Most of what is written about SK Inc. (KRX:034730) concerns the stakes it holds rather than the businesses it consolidates, and for good reason: ₩27.31tn of its ₩32.82tn of first-half pretax income arrived from equity-accounted affiliates reaching down to SK hynix.
But this is also one of Korea's largest operating companies by revenue, at ₩122.70tn in FY2025, larger than LG Electronics and roughly two-thirds the size of Hyundai Motor. And that part of it has just done something remarkable.
Consolidated operating income, by fiscal year: ₩8,004.7bn in FY2022, ₩4,788.5bn in FY2023, ₩2,396.0bn in FY2024, ₩1,818.5bn in FY2025.
Down 77% across three years, on revenue that fell only 8.8%, from ₩134.55tn to ₩122.70tn. The operating margin went from 5.95% to 1.48%.
Quarterly it got worse before it got better. The fourth quarter of 2024 was an operating loss of ₩408.3bn. The second quarter of 2025 produced ₩199.6bn on ₩30.14tn of revenue, a margin of 0.66%.
Then: ₩3,673.1bn in the first quarter of 2026, and ₩4,841.2bn in the second. The first half's ₩8,514.4bn is 4.7 times what the company earned in the whole of FY2025, and the second quarter's 11.49% margin is the highest in the eleven years of data available here.
The change is not at the overhead line. Selling, general and administrative expense was ₩2,158.3bn in the second quarter of 2026 against ₩2,099.5bn a year earlier, essentially flat.
Gross profit was ₩6,999.5bn on ₩42,124.7bn of revenue, a margin of 16.62%. A year earlier it was ₩2,025.7bn on ₩30,142.0bn, or 6.72%.
Nearly a tripling of gross margin, year on year, at a group with ₩42tn of quarterly revenue. For context the annual gross margin has run between 7.81% and 11.78% across the last decade. Sixteen point six is far outside that range.
Revenue also grew 39.8% in the quarter, from ₩30.14tn to ₩42.12tn.
Higher revenue and dramatically higher margin at the same time is not a cost story. Something changed in what this company sells or what it gets paid for it.
The first is refining. SK Innovation is the largest piece of the consolidated revenue base, and refining margins are volatile enough to move a group result by trillions of won in either direction. A strong crack spread environment would produce exactly this pattern.
The second is semiconductors, one level down from the affiliate stakes. SK Siltron makes silicon wafers, and wafer demand and pricing follow memory capital spending, which in the current cycle has been extraordinary. Siltron is consolidated rather than equity-accounted, so its profit shows up in operating income rather than below the line.
The third is the consolidation scope itself, and this is the one that should make a reader cautious.
Between late June and late August, SK Inc. filed three notices of subsidiaries being incorporated into the holding structure, two of subsidiaries withdrawing from it, a subsidiary merger decision that was then amended, several acquisitions and disposals of stakes in other corporations, and a convertible bond issued to buy a Malaysian car rental business.
The balance sheet shows the effect. Property, plant and equipment fell from ₩80,363.7bn at the end of FY2024 to ₩69,788.3bn at the end of FY2025, a decline of ₩10.6tn, which at a group this capital-intensive points to something leaving the consolidation rather than being depreciated.
When the perimeter changes, year-on-year comparisons stop meaning what they appear to mean. A margin that improves because a low-margin subsidiary was deconsolidated is not the same thing as a margin that improves because the business got better, and from the summary financials the two are indistinguishable.
The segment note in the half-year report identifies which businesses produced the profit, and anyone acting on the inflection should read it first.
Here is the reason to care about a ₩8.5tn operating result at a company that just reported ₩29.01tn of net income.
The ₩27.31tn arriving from below the operating line is equity-accounted profit from affiliates, dominated by a memory cycle two levels of ownership away. It is a bookkeeping entry that increases the carrying value of investments. It does not move cash, it cannot be distributed except through affiliate dividends, and it will reverse violently when memory turns, exactly as it did at these companies in 2023.
Operating income is different. It is generated by businesses SK Inc. consolidates and controls, it converts to cash, and it services the ₩127.10tn of liabilities on the balance sheet against which the group paid ₩7,998.0bn of finance costs in six months.
For a shareholder buying at 0.342 times consolidated book value, the durability of ₩8.5tn of operating profit matters far more than the size of a mark that will not be there in two years.
The third quarter, in November, and specifically whether the gross margin holds near 16%. One quarter at nearly triple the prior year is either a cycle peak or a step change, and the second one will distinguish them.
The second thing is the segment disclosure in the FY2026 annual report, which shows revenue and operating profit by business and identifies what was added to or removed from the consolidation during the year. Until that exists, the honest position is that SK Inc.'s operating businesses have produced their best result on record and the reason is not yet public.
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