Completion of SK On, SKTI, and SK Entum Merger... Reborn as a 62 Trillion Won Revenue Company

SK On announced that it has completed the merger process with SK Entum on the 1st. Accordingly, the merger among the three companies?SK On, SK Trading International (SKTI), and SK Entum?announced in July last year, has been fully completed. The name of the merged entity is SK On.

Previously, SK On merged with SK Trading International in November last year. After the merger, the former SK Trading International operates under the new name 'SK On Trading International' as a company-in-company (CIC) within SK On. SK Entum operates as the terminal business division of SK On Trading International.

SK Trading International is the only specialized trading company for crude oil and petroleum products in Korea. It is responsible for importing crude oil and exporting products for SK Energy and SK Incheon Petrochem. SK Entum is a business tank terminal company that manages the storage and loading/unloading of petroleum cargo.

Having completed the merger of the three companies, SK On stated on the day, "We aim to make a full-fledged leap as a 'global battery & trading company' that balances growth and stability, securing differentiated competitiveness through 'together yet apart' synergy creation and enhancing future growth value."

First, the merger is expected to improve SK On's financial structure. Before the merger, SK On's sales and asset scale were 13 trillion KRW and 33 trillion KRW, respectively (as of the end of 2023). After the merger, these figures will grow to 62 trillion KRW and 40 trillion KRW, respectively. An additional annual EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of about 500 billion KRW is also anticipated.

SK Trading International and SK Entum were profitable companies generating stable earnings without large-scale facility investments, which is expected to ease SK On's financial difficulties. SK Trading International recorded sales of 48.963 trillion KRW and operating profit of 574.6 billion KRW in 2023. SK Entum also posted sales of 257.6 billion KRW in the same year.

SK On, which was spun off from SK Innovation in October 2021, recorded operating losses of 1.0727 trillion KRW in 2022 and 581.8 billion KRW in 2023. With continued deficits, its borrowings exceeded 20 trillion KRW. In the third quarter of last year, after ten consecutive quarters of losses, SK On recorded its first operating profit of 24 billion KRW.

SK On expects synergies not only in financial aspects but also in business areas such as strengthening raw material procurement capabilities through this merger. SK On explained, "Through the trading know-how of Trading International, SK On can create merger synergies in reducing raw material purchasing costs as well as responding to market risk factors such as price volatility and transaction risks." It added, "It is also positive that partner companies with whom Trading International has maintained cooperative relationships are pursuing entry into the battery raw material business sector."

The trading business plans to expand from the existing oil-centered business structure to trading of battery minerals and materials such as lithium, nickel, and cobalt. It is also expected to improve trading efficiency and profitability by utilizing SK Entum's existing tank terminal assets.

An SK On official said, "Synergy creation through the merger will secure differentiated competitiveness and lay the foundation for long-term growth," adding, "SK On will be reborn as a 'global battery & trading company' that balances growth and stability."