SK On firm to freeze annual pay of all executives until it turns to profit

SEOUL — SK On, the loss-making battery unit of South Korea’s chip-to-construction conglomerate SK Group, said on Monday it will freeze the annual pay of all executive-level officials until it turns to profit, as part of its cost-cutting measures.

Under the measures, C-suite executives, including the chief executive officer, let the company’s board decide their position, SK On said in a statement.

In his message to all employees, SK On CEO Lee Seok-hee said the emergency plan is to respond to “changed business environments” and effectively manage business operations, reports Yonhap news agency.

“The current crisis will be an opportunity (for the company) to reemerge as a leading global manufacturer (in the fields of EV batteries),” the CEO said.

SK On reported an operating loss of 581.8 billion won ($422.7 million) last year and remained in the red in the first quarter of 2024 with a loss of 331.5 billion won.

In its guidance announced earlier this year, the company targeted reaching the break-even point during the second half by posting an operating profit in the third or fourth quarter.

But SK On will continue to make investments in research and development projects to strengthen its competitiveness in car battery manufacturing while reorganising sales operations to flexibly respond to market demands, it said.

The global EV markets are in a stagnation phase, known as the “chasm,” which occurs before the widespread adoption of EVs.

SK On is 89.5 per cent owned by SK Innovation Co., the country’s leading refiner by sales.