S&P Upgrades SK Innovation Credit Rating... Profitability Improvement Expected from Next Year

The merged entity of SK Innovation and SK E&S, with assets totaling 105 trillion won (as of the first half of this year), has officially launched. After about three months of preparation following the merger announcement in July, the largest private energy company in the Asia-Pacific region has been established. The photo shows the SK Seorin Building in Jongno-gu, Seoul, where SK Innovation's headquarters is located. Photo by Kang Jin-hyung

Global credit rating agency Standard & Poor's (S&P) has upgraded SK Innovation's credit rating by one notch.

According to the credit rating industry on the 1st, S&P revised SK Innovation's credit rating and outlook from 'BB+ Stable' to 'BBB- Negative.' As a result, SK Innovation's credit rating has regained investment-grade status.

S&P explained, "The merger with SK E&S has improved the overall business and earnings volatility of the integrated SK Innovation, and reflecting the parent company SK Inc.'s support potential, SK Innovation's rating has been upgraded by one notch."

Through this merger, it is expected that SK Innovation will secure stable cash generation capability and build an expanded energy portfolio including city gas and power generation sectors, thereby mitigating volatility in SK Innovation's petrochemical and battery industries. Additionally, the increase in SK Inc.'s stake in SK Innovation from 36% to 56% has raised the likelihood of SK Inc.'s support for SK Innovation, which was also cited as a basis for the rating upgrade.

In the short term, S&P forecasts that SK Innovation's cash flow will improve starting in 2025. Thanks to the completion of large-scale facility investments in the battery sector and increased production volume in the United States, the overall financial structure of SK Innovation is expected to improve.

Considering that SK Geocentric is one of SK Innovation's core subsidiaries, it was assigned the same credit rating as SK Innovation, while the credit rating for SK E&S was withdrawn due to the merger.

SK Innovation announced its merger with SK E&S in July, and the merged entity officially launched on this day. The merged company is the largest private integrated energy company in the Asia-Pacific region with assets totaling 105 trillion KRW. It has built a portfolio encompassing current and future energies, including petroleum energy, chemicals, LNG (liquefied natural gas), power, batteries, and renewable energy.