SK on, the last among South Korean battery majors to report first-quarter earnings, remained in the red in the first quarter due to aggressive global expansion to build economies of scale as a latecomer, weighing down on the profit of its parent SK innovation Co. despite refining boon from surge in oil prices.

According to SK innovation’s disclosure on first-quarter statement Friday, the unlisted battery unit, or spun-off SK on, incurred a loss of 273.4 billion won ($216 million), narrowing from losses of 310.4 billion won last year quarter, and by 37 billion won from a year ago.

Sale however more than doubled to 1.26 trillion won from 1.07 trillion won in the previous quarter and 139 percent from a year ago.

Its competitors stayed comfortably in the black zone. Samsung SDI on Thursday reported an operating profit of 322.3 billion won on sales of 4.05 trillion won, and LG Energy Solution on the previous day disclosed 258.9 billion won in operation profit and 4.34 trillion won in sales. Both fared better against surge in material prices thanks to cylindrical batteries as they have been in higher demand by EV finished carmakers over pouch type.

SK innovation’s consolidated operating profit significantly improved to 1.64 trillion won ($839 million) for the January-March period from a loss of 58.4 billion won last quarter and surging by nearly threefold from 584.3 billion won a year ago, largely owing to refining boon.

Revenue amounted to 16.26 trillion won, gaining 18.51 percent on quarter and 72.9 percent on year on increased demand for oil and petrochemical products. Net profit came to 863.3 billion won, jumping from 151.9 billion won last quarter and reversing from a loss of 371.4 billion won last year.

Its shares closed down 4.87 percent at 205,000 won on Friday.

Mainstay oil refining business registered an operating income of 1.5 trillion won, rising 35 percent on quarter and 57 percent on year on improved refining margin and inventory-related profit from hiked global oil prices.

Chemical business turned to black, recording 31.2 billion won in operating income, up 241 billion won from the previous quarter on PX products and inventory effects.

Lubricant business recorded 211.6 billion won in operating income, narrowing by 56.1 billion won from 267.7 billion won last quarter on decreased sales and margins from soaring costs.

The company is sanguine about the battery outlook in line with its fast expansion in global capacitiy.

The company expects annual battery sales of around 7.5 trillion won since its plants in the U.S. and Hungary begin mass production.

Factories in the U.S. and Hungary have already begun commercial production and the global battery production capacity is anticipated to reach 77 gigawatt hours (GWh) when the Yancheng plant in China adds to capacity by starting commercial operation.

The company aims to bolster its EV battery production capacity to 88 GWh by 2023 and 220 GWh by 2025.

By Susan Lee

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