S&P Global Ratings revised its outlook on SK Innovation Co. Ltd. to stable from negative while maintaining the company’s BBB- long-term issuer credit rating. The agency highlighted expected strong earnings in 2026-2027 combined with ongoing asset disposals as key factors that should help lower SK Innovation’s debt burden.
In the first half of 2026 SK Innovation recorded EBITDA of about KRW7.2 trillion. S&P attributed that performance to firm refining margins and constrained lubricant supply following damage to a competitor’s production facility in Qatar. Higher oil prices related to the Middle East war further supported the refining segment’s profitability.
S&P Global Ratings projects EBITDA for the full year 2026 at KRW11.0 trillion, a significant increase from KRW3.9 trillion in 2025. The agency expects EBITDA to moderate to KRW7.6 trillion in 2027 as the one-off drivers ease.
On the balance sheet side, SK Innovation completed a capital reduction of roughly KRW1.2 trillion in 2026 stemming from joint venture investments in China and Southeast Asia, with proceeds expected to be repatriated to the parent company in the third quarter. In addition, chemical subsidiary SK Geo Centric Co. Ltd. anticipates receiving about KRW200 billion in the same quarter through the sale of subsidiaries and land assets.
Management may also deploy city gas assets to redeem KRW3.1 trillion of redeemable convertible preferred shares in early 2027. When incorporating these planned and completed disposals, S&P forecasts the company’s adjusted debt-to-EBITDA ratio will improve to about 3.2x in 2026, down from 9.1x in 2025. The agency expects the ratio to rise to 4.3x in 2027 as EBITDA declines, but still remain comfortably under its downside trigger of 5.5x.
In calculating adjusted debt, S&P included approximately KRW1.7 trillion of derivative liabilities tied to price return swaps with financial investors.
S&P’s outlook also addresses individual business-line performance. The EV battery division is expected to post a modest profit in 2026, aided by a one-time compensation payment from Ford Motor Co. in the second quarter, but the agency sees the battery business likely returning to losses in 2027. The chemical segment faces industry supply-demand imbalances and is projected to see only marginal improvement over the next one to two years.
Overall, the ratings agency’s reassessment reflects near-term profit strength in refining and the impact of asset monetization on leverage, while flagging ongoing vulnerabilities in batteries and chemicals that could temper results beyond 2026.