Investment Rating - The report recommends the industry [6] Core Insights - The overall revenue for the company in Q1 2025 reached 21.15 trillion KRW (114.21 billion RMB), marking the highest quarterly revenue in 10 quarters, driven by the inclusion of SK Innovation E&S performance [1][19] - Despite improvements in the battery business, the company faced operating losses due to declining refining profit margins and falling international oil prices [1][19] Financial Performance Summary Q1 2025 Overall Performance - The company reported an operating loss of 446 billion KRW (24.1 million RMB) in Q1 2025 [1][19] Business Segment Performance 1. **Refining Business** - Revenue: 11.92 trillion KRW (643.68 million RMB); Operating profit: 363 billion KRW (19.6 million RMB) [4][19] - Operating profit decreased by 306.1 billion KRW (16.53 million RMB) compared to the previous quarter due to global economic slowdown concerns and OPEC+ production cuts [4] 2. **Petrochemical Business** - Revenue: 2.48 trillion KRW (133.92 million RMB); Operating loss: 1.14 trillion KRW (61.7 million RMB) [5][19] - Continued operating losses due to weak demand for paraxylene (PX) and olefin products [5] 3. **Lubricants Business** - Revenue: 972.2 billion KRW (52.50 million RMB); Operating profit: 121.4 billion KRW (6.56 million RMB) [7][19] - Operating profit decreased by 18.1 billion KRW (977.4 thousand RMB) due to economic slowdown impacts [7] 4. **Exploration & Production (E&P) Business** - Revenue: 383.1 billion KRW (20.69 million RMB); Operating profit: 120.4 billion KRW (6.50 million RMB) [8][19] - Slight revenue growth, but operating profit decreased by 25.4 billion KRW (1.37 million RMB) due to declining sales in Peru [8] 5. **Battery Business** - Revenue: 1.61 trillion KRW (86.94 million RMB); Operating loss: 299.3 billion KRW (16.16 million RMB) [9][19] - Revenue growth driven by increased sales in North America, with operating profit improving by 60.1 billion KRW (3.25 million RMB) compared to the previous quarter [9] 6. **Materials Business** - Revenue: 238 billion KRW (1.29 million RMB); Operating loss: 548 billion KRW (2.96 million RMB) [10][19] - Operating profit increased by 19.3 billion KRW (1.04 million RMB) due to sales growth and reduced one-time costs [10] 7. **SK Innovation E&S** - Revenue: 3.75 trillion KRW (202.5 million RMB); Operating profit: 1.93 trillion KRW (10.43 million RMB) [11][19] - Operating profit increased by 78.9 billion KRW (4.26 million RMB) due to increased urban gas sales driven by winter heating demand [11] Q2 2025 Outlook 1. **Refining Business** - Expected gradual improvement in refining profit margins due to seasonal demand factors [12] 2. **Petrochemical Business** - Anticipated improvement in aromatics spreads due to reduced regional PX supply and new PTA facilities coming online [13] 3. **Lubricants Business** - Expected to maintain stable profitability due to strong demand for high-quality base oils [14] 4. **Exploration & Production Business** - Ongoing discussions for drilling more production wells following successful drilling operations [16] 5. **Battery Business** - Anticipated continued growth in North American sales driven by electric vehicle battery demand [17] 6. **Materials Business** - Expected significant sales growth due to increased sales to major customers and new product launches [17] 7. **SK Innovation E&S** - Plans to ensure stable and competitive LNG supply through various channels [18]