KEPCO's 'Brief Profit in Q3'... 'Deficit Resolution' Remains Elusive

Korea Electric Power Corporation (KEPCO) is expected to record a profit in the third quarter. However, it is still insufficient to resolve the accumulated deficit of about 47 trillion won.

According to the power industry on the 12th, KEPCO will announce its third-quarter earnings on the 13th. KEPCO has recorded losses for nine consecutive quarters. In the second quarter, it posted an operating loss of 2.2724 trillion won.

In the securities industry, the prevailing view is that KEPCO will turn a profit in the third quarter. Shinhan Investment Corp. expects KEPCO to smoothly achieve profitability for the first time in 10 quarters, and Hanwha Investment & Securities also anticipates operating profit to exceed market expectations.

However, despite the third-quarter profit, it remains difficult to eliminate the accumulated deficit. KEPCO has recorded losses for nine consecutive quarters. In the second quarter, it posted an operating loss of 2.2724 trillion won.

Earlier, KEPCO decided to raise the electricity rate by an average of 10.6 won per kWh for large-volume customers in the industrial sector (Eul) starting from the 9th. With this increase, KEPCO is expected to gain an additional profit of 400 billion won this year and 2.8 trillion won next year.

KEPCO also announced additional self-help measures on the same day. Since the spin-off of power generation companies in 2001, KEPCO plans to downsize its organization and strengthen core functions through the largest organizational restructuring. It will reduce two out of five headquarters director positions and cut 20% of the head office organization, reorganizing from '8 headquarters and 36 departments' to '6 headquarters and 29 departments,' reducing two headquarters and seven departments.

Voluntary retirement will also be implemented. This will be the second time since the company's founding that voluntary retirement is offered to those who wish to participate within the scope of funds secured for severance pay. The voluntary retirement funds will be used for severance pay and other benefits, utilizing the 2024 wage increase forfeiture by executives and employees at level 2 or higher.

Additional asset sales will be pursued. KEPCO plans to sell the Talent Development Center site (640,000㎡) located in Nowon, Seoul, 20% of KEPCO KDN shares, and all shares in Calatagan, Philippines. Kim Dong-cheol, President of the Power Generation Division, explained, "Although the Talent Development Center is a highly valuable asset located in Seoul with excellent accessibility and educational conditions, and has served as a cradle for education in KEPCO and the domestic and international power industry, it had been excluded from previous self-help measures. However, with a desperate determination to overcome the management crisis on the brink, we decided to sell it." He added, "We expect to generate about 1 trillion won in cash from the sale of the Talent Development Center."

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