Kepco’s big loss seen narrowing in second quarter

Korea Electric Power Corporation (Kepco) is expected to report a smaller loss in the second quarter as the utility increases the use of nuclear power.

After Kepco posted its worst-ever first quarter operating loss of 629.9 billion won ($533.3 million) this year, analysts forecast that the company will see improvement in second quarter earnings from the previous year.

According to a report by Korea Investment & Securities analyst Choi Go-woon on Tuesday, Kepco is expected to record an operating loss of 319.1 billion won in the second quarter compared to last year’s loss of 687.1 billion won in the same period.

The report cited increased nuclear power usage rates and decreased raw materials costs for the improvement.

“Nuclear power usage rate is expected to be at 83 percent [in the quarter], up 10 percentage points from the same period a year earlier,” the report read.

According to data tracker FnGuide’s compiled estimates, analysts expect the operating loss for Kepco to be at 577.1 billion won in the second quarter.

The company has tried to dispel concerns that it will repeat its recent disappointing earnings performance amid criticism that the poor results were due to the current administration’s policy to shift away from nuclear power.

Under the administration’s energy drive, Kepco reported an annual operating loss of 208 billion won last year, its first in six years, compared to an operating profit of 4.9 trillion won in 2017 and 12 trillion won in 2016.

According to Kepco’s preliminary report on its long-term financial plan acquired by Liberty Korea Party Rep. Kwak Dae-hoon, the utility forecast a dim outlook, estimating 1.5 trillion won in operating loss this year.

Kepco explained in a statement Monday that the figures are preliminary estimates and are based on earnings of the utility alone, rather than the consolidated earnings of its entire subsidiaries that it officially reports.

Finalized estimates will be announced in early September.

The utility added that its nuclear power usage rates have increased this year. It reported that the rate for the first quarter was at 75.8 percent, a rise of 20.9 percentage points from a year earlier.

The company emphasized that its recent disappointing performance was due to rises in global fuel prices and unrelated to the administration’s move away from nuclear power.

Analysts believe uncertainties surrounding the utility stemming from government policy have been largely resolved after the government approved earlier this month discounts to electricity bills during the summer.

BY CHAE YUN-HWAN [chae.yunhwan@joongang.co.kr]