SEOUL, Aug 1 (Reuters) - SK Innovation said

on Thursday it expects strong oil refining margins in the second

half of the year as OPEC+ production cuts buoy prices and the

peak demand season for transportation, cooling and industrial

use begins.

The owner of South Korea's biggest refiner, SK Energy,

posted an operating loss of 46 billion won ($33.6 million) for

April-June versus a 107 billion won loss a year earlier. The

result compared with an LSEG SmartEstimate of 295 billion won

profit.

Revenue rose 0.4% to 18.8 trillion won, just missing analyst

estimates.

Lower oil prices and narrowing refining margins as well as

declining utilisation rates at battery factories and new factory

costs contributed to the quarterly result, SK Innovation said in

a statement.

Battery subsidiary SK On, a supplier of automakers including

Ford Motor ( F ), Hyundai Motor ( HYMTF ) and Volkswagen

, booked an operating loss of 460 billion won versus

a loss of 332 billion won in the previous quarter.

SK On reiterated its target of breaking even in the fourth

quarter, citing a demand recovery in electric vehicles (EVs) and

batteries in general as well as cost reduction initiatives.

It said it will continue to broaden its battery product

portfolio to better meet automaker customer needs.

Last month, a senior executive said SK On was in talks

with automakers to supply prismatic batteries, in addition to

its mainstay pouch-type batteries.

Parent SK Innovation is merging with energy affiliate SK

E&S, which analysts said will likely shore up the finances of

the money-losing battery subsidiary by combining it with a

profitable company with a stronger balance sheet.

Slowing EV demand has prompted automakers to adjust

electrification plans. Ford last month said would use a Canadian

plant earmarked for EVs for petrol-powered versions of its

F-Series pickup truck.

Hyundai Motor ( HYMTF ) is expanding its petrol-electric hybrid

vehicle lineup due to easing EV demand and uncertainty over EV

policies in the U.S. due to a presidential election there in

November.

SK On's cross-town rival LG Energy Solution

last week cut its annual revenue target by more than 20% and

said it would slow expansion plans due to a

sharper-than-expected slowdown in EV demand.

SK Innovation's share price was 0.4% higher in morning trade

versus a 0.4% rise in the benchmark KOSPI.

($1 = 1,369.0500 won)