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| SK Innovation CEO Kim Jun speaks during the company's annual general meeting at its headquarters in Jongno-gu, Seoul, Thursday. Courtesy of SK Innovation |
By Nam Hyun-woo
SK Innovation, Korea's leading refinery, and S-Oil both expressed concerns over the uncertain business environment and promised to maintain stability through crisis management at their respective annual general meetings.
During the meetings, their CEOs highlighted efforts for stable management, rather than launching aggressive business strategies. This appears to be a move to ease shareholders' concerns over the firms' weakening profitability amid the growing COVID-19 outbreak.
SK Innovation held its annual general meeting Thursday and a number of agenda items were approved, including the reappointment of CEO Kim Jun as a director of the board.
During his opening remarks, Kim said the company was facing "an unprecedented crisis" due to the global economic downturn and declining demand for its major products following the coronavirus pandemic.
"We expect to face heightened uncertainties due to the economic downturn and weaker demand stemming from COVID-19," Kim said. "SK Innovation has weathered through a slew of difficulties since its establishment and we believe we have the capability to overcome difficulties embedded in our DNA. The company will spare no effort to overcome this unprecedented crisis and make a leap forward."
Regarding Kim's reappointment, SK Innovation's board said, "Kim is a qualified director who can lead the stable operation of the company's materials and battery divisions amid the volatile business environment."
Last year, SK Innovation saw its consolidated operating profit decline to 1.27 trillion won ($1.03 billion), down 39.6 percent from a year earlier, mainly due to deteriorating profitability in its refining and chemical businesses.
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| S-Oil CEO Hussain Al-Qahtani |
"It is expected that the uncertainties over the company's management will increase this year due to the global economic downturn and the volatile crude market amid the COVID-19 outbreak," Al Qahtani said during the meeting. "To better cope with changes in the market and generate greater outcomes, S-Oil will pursue optimization all across its businesses."
Al-Qahtani joined S-Oil in June last year as the company was seeking to broaden its portfolio from refining to petrochemicals to enhance its profitability. As part of such efforts, S-Oil has been making massive investments in steam cracking and olefin downstream facilities.
However, the company was affected by the industry-wide downturn last year, mainly stemming from the U.S.-China trade conflict. The company logged 449.2 billion won in consolidated operating profit last year, down 29.8 percent from a year earlier.
This year is expected to be tougher for refiners, as weakened global oil prices deal an additional blow to their deteriorating refining margin. Brokerages are casting a gloomy outlook for the firms, forecasting massive operating losses in the first quarter.
KB Securities expects SK Innovation will post an 830.2 billion won operating loss in the January to March period, citing an expected inventory loss after the global oil price plunge and subsequent drop in refining margins. Yuanta Securities anticipated S-Oil will log a 454.1 billion won operating loss, citing similar reasons.
"Global oil prices are showing the widest volatility ever, heightening uncertainties for refiners," an industry official said. "Under these circumstances, maintaining stable management policies seems to be more appropriate than following aggressive new business strategies."
