KEPCO Q2 Operating Profit 389.8 Billion KRW... Two Consecutive Quarters of Surplus (Comprehensive)

Surprising Earnings Exceeding Securities Firms' 'Deficit' Consensus
Fuel Cost Drop Cuts Power Purchase Expenses by 2.5 Trillion Won
Nuclear Plant Utilization Rate Down 1.7%p YoY
KEPCO: "Fuel Costs Impact More Than Nuclear Phase-Out"
Indicates Electricity Rate System Reform
KEPCO: "Efforts to Revise Electricity Charges"

Headquarters of Korea Electric Power Corporation. (Photo by Korea Electric Power Corporation)

[Asia Economy Reporter Moon Chaeseok] Korea Electric Power Corporation (KEPCO) posted a profit in the second quarter, marking two consecutive quarters of profitability.

KEPCO announced on the 13th that its consolidated operating profit for the second quarter turned positive compared to the same period last year, reaching 389.8 billion KRW.

This follows a profit of 430.6 billion KRW in the first quarter, resulting in two consecutive quarters of profit. This exceeded the securities market consensus (forecast) of an operating loss of 70.8 billion KRW.

Looking at the second quarter results alone, KEPCO succeeded in returning to profitability for the first time in three years. The consolidated operating profit of 389.8 billion KRW contrasts with losses of -687.1 billion KRW in 2018 and -298.7 billion KRW last year.

Source=Korea Electric Power Corporation

The consolidated operating profit for the first half of the year is 820.4 billion KRW. This is in stark contrast to the operating loss of 928.5 billion KRW recorded in the same period last year. Sales revenue was 28.1657 trillion KRW, a 0.5% decrease compared to the same period last year.

Source=Korea Electric Power Corporation

The decline in oil prices led to a reduction of 2.5637 trillion KRW in fuel costs for power generation subsidiaries and electricity purchase costs from private power producers in the first half, boosting performance. Fuel costs decreased by 1.4 trillion KRW compared to the first half of last year due to lower prices of fuels such as thermal coal and liquefied natural gas (LNG).

Source=Korea Electric Power Corporation

However, the reduction in coal-fired power generation, which has a lower generation cost, due to winter fine dust reduction measures acted as a constraint on performance.

Source=Korea Electric Power Corporation

The nuclear power utilization rate also fell by 1.7 percentage points to 77.6% compared to the first half of last year. KEPCO interpreted this as evidence that the losses were not due to the nuclear phase-out policy.

A KEPCO official explained, "Despite a slight decline in nuclear power utilization, performance improved due to low oil prices. This shows that KEPCO's performance is more significantly affected by international fuel prices than by nuclear power utilization rates."

Regarding electricity purchase costs, the volume purchased from private power producers remained similar, but costs decreased by 1.2 trillion KRW due to the drop in oil prices and other factors.

Source=Korea Electric Power Corporation

Due to prolonged COVID-19 pandemic-related consumption contraction, electricity sales volume decreased by 2.9%, resulting in a 200 billion KRW decrease in electricity sales revenue.

Industrial use dropped by 4.9%, educational use by 16.2%, and general use by 1.8%. Meanwhile, residential use increased by 5.2% due to the rise in remote work.

Essential operating costs related to power supply, such as greenhouse gas emission costs, increased by 700 billion KRW.

A KEPCO official stated, "If the exchange rate stabilizes and low oil price levels continue, the trend of improved performance is expected to continue in the second half of the year. We will continue to pursue management efficiency to minimize power supply costs through expanding new technologies and improving work methods."

He added, "We will also strive for a rational reform of the electricity tariff system."

This content was produced with the assistance of AI translation services.