Kepco swings to profit after 10 quarters

Industry

Published: 13 Nov. 2023, 14:04 Updated: 13 Nov. 2023, 18:18

Kepco swings to profit after 10 quarters

A pedestrian walks past Korea Electric Power Corporation's Seoul office building in central Seoul. [NEWS1]

Korea Electric Power Corporation (Kepco), the country’s sole power distributor, swung back to black in the July-September period for the first time in 10 quarters, following electricity rate hikes and a downturn in fuel prices.

Despite the turnaround, however, the crushing debt continues to weigh down heavily on the debt-ridden state utility, as the company strives to regain its footing amid mounting macro uncertainties.

According to its regulatory filing Monday, Kepco’s quarterly operating profit came in at 1.997 trillion won ($1.51 billion), exceeding the market expectation of 1.556 trillion won compiled by FnGuide.

It is a turnaround from the previous quarter’s loss of 2.272 trillion won. In the same period last year, Kepco’s operating loss stood at 7.531 trillion won, mainly due to high fuel prices.

The latest surplus brings Kepco's total operating loss this year to 6.45 trillion won.

Net profit also swung to black at 833.3 billion won, compared to the second quarter’s loss of 1.904 trillion won. The figure beat the analyst forecast of 685.8 billion won.

Revenue rose 23.8 percent on year to 24.470 trillion won, also surpassing the forecast of 23.709 trillion won.

Kepco attributed the turnaround to the five rounds of electricity rate hikes since April last year, which pushed up prices by 39.6 percent so far, as well as the decline in fuel expenses from the peak last year.

In the third quarter, profits generated from selling electricity increased by 13.83 trillion won on year, as the rate hikes drove up the selling price by 29.8 percent.

However, Kepco said that “whether the surplus will continue is unclear due to rising uncertainties in international crude prices and foreign exchange rates driven by the Israel-Hamas conflict and other factors,” in a release Monday.

Kepco is expected to swing back to an operating loss of 679.3 billion won in the fourth quarter, according to FnGuide.

Kepco has so far accumulated deficits of 47 trillion won since 2021 and debt of over 200 trillion won.

The company recently promised to implement additional turnaround plans to sell core assets and cut around 2,000 workers, following a previously announced 25 trillion won restructuring plan.

While the utility rate for households and small businesses remained frozen in the fourth quarter, the electricity rate for big companies has been raised by 10.6 won per kilowatt-hour, or 6.9 percent, on average.

Korea Gas Corporation, the state-owned gas supplier, also posted its earnings results on Monday, logging an operating profit of 230.4 billion won and revenue of 7.89 trillion won. Its accounts receivable — meaning outstanding balance owed by customers — totaled 12.52 trillion won, a 276.7 billion won increase from the previous quarter.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]