Good morning. This is Project Leader Ji-yoo Lee from SKI's IR Team. I thank you for participating in the SKI's Q1 2021 earnings release session. Please note that the contents presented today have yet to undergo an independent auditor's review and could be subject to changes upon such review. The presentation will be delivered by Mr. Yang-Seop Kim, who heads the Finance Division. Good morning. This is Kim Yang-Seop from SK Innovation. I thank the shareholders and analysts for taking consistent interest in SKI. I will go over Q1 2021 management results in my presentation, followed by a Q&A session. To earnestly address your questions, we have here with us management and staff of SKI and the major subsidiaries. First, on Q1 sales, operating profit, and other management results. With the rise in oil price, the subsequent petrochemical goods price sales increased KRW 1.5622 trillion QoQ and recorded KRW 9.2398 trillion. The cold spell in the U.S. and other supply glitches resulted in margin rise of petchem products, and that, coupled with inventory-related gain with higher oil price, led to an increase of KRW 745.9 billion QoQ of operating profit, resulting in Q1 number of KRW 502.5 billion, realizing a turnaround. As for non-operating profit, FX loss of KRW 71.7 billion and battery-related settlement of minus KRW 976.3 billion was reflected, resulting in a decrease of KRW 998.6 billion QoQ at minus KRW 1.0301 trillion. Now, on the company's financials. At the end of Q1 2021, the company's assets increased by KRW 4.4891 trillion compared to the end of last year. With petrochemical product price increase, inventory asset and receivables increased at KRW 42.9872 trillion. As for liability, with increase in payables with higher oil prices, it increased by KRW 4.6305 trillion compared to last year-end, at KRW 27.6701 trillion. The debt-to-equity ratio is at 181%, and net debt increased by KRW 191.8 billion and recorded KRW 8.9172 trillion. Now, on Q1 business results and market conditions. First, on the refining market. International oil price in the first quarter was influenced by the cold spell in the U.S. and voluntary production reduction out of Saudi Arabia. With the new U.S. economy-boosting measures amounting to $1.9 trillion and increased expectations for the COVID-19 vaccine, oil prices rose. With inventory burden eased due to operational glitches in the U.S. and Japan, and also with expected demand pickup for oil, with more vaccination, Q1 crack was strong. With gradual demand recovery centering around the U.S. and with the production disruption of U.S. companies with the cold weather, coupled with rapid decrease in inventory, gasoline crack rose. Diesel crack was also helped by the cold weather in the U.S., but with the winter demand gone and with tougher lockdown in Europe resulting in dampened demand, saw less stronger movement. Kero crack was also pushed upwards with the U.S. cold spell, but the rise was limited with worsening COVID-19 situation in Europe. Let me now brief you on the results of our Q1 refining business. Refining OP was influenced by the big improvement in refining margins with the supply disruption caused by the U.S. cold spell and increased inventory-related gain with higher oil price. It increased KRW 608.6 billion QoQ at KRW 416.1 billion. Q1 refining business inventory-related gain, including the lower of cost or market method, is at KRW 372.2 billion. With lesser influence from COVID-19 in the second quarter and the following demand recovery, the refining margin is expected to improve gradually. On to our petchem business. Steady demand from downstream business continued for olefin in Q1. With North American facility trouble brought on by the cold weather and logistics limitation with container shortages, the quarter end spread rose rapidly. With demand recovery for aromatics and facility trouble in different regions leading to supply decrease, PX and benzene spread improved over the previous quarter. I will now brief you on the petrochemical business results for Q1. Operating profit for petrochemical business was helped by spread improvement centering on PX, benzene, and other aromatics, and sales volume recovery with the completion of regular maintenance in the previous quarter and also inventory-related gain. It increased KRW 164.5 billion over the previous quarter at KRW 118.3 billion. The upcoming regional regular maintenance season and subsequent decrease in supply will result in continued strong spread in the second quarter. Regional new volume will come on board after the planned maintenance and restart of troubled facilities. That will gradually ease the supply situation at the end of the quarter. PX, the representative aromatic product, sees continued tight supply with regional major players regular maintenance. With operation of new PTA and polyester chain demand recovery, the spread is expected to gradually rise. Now on first quarter lubricant business. With tighter supply with the U.S. cold spell, sales volume decreased with global supply issues. With inventory related gain with oil price increase, the business realized an OP number of KRW 137.1 billion, which is KRW 11.8 billion increase QoQ. A tight supply and demand situation will continue for some time in the second quarter. With seasonal demand increase, spread is expected to remain strong. Next, on the results of our E&P business. Q1 E&P operating profit improved with more sales and sales price increase and recorded KRW 11.3 billion, which is an improvement over the previous quarter. On our Q1 battery business results. Q1 sales recorded KRW 526.3 billion, which is an increase of KRW 29.1 billion QoQ. This was due to sales volume increase with Hyundai Motor Company's volume production of IONIQ 5 in the first quarter. Initial cost increase for our overseas sites that have begun commercial production or is slated to commence commercial production next year. With that, operating loss for this business increased KRW 67.8 billion QoQ at minus KRW 176.7 billion. The Hungary number one and China Jiangsu plant have begun commercial production in 2020. Plants two and three in Europe and plants one and two in Georgia, U.S. are under construction. China's Yancheng and Huizhou plants have started commercial production in Q1. Please refer to the appendix for detailed regional facility expansion plans. Now on our IE materials business results for Q1. Productivity gain in the Chinese plant and reduction in raw material cost led to an OP increase of KRW 6.4 billion over the previous quarter at KRW 31.7 billion. The company continues to add new LIBs capacity. The output, which stood at 816 million sq m per year at the end of last year, will increase to 1.37 billion sq m by the end of this year. The new line that will be completed in China at the second quarter of this year is expected to begin commercial production as soon as it is completed. The other global manufacturing site in Poland is well under construction on schedule and is expected to commence commercial production at the third quarter. For details, please refer to the appendix in the presentation deck. Now we will entertain your questions. Before posing your questions, please state your affiliation and your name first. Please note that the Q&A session will be translated consecutively. [Non-English content] Now Q&A session will begin. Please press star one, that is star and one if you have any questions. Questions will be taken according to the order you pressed star and number one. For cancellation, please press star two, that is star and two on your phone. The first question will be presented by Youngchan Baek from KB Securities. Please go ahead with your question. Yes. I have two questions. First is on the settlement amount that you have reached with your counterpart. Could you please give us more detail on the settlement? Do you believe that there will be additional cost out in the second half related to this settlement? My second question is for the battery business backlog. Could you please give us an update of the backlog? Yes, I will brief you on how we are going to account for the settlement amount that we have reached with our counterpart, as was agreed by the two companies and as was disclosed. Well, the settlement amount stands at KRW 2 trillion, KRW 1 trillion would be given out during 2021 and 2022, both in equal KRW 50 billion tranches. That amount will be calculated at this present value. The present value calculation stands at KRW 976.3 billion. [Non-English content] The remaining KRW 1 trillion that would be paid after year 2023, that will be linked to our sales numbers, and that would also be calculated to that present value. It will be accounted for as cost of sales. With that, we do not foresee any costs out for the later half of this year. [Non-English content] Yes, this is Mr. Yongjo Yoon, who heads the Battery Strategy and Planning Office. He will be providing you with the answer for your battery related question. Currently, we have an outstanding relationship with our existing OEM clients, including Daimler, Hyundai and Kia, and we are on a continuous search for a better relationship improvement with global OEM players such as Ford and Volkswagen to win their new programs. [Non-English content] Our backlog as of today stands at 600 GWh and translating into money-wise terms, that would amount to KRW 80 trillion. Now with the uncertainty gone with the settlement, we believe that we are in a much more favorable condition to win new orders from the global OEMs. [Non-English content] Yes. If I make a correction on the translated amount. Well, I told you that it's KRW 50 billion. It's actually KRW 500 billion paid out in 2021 and 2022. [Non-English content] The next question will be presented by Jae-sung Yoon from Hana Financial Investment. Please go ahead with your question. [Non-English content] Yes, I have two questions. First, I've heard that you have plans for divesting some of the businesses of SK Lubricants and your petchem business, and also your E&P business. I would like to hear on the schedule and how much cash in you expect from such divestment, also as to when it would be reflected in your results. Now on to my second question. You talked about the settlement, with the settlement being paid to your counterpart, do you think there will be a change in the timing where the battery business will reach a break-even point? [Non-English content] Yes, this is the Head of Finance Division, Mr. Yang-Seop Kim, addressing your question. On the sales of SK Lubricants shares, it has been disclosed a 40% share will be divested or sold, and it amounts to KRW 1.1 trillion. [Non-English content] We could look into other options with SK Global Chemical and the E&P business, but nothing has been finalized. Should there be any conclusion to such reviews, we will be making sure to disclose the information to you. [Non-English content] I will be now addressing your battery business settlement related question. Well, I've mentioned to you in my previous answer that the KRW 500 billion amount will be paid out this year and next year, and it had already been reflected as our non-operating numbers. Starting from 2023, a royalty payment will be made, and at that time of payment, it will be reflected in our numbers. With that, we do not foresee any changes in our expected BEP point. [Non-English content] If I may add to my previous answer, we do expect to see a mid-single digit profit numbers in 2023 and by year 2025, that could rise to high single digits. [Non-English content] The next question will be presented by Park Soo Yong from JP Morgan. Please go ahead with your question. Hi, this is Park Soo Yong from JP Morgan. Thank you for the opportunity to ask a question. The first question I have is, if I look at page 18 of your presentation, you have 2025 EV battery capacity of 125 gigawatt hours. This looks a bit higher than your existing capacity expansion plan outlined on page 12, which would imply closer to 100 gigawatt hours or so. Could you tell us which region do you see more potential for capacity growth? Is this likely to be in JV format, or will it be fully owned by SK? My second question is, could you give us your thoughts on the impact from battery raw material price inflation as well as an update on the impact on your business, and then give us an update on your battery recycling business? Thank you. [Non-English content] [Non-English content] This is Mr. Yoon, who heads battery business, who will be addressing your question. You see the 125 GWh after 2025. We have made our investment decisions for our capacity expansion, but the battery market itself is in such a rapid growth stage. That is why we are looking into additional opportunities for capacity expansion. With that, we've given you a number of 125 GWh. [Non-English content] In the process of increasing our global footprint, we're not focusing on a specific region. We keep an even lookout for all the regions that see a rapid growth in the EV sector, including USA, Europe, and China. [Non-English content] As for the approach, whether it would be 100% ownership or whether it be a joint venture type of approach, we are looking into various options. [Non-English content] [Non-English content] Yes, this is once again Mr. Yongjo Yoon, Head of the Battery Strategy and Planning Office, who will be addressing the second part of your question. You've asked the impact of raw material price on our battery business and on our recycling business. [Non-English content] It is true with the global economic recovery and with the rapid growth of the EV market that the raw materials or materials have seen a price rise. [Non-English content] Well, the raw material prices, it saw an increase for lithium and cobalt and also nickel. With the big project in Indonesia now committing production, we have seen the prices somewhat become more stabilized. [Non-English content] Well, there have been some logistic wise issues when it comes to supply and demand situation. There have been bottlenecks from time to time. We do expect to see some improvement with this bottleneck situation. We entered into a long-term agreement with the suppliers, and we do get a stable supply of what we require. We also link the raw material prices to our final sales prices. The raw material price increase poses no risk to our business. [Non-English content] Now to address the recycling question. Well, we have entered into an agreement with Kia and begun a project together. We started this in March last year, and we are looking into or studying the efficiency when it comes to recovered metals from our used batteries. [Non-English content] We have studied the recovery of lithium and other metal materials that go into our battery packs. We have created an ecosystem that is very environmental friendly. [Non-English content] We have developed ourselves the recovery method for lithium, and we hope to use this once again in our cathode materials that goes into our battery packs. With that, we will be creating an eco-friendly EV ecosystem, and it would also help in our ESG initiatives. [Non-English content] The next question will be presented by Sang-won Han from Daishin Securities. Please go ahead with your question. [Non-English content] Yes, I have three questions. First is on your battery business. I see that the loss is widening in first quarter. Could you give us the most updated guidance when it comes to your sales numbers and your profit numbers? The same question goes to SK IET business. Please provide us with the guidance on your sales number and your profit numbers. My other question goes to the battery business. Many global OEMs have announced that they will be bringing the battery business in-house, and there have been press releases or press reports on Ford's activity. Could you please provide the company's opinion on the global OEMs trend, and what is your countermeasure to this trend? My third question goes to the refining business. Even excluding the inventory related gains, I believe that your refining business has seen a profit number, and the margin is expected to be stronger going further into this year. Do you think you will be seeing an upward movement in your refining margin? [Non-English content] 성 가능할 것으로 보고 있습니다. Yes, this is Mr. Yoon once again from the Battery Strategy and Planning Office. Well, we've seen the initial cost rise with the new plants that have initially begun production, and also with the plants that are slated to produce starting next year. As was mentioned, the sales this year is expected to be double the size that we have witnessed last year at mid KRW 3 trillion level. [Non-English content] Yes. The new sites, they have, of course, incurred initial costs, but we have our expertise in early stabilization of our plants with our existing plants. We will be seeing new volume being created from our new facilities. With that, compared to last year, we will see loss decrease by 30%. [Non-English content] If I may give you our guidance, we hope to see our EBITDA numbers turn black this year, and we hope to see a number greater than our break-even point. [Non-English content] You asked the company's opinion on the global OEMs move towards bringing the factory business in-house. [Non-English content] Yes. Well, last September in 2020, Tesla had their Battery Day, and this March Volkswagen had their Power Day. They have made their announcements, and they've also talked about their ideas on how to cut costs. [Non-English content] Yes. The global EV OEMs, in order to ensure stable supply of their required battery packs, they are trying to be in the battery business themselves. They also believe that this would add to their competitive edge, some say that this could pose a threat to the battery business players. [Non-English content] We believe that this could be an opportunity for our business. [Non-English content] Rather than the OEM companies involving directly in technology development and manufacturing themselves, I think it's highly likely that they form a good firm partnership with the battery makers. [Non-English content] Should we see such cooperative plans be more concrete, then it will ensure us a more stable sales source. It would also possibly lessen our investment burden. We could in various ways cooperate in building a good battery ecosystem together. [Non-English content] We did get various offers from many global OEMs and we're reviewing them positively, but at the same time very prudently. [Non-English content] Yes, this is CFO from SK IET who will be providing you with the SK IET answers. Well, we do not give a number-wise guidance as was briefed to you during our IPO roadshow. However, having said that, our sales volume and revenue numbers and OP numbers are closely aligned. I would like to talk about our volume. [Non-English content] We have begun phase I operation in China in November, and it takes usually about nine to 10 months to go to 100% operational rate. It will take a nine to 10 month period for a full ramp-up. This period also includes getting the green light from our customers. [Non-English content] The mentioned phase I operation in China is running at an 80% utilization rate. At the later half of this year, when we do get the final sign off from our customers, we believe the number could go up to 100%. [Non-English content] We believe that the sales volume will start to see an earnest increase in the second quarter. Our sales volume on a YoY basis could grow as high as 50%. As was mentioned, our volume is tightly aligned with our revenue numbers and OP numbers. [Non-English content] Yes. This is Mr. Lee from SK Energy who will be answering your refining margin related question. Despite COVID-19 with the vaccination currently ramping up in the U.S. and Europe, we do see a demand pickup. With the driving season in May, we do expect to see a real good fundamental demand increase, especially centering around gasoline. We believe the refining margins could see an improvement. [Non-English content] When vaccination rate in the U.S. reaches over 50% in the later half of this year, we do expect to see crack improve significantly for jet oil and diesel. [Non-English content] The next question will be presented by Hyunryul Cho from Samsung Securities. Please go ahead with your question. [Non-English content] Yes. I have questions largely for your refining business and your petrochemical business. First, on capacity increase of your refining facilities. How much capacity increase do you foresee for year 2021 and year 2022? On the other hand, how much facility will be closing down? This is my first question that goes to the refining business. The second question is for your chemical business to SKGC. Well, I've read an article about your potential joint venture concerning bioplastic. Nothing has been confirmed after the article. Are you currently engaged in this project? I would like to hear your confirmation. Then now on the recycling business, where would the site be located? The pyrolysis facility establishment, which region would that be? When will it commence actual operation? [Non-English content] Yes. This is Mr. Lee from SK Energy who will be addressing your first question. We do not have enough information to address your question for year 2022. I will be talking about the outlook for year 2021. On a global basis, the new volume to come on board is expected to add 1.8 million barrels per day, and the scrapped amount would be somewhere around 1.752 billion barrels per day. That will be a change by 1 million. [Non-English content] This is Mr. Cho from SKGC. He will be addressing your bioplastic joint venture question and also your recycling question. [Non-English content] SKGC is currently engaged in our own technology development activities, and also we have joined hands with various partners to look into various opportunities. As of today, bioplastic joint venture is not being considered as a most viable option. It is not being considered. [Non-English content] Now on to your pyrolysis or Brightmark pyrolysis recycling question. [Non-English content] To make full use of waste plastic, we are currently studying the later processes for recycling pyrolysis of plastic. Also, we are thinking of how we could advance this technology on a global basis. [Non-English content] For the immediate future, we are looking domestically for our EPC, and beyond year 2025, we could go to other countries as well. [Foreign language] The next question will be presented by Yu-sik Hwang from NH Investment & Securities. Please go ahead with your question. [Non-English content] Yes. My question is for your battery business. What is the operation rate for your plants in Hungary and Changzhou? I've seen that your initial cost records a minus KRW 82.7 billion. Was the initial cost increase associated with your Yancheng and Huizhou plants? My second question is related to the raw material price increase. What is the company's expectation for oil prices after the second quarter? [Non-English content] Yes. This is Mr. Yoon once again, head of Battery Strategy and Planning Office, who will be addressing your battery related question. For our Hungary Plant 1 and Changzhou plant, they have begun commercial production in first quarter last year. These two sites, they have achieved what they have set out to achieve and is running very stably. [Non-English content] As for new facilities, well, we do have a new facility being set up in Yancheng SKBJ, and most of the initial cost increase was incurred by this site. Also the SKBA site in U.S. and SKBM in Hungary, they would begin commercial production starting next year. These two sites also added to the increase in our initial cost. [Non-English content] Yes. This is Mr. Lee from SK Energy who will be addressing the oil price outlook question. As was mentioned in my previous answer, with more vaccination in Europe and U.S., we see real demand pickup. We do with that foresee oil price increase going forward. The OPEC+ plans for the production, of course, could limit or influence the rise. In taking into consideration the external organization's outlook, we believe that for year 2021, if I may talk about the Dubai oil price, it could move somewhere between mid $60 level to $70 level. [Non-English content] The next question will be presented by Tim Bush from UBS. Please go ahead with your question. Thank you. This is Tim Bush with UBS. I guess recently we've seen some Japanese automakers show interest to take potentially Korean battery cells, for example, I think Honda talked about taking the Ultium cell from General Motors. Today we had a report from Reuters that Nissan wanted to look more closely to partner with Renault on taking a same technology battery cell. I guess my question is, do you see Japanese OEMs as potentially becoming larger customers in the next, let's say, 24 months? [Non-English content] [Non-English content] Yes. Your question was on the Japanese auto OEMs potential use of more Korean batteries. Well, as of today, we are not reviewing any concrete projects with the Japanese companies. This was an answer provided by Head of Finance 3 Office, Mr. Lee Dong-hoon. [Non-English content] Due to time limitations, we would entertain one last question. [Foreign language] The last question will be presented by Nikhil Bhandari from Goldman Sachs. Please go ahead with your question. Yes. Thank you so much for the opportunity. On the battery business, you mentioned about the order book number at more around 600 GWh. I believe the last quarter you mentioned it was 550 GWh. Does this upgrade already reflect now the contract you won from Hyundai? Can you give us an update on the technology for future battery from SK Innovation perspective? What is SK Innovation doing in terms of more innovations around cathode or silicon in the anode and the work around solid-state battery? Is SK Innovation also planning to do cell-to-pack technology as well as some of your competitors are planning to do and cut costs? Broader update around technology work that SK Innovation is doing on battery would also be appreciated. My last question is just around petrochemical. Recently, the benzene margins have been extremely strong in the last two or three weeks. Can you comment on that and sustainability of that, given that's an important product in your petrochemical business? Thank you. [Non-English content] [Non-English content] This is Mr. Yoon once again from the Battery Strategy and Planning Office. On to your first question regarding our backlog. With our contract with the OEMs, we are not in a position to disclose the actual numbers. It's a contractual obligation. Please understand we cannot give you the numbers here. [Non-English content] You had many questions related to our technology development. Our focus is on safety, fast charging, and long life. [Non-English content] Yes. The company's focus is on high nickel content cathode, and we are focusing on our technology development activities in this area. As you're well aware, the nickel content in our batteries, it went to 80% in year 2018, and in year 2020 it went as high as 83%. [Non-English content] The company had also developed an NCM 9.5.5 technology. This technology will be used for our commercial supply to Ford starting next year. [Non-English content] Our continuous effort is to decrease the use of cobalt in our battery and also to increase the nickel content for our NCM batteries. We are working on our anode technology for more higher added efficiency. By year 2023, with a single charge, we hope to cover 700 km. [Non-English content] Now on to solid-state batteries. Well, some may think this as a potential risk or threat, but we could also view this as a future opportunity. We are engaged in various activities to research into the possibility of this technology. [Non-English content] We have a technology roadmap ready within the company to realize higher energy density and more performance and safety for our next generation Lithium-Ion Batteries. [Non-English content] In our roadmap, we look into electrolytes of solid-state batteries and also we look into better performing lithium batteries with lesser dendrite formation issues. [Non-English content] Now your question regards to cell-to-pack technology. Well, it has been announced that the cell-to-pack technology would realize a direct link between cell and pack, and with that there would be more space within the packs for more cells, leading to better energy density. [Non-English content] Well, we are doing our work in order to increase our energy density in our energy packs and to also eliminate any unnecessary processes. We're working on the modules and also the width of things. [Non-English content] We have since the past been working on long body technology, long body cells, and we've also worked heavily on our modules. [Non-English content] With its background, we are actively collaborating in joint development activities with the OEMs. [Non-English content] This is Mr. Cho from SKGC. I will now entertain your benzene related question. [Non-English content] The spread continues to be very strong. It was at $195 in the first quarter, and in April the number recorded $354. In May, the number reached to $424, and as of yesterday, it went high as $463. [Non-English content] The reason behind this strength is the very strong demand from the downstream industries and also the regular maintenance, and with that tighter supply. [Non-English content] In the long run, we do foresee that the stronger margin could continue with the fundamental improvement for global downstream industries. However, with the newer facilities coming on stream from China and the restart of their facilities, well, this trend could see a little adjustment. [Non-English content] This concludes our Q&A session. Thank you for participating.