SK Energy's Record-Breaking Year

65 pct and 31 pct increases in sales and operating profit last year

SK Energy Co. had its best year ever in 2008, posting over 45 trillion won in sales on the strength of its record-breaking oil product exports of over $20 billion, the company said during its investor relations session held on Jan. 22.
The company said its sales revenue expanded 65 percent YoY to 45.75 trillion won with an operating profit of 1.93 trillion won, up 31 percent YoY.
Despite the superb sales figures, the company suffered reductions in normal and net profit, down 39 and 26 percent respectively, coming in at 992 billion won and 907 billion won, mostly due to the steep depreciation of the Korean won vis-a-vis the U.S. dollar in 2008, the company said.
The largest oil company in Korea said it was able to post such record annual sales thanks to such oil fuels as gasoline and diesel whose value-added portions are high, posting a superb export record, up 87 percent from the previous year, at $21 billion or 29.60 trillion won. This and the heavy oil-cracking tower, which came online in June, attributed to the company's tough export drive.
In the meantime, the company's fourth quarter results ended in the red due to global economic downturn with its deficit figure running to 66.5 billion won for the first time in five years. The quarter's sales amounted to 9.99 trillion won, down 31 percent YoY, and operating profit was down 63 percent YoY at 268.9 billion won.
Exports of light oil such as gasoline, diesel and kerosene increased 55 percent last year at 72.24 million barrels valued at some 9 trillion won, up 138 percent, accounting for more than half of its oil product exports. The company said exports of oil products doubled the previous year's record at 16.890 trillion won in value, exceeding domestic sales of those products for the first time, the company said.
The company also enjoyed a huge year in the oil exploration field, which contributed greatly to the company's operations, with the sector's total sales reaching 534.5 billion won on 309.1 billion won in operating profit. The company posted more than 300 billion won in operating profit for the first time in the history of its oil exploration projects.
The company began to pump oil from its 56 mining bloc in Peru in September for the first time and it also increased pumping from its 15-1 mining bloc in Vietnam in October, averaging 36,000 barrels per day to increase its total crude oil output from its overseas oil fields by 15,000 barrels per day compared to figures at the start of last year.
The company also finished the year with 31 overseas oil fields in 17 countries, up from 27 oil fields in 15 countries at the beginning of 2008. Hit the hardest was its petrochemical sector, which saw its operating profit plummet 75 percent to 124.8 billion won at the end of last year from comparable figures at the end of 2007.
The company tried hard to expand exports of petrochemical products last year, but it was unable to do any more than it did due to the economic slump sweeping the world, cutting demand and prices. The company plans to upgrade the quality of its petrochemical products, aware that market conditions will not improve this year due to increases in the number of petrochemical production facilities and reduced demand in the region.
The company's lubrication oil sector saw its sales rise to 1.88 trillion won last year on operating profit of 254.2 billion won, an increase of 66 percent and 34 percent respectively from the previous year, thanks to the operation of its lube oil plant in Indonesia, which helped increase the export of lube base oil by 12 percent and provided a steady increase of finished lube oil products.
The lube oil sector continued to play a key role in exports of the company's products, accounting for 84 percent of total lube oil product exports. Further expansion is expected in the sector through a diversification of markets and the development of an upgraded quality of lube oil.
The SK Energy, like many Korean conglomerates, suffered a setback in its fourth quarter with total sales of 9.87 trillion won and operating profit of 268.9 billion won, up over the same period in the previous year, but down 31 and 63 percent, respectively, from the third quarter. nw

An offshore oil platform operated by SK Energy at one of its offshore oil districts overseas

Chairman Chey Tae-won of SK Energy