SK E&S CEO: "Maximizing Merger Synergies in 4 Core Businesses Including LNG and Hydrogen"

SK E&S Holds Business Presentation for Securities Firms
Highlights Business Overview, Financial Stability, and Merger Synergies

Chu Hyung-wook, CEO of SK E&S, is presenting the company's business status at the 'SK E&S Corporate Briefing' held on the 7th at the Conrad Hotel in Yeouido, Seoul. Photo by SK E&S

Choo Hyung-wook, CEO of SK E&S, stated, "Based on SK E&S's differentiated business competitiveness that generates stable annual operating profits exceeding 1 trillion KRW, we will maximize the synergy effects of the merger with SK Innovation and transform into a leading future energy company."

SK E&S announced that on the 7th, it held an investor relations (IR) session at the Conrad Hotel in Yeouido, Seoul, attended by major domestic and international securities analysts to explain the company's business status.

This session was organized to enhance the understanding of SK E&S's business and explain the expected benefits after the merger to key stakeholders in the financial investment industry, amid the ongoing merger process between SK E&S and SK Innovation. CEO Choo Hyung-wook personally attended the session and presented on SK E&S's business competitiveness, financial stability, and merger synergy strategies.

"Securing Stability and Growth through Four Core Businesses: LNG, Hydrogen, and More"

CEO Choo highlighted 'stability' and 'growth potential' as the strengths of SK E&S's differentiated business portfolio.

He said, "SK E&S started in 1999 as a city gas holding company and has established itself as the 'No. 1 private LNG operator in Korea' by integrating and completing the LNG value chain?from the development and production of overseas gas fields, LNG (liquefied natural gas) transportation, storage, and transmission infrastructure, to direct LNG import and power generation businesses. We have built a stable profit base capable of maintaining high profitability despite the volatility of the global energy market."

He added, "SK E&S is not resting on its laurels but is currently transitioning to a 'green portfolio' centered on four core businesses?renewable energy, hydrogen, energy solutions, and LNG value chain business. The expansion of the LNG value chain and the transition to the green portfolio are showing progressive results."

Chu Hyung-wook, CEO of SK E&S, is presenting the company's business status at the 'SK E&S Corporate Briefing' held on the 7th at the Conrad Hotel in Yeouido, Seoul. Photo by SK E&S

Robust Profitability with Differentiated Competitiveness

SK E&S is Korea's leading private LNG operator, supplying over 5 million tons of LNG annually and owning the largest private LNG power generation facilities with a capacity of 5GW. It is also the top city gas operator in the domestic market, generating stable profits every year. Considering the ongoing business permit procedures for the 'SK Hynix Yongin Semiconductor Cluster District Energy Project' and the 'Boryeong Hydrogen Co-firing Power Generation Project,' as well as additional demand expansions in Europe and Southeast Asia, the total power generation capacity is expected to expand beyond 8GW, and LNG supply volume could increase to 10 million tons, further enhancing the cost and operational competitiveness of the LNG value chain.

SK E&S is the leading private renewable energy operator in Korea with a renewable energy pipeline of approximately 4.6GW, spearheading the RE100 initiative. It is also advancing liquefied hydrogen and blue hydrogen businesses linked to mobility and power generation market demands. In the energy solutions sector, SK E&S is gradually increasing its market share, primarily in the U.S. market.

Moreover, SK E&S's four core businesses are organically integrated and mutually complementary, enabling balanced profit generation even amid external environmental changes such as fluctuations in international energy prices. Based on this stability and profitability, SK E&S's annual sales increased more than twofold from 5.5352 trillion KRW in 2017 to 11.1672 trillion KRW last year, and operating profit rose from 355.7 billion KRW to 1.3317 trillion KRW during the same period. The company has grown into a sustainable business capable of generating stable annual operating profits exceeding 1 trillion KRW.

"Maximizing Merger Effects through Future Electrification Response"

CEO Choo emphasized that this high growth potential will continue even after the merger with SK Innovation. Structural sustainable growth of the four core businesses is expected in line with the global energy transition trend, further enhanced by merger synergies.

Global LNG demand is steadily increasing due to energy security issues, raising the value of the LNG value chain. Accelerated clean energy transition is expected to drive high growth in renewable energy and hydrogen businesses. The energy solutions business also has significant growth potential as it responds to electrification, with surging electricity demand driven by AI (artificial intelligence) and the expansion of the mobility industry.

The merger with SK Innovation is also expected to create synergies by strengthening existing business competitiveness and generating new businesses. For example, SK E&S is currently successfully supplying LNG fuel to SK Hynix's self-generation plant. Post-merger, if LNG direct import volumes are expanded to self-generation facilities within the SK Innovation group, it could contribute to expanding the LNG value chain by reducing fuel costs and creating additional LNG demand.

Furthermore, by combining the future energy business capabilities of both companies, such as battery and grid solution technologies, it will be possible to provide diverse customized energy supply solutions, leading the electrification era.

CEO Choo said, "We will form an 'Integrated Synergy Promotion Team' to secure merger synergies early and pursue sustainable corporate value 'value-up.' Through this, the merged entity will evolve into a 'Total Energy & Solution Company' leading future electrification trends."

Meanwhile, SK E&S and SK Innovation each held board meetings on the 17th of last month and approved the merger agenda. If the merger is approved at the shareholders' meeting on the 27th of this month, the merged company will officially launch on November 1.