SK Innovation to adjust business portfolios for long-term growth

SK Innovation Co., South Korea’s top energy company, is slated to adjust its business portfolios for long-term growth while not planning to slow investment in the electric vehicle battery sector as its cell and materials units are expected to successfully emerge from the recent industry-wide downturn on an eventual recovery in the global EV sector, its CEO said.

SK Innovation CEO Park Sang-kyu assured its employees of projected long-term growth in the EV industry, which has been sluggish due to weaker demand, according to the intermediate holding company of South Korea’s No. 2 conglomerate SK Group on Wednesday.

“SK Innovation has been reviewing business portfolios to improve units’ competitiveness since earlier this year with a plan to share measures once ready,” Park told executives and staff at a recent workshop. “We are convinced that the company is going in the strategically right direction. We can achieve anything together since we have technology and talent.”

Earlier this month, SK Innovation reorganized its subsidiaries to boost their individual values through independent management for potential sales of stakes in them. The parent of SK On Co., the world’s fifth-largest EV battery maker, asked its 26 subsidiaries and affiliates to take steps to boost competitiveness.

EV, SCHEDULED FUTURE

SK Innovation, which holds a 100% stake in SK On and 61.2% in SK IE Technology Co. as of end-2023, will not slow its investments in the battery sector, Park said.

“The trend toward EVs is a scheduled future, given the global climate crisis and electrification, although the EV market recently suffered from slowing demand and worsening business environments,” he stressed.

“A company must look ahead to five to 10 years, not just two to three years, for investments.”

Park advised SK On and SK IE Technology, a global top lithium-ion battery separator, to enhance their competitiveness as the EV industry is expected to dominate the global auto industry in the long term.

“Green tech units such as SK On and SK IE Technology are like marathoners running uphill out of breath at around the 35-kilometer mark,” he said. “Competitors are in the same situation, also running uphill, so it can be an opportunity for us.”

Park called on SK On to improve competitiveness in prices, technology, quality, customer management, corporate culture and talent to take advantage of the situation when the global EV industry recovers.

For the petroleum and chemical businesses, Park advised securing a competitive advantage through optimal operations.

“The oil business is influenced by an economic cycle, while the chemical business is suffering structural difficulties,” he said. “The petroleum and chemical units need to top the Asia-Pacific market through price competitiveness and operational optimization.”

Write to Woo-Sub Kim at duter@hankyung.com
 
Jongwoo Cheon edited this article.