[Click eStock] "KEPCO Recovers Profits, Resumes Dividends After 4 Years"

Electricity Rate Hikes and Lower Procurement Costs Lead to Significant Profit Improvement
Dividend Payout Could Increase Nearly Fivefold

Korea Electric Power Corporation (KEPCO) has succeeded in turning an annual profit for the first time in four years, thanks to the effects of electricity rate hikes and a decline in power procurement costs. There are expectations that KEPCO can further increase dividends, which it resumed after a long hiatus, as operating profit continues to improve.

On the 4th, KB Securities forecasted that if KEPCO's dividend payout ratio remains at around 16%, the dividend per share this year could expand to over 1,000 KRW. This analysis is based on KEPCO's return to annual profitability last year after significant losses since 2021, coupled with the potential for continued performance improvement due to rising electricity rates.

In the fourth quarter of last year, KEPCO reported consolidated sales of 24.1315 trillion KRW and operating profit of 2.4032 trillion KRW, representing increases of 7.1% and 25.7% respectively compared to the same period the previous year. This was partly due to the impact of electricity rate hikes and the maintenance of low power procurement costs amid fluctuations in international energy prices, which improved the power sales profit margin.

The average power sales price in the fourth quarter of last year was 167.4 KRW/kWh, up 5.7% year-on-year. The electricity rate hike was sustained by an average 9.7% differential increase in industrial electricity rates in October last year. Although power sales volume increased by only 0.4%, this was enough to boost sales by over 1 trillion KRW.

The power procurement cost was 84.2 KRW/kWh, down 4.0% during the same period. Despite a 19.0% rise in nuclear power generation costs reflecting fuel shrinkage losses since last year, it is analyzed that KEPCO was able to reduce costs by approximately 408.7 billion KRW due to the downward stabilization of global coal and oil prices. Additionally, the costs of LNG power generation and power purchases from independent power producers (IPPs) decreased by 3.1% and 2.1%, respectively, leading the cost reduction.

Amid these performance improvements, KEPCO announced on the 28th of last month that it would pay a dividend of 24 KRW per common share. The total dividend amount is 137.3 billion KRW, with a dividend yield of 1.0%. This marks KEPCO's first shareholder dividend in four years since 2021. KB Securities analyst Jeong Hye-jeong stated, "Although the actual dividend size is not large, the resumption of dividends ahead of financial structure improvement tasks is meaningful," adding, "With electricity rates expected to remain high this year and operating profit projected to improve significantly, if the dividend payout ratio stays at around 16%, the dividend per share could exceed 1,000 KRW."

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