Choi Hyung-wook, CEO of SK E&S, stated, “We aim to transform into a leading future energy company by maximizing the synergy effects of the merger with SK Innovation, based on SK E&S’s differentiated business competitiveness, which generates stable annual operating profits of over 1 trillion won.”
On the 7th, SK E&S announced that it held an investor relations (IR) meeting at the Conrad Hotel in Yeouido, Seoul, attended by major securities analysts from both domestic and international firms to explain the company’s business status.
This meeting was organized amidst the ongoing merger efforts between SK E&S and SK Innovation to enhance the understanding of SK E&S’s business among key players in the financial investment industry and to explain the expected benefits after the merger. CEO Choi Hyung-wook attended the session personally to present on the business competitiveness and financial stability of SK E&S, as well as the synergy strategies post-merger.
CEO Choi identified ‘stability’ and ‘growth potential’ as the strengths of the differentiated business portfolio that SK E&S has built.
He emphasized, “Since its inception as a city gas holding company in 1999, SK E&S has established itself as the ‘number one private LNG operator in Korea’ by completing the LNG value chain from the development and production of overseas gas fields to the transportation, storage, and distribution infrastructure for LNG, as well as direct importation and power generation. This has created 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; we are currently advancing our transformation into a ‘green portfolio’ centered on four core businesses: renewable energy, hydrogen, and energy solutions, based on our existing LNG value chain. We are already seeing results from the expansion of the LNG value chain and the conversion to our green portfolio.”
SK E&S is the leading private LNG operator in Korea, supplying over 5 million tons of LNG annually and owning 5GW of LNG power generation capacity, maintaining the top market share in domestic city gas operations, generating stable profits year after year. Moreover, with ongoing project approvals for ‘SK Hynix Yongin semiconductor cluster district energy business’ and ‘Boryeong hydrogen co-firing power generation business’, and considering the additional demand expansion in Europe and Southeast Asia, the total generation capacity is expected to exceed 8GW, and LNG supply could rise to 10 million tons, further enhancing cost and operational competitiveness in the LNG value chain.
SK E&S also leads the domestic RE100 project as the top private renewable energy operator, holding a pipeline of approximately 4.6GW of renewable energy, and is advancing liquefied hydrogen and blue hydrogen businesses linked to demand in mobility and power generation markets. In the energy solutions sector, SK E&S is gradually increasing its market share primarily in the U.S.
The four core businesses of SK E&S are structured to be mutually complementary through organic integration, ensuring balanced profit creation even amidst fluctuations in international energy prices and external environmental changes. Based on this stability and profitability, SK E&S has seen its annual revenue increase from 55.352 trillion won in 2017 to 111.672 trillion won last year, with operating profit more than doubling from 355.7 billion won to 1.3317 trillion won, establishing itself as a company capable of generating sustainable annual operating profits of over 1 trillion won.
CEO Choi emphasized that this high growth potential is expected to continue even after merging with SK Innovation. Given the anticipated structural continuous growth across the four core businesses, plus the added merger synergies, the forecast looks promising.
Due to energy security issues, global LNG demand is steadily increasing, enhancing the value of the LNG value chain, and accelerating the transition to clean energy is expected to fuel high growth in renewable energy and hydrogen businesses. Furthermore, with the electrification in response to the rapid rise in electricity demand due to AI and the expanding mobility sector, there is substantial growth potential for the energy solutions business.
The merger with SK Innovation is also anticipated to enhance the competitiveness of existing businesses and create synergies for new business ventures. Specifically, SK E&S is currently successfully supplying LNG fuel to SK Hynix’s self-power generation facility, and should LNG direct supply volumes to self-generation facilities within the SK Innovation group expand post-merger, it could contribute to LNG value chain expansion through fuel cost reduction and additional LNG demand creation.
Additionally, by merging the battery and grid solution capabilities of both companies, it would enable the provision of diverse customer-tailored energy supply solutions, potentially leading the electrification era.
CEO Choi stated, “We will form an ‘integrated synergy promotion team’ to swiftly secure the synergies that can be attained through the merger and drive sustainable corporate value enhancement. Through this, the merged entity will evolve into a ‘Total Energy & Solution Company’ that leads the future electrification trend.”
Meanwhile, SK E&S and SK Innovation held respective board meetings on the 17th of last month and passed the merger agenda. If approved at the shareholders’ meeting on the 27th of this month, the merged entity will officially launch on November 1st.
Lee Sang-jin daedusj@autodiary.kr