SK innovation Co., the intermediate holding company for SK Group’s energy sector, will implement an emergency management system starting in May 2025 amid sluggish performance across its key businesses.

According to industry sources on Monday, SK innovation plans to officially declare emergency management in early May. The company is gathering input on measures including earlier executive work hours, weekly emergency meetings, and scaled-back meetings and training, with final plans to be set after consulting affiliates and employees. A company-wide announcement is expected after the long weekend in early May, according to an SK Group official, who added that the company is working to deliver a message focused on motivating progress rather than emphasizing crisis.

The decision reflects concerns over the continuously poor performance across key subsidiaries. SK on Co., its battery unit, continues to face a prolonged slump while SK energy Co. and SK geo centric Co., its oil refining and petrochemical affiliates, are under pressure from falling oil prices and increased supply from China.

With SK Group actively pushing group-wide business rebalancing, the ongoing slump in the energy sector, which serves as a core growth pillar for the group, poses a significant burden.

SK on’s losses have widened amid a slowdown in global electric vehicle demand and intensifying price competition. A prolonged period of stagnant demand has slowed earnings recovery, which dragged SK innovation’s overall performance down. SK on implemented its own emergency management plan in July 2024, under which it froze executive salaries, cut costs, and merged two affiliates with strong performances, SK enterm and SK trading international.

SK geo centric has also been struggling with widening losses due to oversupply from China. Adding to the pressure, SK energy is expected to report weak first-quarter earnings due to falling oil prices and shrinking refining margins. High interest rates and a strong Korean won dampened consumer demand even further while intense price competition with Asian rivals is squeezing export profitability.

Against this backdrop, SK innovation has been taking steps to weather an “unprecedented crisis” even before its official emergency declaration.

Following large-scale restructuring efforts that slightly improved its financial structure, the company is now considering asset sales. SK innovation E&S has begun procedures to sell the former Ko-one Energy Service Co. headquarters site in Daechi-dong, southern Seoul, which is a core asset of its city gas business, with the sale estimated at about 500 billion won ($348 million) and the buyer expected to be finalized around June 2025.

A partial or full sales of additional SK innovation E&S businesses are also under review. Amid the additional difficulties in proceeding with an initial public offering (IPO) for its lubricants unit SK enmove Co. due to concerns over dual listings, business restructuring discussions are underway. Internal discussions also continue on affiliate mergers to strengthen the group’s financial structure as boosting corporate value through IPOs has become increasingly difficult.

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