SKC eyes M&As in semiconductor, rechargeable battery materials

SKC Inc., a South Korean chemical materials company under SK Group, is seeking to buy semiconductor and rechargeable battery materials companies in the US and Japan to bolster its non-chemical business after it swung to losses in 2022 due to the stagnant chemical sector.

“We are seeking to buy a rechargeable battery materials company in the US while reviewing a Japanese company in the semiconductor materials sector,” Choi Du-hwan, chief financial officer (CFO) at SKC, told reporters and analysts during a fourth-quarter earnings conference call on Monday. The company is also open to buying a company at home should it find a good candidate in these sectors.

Given its active search for M&As, SKC projected its capital expenditure for 2023 will jump more than 30% from the previous year’s 1.1 trillion won ($876.8 million), according to its regulatory filing on Monday.

The announcement comes after SKC swung to an operating loss of 24.3 billion won on a consolidated basis in the fourth quarter ending December 2022 from the same period a year earlier, the company said in a separate regulatory filing on the same day. Its bottom line also reversed to a loss of 266.6 billion won in the quarter on sales of 763.7 billion won, up 18.6% over the same period.

For the whole of 2022, its operating income plunged 45.1% to 220.3 billion won although its sales added 38.6% to 3.1 trillion won. It swung to a net loss of 66.7 billion won.

The company blamed the losses on sluggish demand for chemical products in the face of a global economic slowdown.

Its chemical division posted 140.9 billion won in operating profit last year, skidding 57.6% year on year. In the fourth quarter, the division swung to an operating loss of 272 billion won from the previous quarter.

The company expects a recovery in demand for chemical products after the second quarter of this year, especially from China following its economic reopening.

Meanwhile, SKC’s semiconductor and secondary battery materials units fared well last year.

Its secondary battery materials division earned 98.6 billion won in operating profit on sales of 810.1 billion won partly thanks to the stellar performance of its copper foil-making unit SK Nexilis Co.   

As the copper-making unit is set to embark on mass production at its factory in Malaysia, the unit is expected to bag more orders this year, said the company.

SKC said in the conference call that it currently supplies copper foil to five global top-tier customers, and it recently completed negotiations with a European battery maker to deliver copper foil. It is also in talks with an EV maker in North America to supply copper foil.

SKC expects annual sales for 2023 at 3.69 trillion won, about 20% higher than last year.

Write to Ik-Hwan Kim at lovepen@hankyung.com

Sookyung Seo edited this article.