[Click eStock] SK Networks, 3Q Operating Profit Forecasted at 42 Billion KRW... Down 8.7% YoY

Prolonged COVID-19 Pandemic Makes Poor Performance Inevitable for Core Businesses Like Rental Cars and Trading Companies

[Asia Economy Reporter Minwoo Lee] SK Networks is expected to find it difficult to avoid poor performance in the third quarter. This is attributed to the sluggishness in businesses such as trading, car rental, and hotels due to the impact of the novel coronavirus disease (COVID-19).

On the 11th, Hyundai Motor Securities forecast that SK Networks will record consolidated sales of 3.0232 trillion KRW and an operating profit of 42 billion KRW in the third quarter of this year. Compared to the same period last year, sales are expected to decrease by 22%, and operating profit by 8.7%.

The sluggishness in the trading division had a significant impact. Due to the prolonged COVID-19 situation, overseas import demand decreased, leading to a sharp decline in steel and chemical sales volume. Operating profit is also expected to be significantly weak. Except for telecommunications marketing, which saw increased sales of new smartphone models, operating profits in all other divisions are expected to fall short of initial forecasts.

The Car Life (car rental) business division experienced a decline in used car resale prices and weakened revenue in the short-term rental segment due to COVID-19. The SK Magic (rental) business division also saw increased brand advertising expenses to respond to competitors' image advertisements. The Walkerhill business division, which was initially expected to improve, saw its deficit widen due to the prolonged COVID-19 situation.

In the fourth quarter, some recovery from the sluggishness is expected. Park Jong-ryeol, a researcher at Hyundai Motor Securities, stated, "Although poor performance is inevitable until the third quarter due to the prolonged impact of COVID-19, operating profit in the fourth quarter is expected to show a solid trend," adding, "The low base effect from last year, along with strong operating profits in core businesses such as Car Life and SK Magic, will drive the overall increase in consolidated operating profit."