...August 2, 2022 HONG KONG (S&P Global Ratings) Aug. 2, 2022--SK Innovation Co. Ltd.'s (SKI) record profit in the second quarter and its resulting decline in debt leverage are likely temporary. The jump in second quarter profit was largely driven by supply disruptions caused by geopolitical tension, particularly the Russia-Ukraine war. Refining profits are volatile and tied to highly temporal geopolitical matters, and therefore likely not sustainable. S&P Global Ratings believes SKI's debt leverage will increase alongside its aggressive investment in batteries for electric vehicles (EVs). SKI's(###-/Negative/--) second-quarter operating profit further expanded to Korean won (KRW) 2.3 trillion, compared with KRW1.6 trillion in the first quarter of 2022, and KRW0.5 trillion a year ago. The strong profit in the first half of 2022 means the company's debt leverage will come in between 2x and 3x in 2022, well below our downgrade trigger of 4x. We note that there is a divergence between the group's...
