. The company's totals from its oil fields increased by 130 million barrels last year to 420 million barrels including 20 million barrels in Brazil's BMC-8 mining block, and 10 million barrels from the 15-1 mining block in Vietnam. The company's sales target will remain unchanged from last year at 21.3 trillion won, but its operating profit is expected to improve to 428.7 billion won, up by 220.4 billion won due mainly to the turnaround in oil refining profit margin. nw

Chairman Chey Tae-won of SK Corp.