Korea Electric Power Corporation stayed in the black in the first half of this year, posting operating profit of 4.91 trillion won ($3.46 billion). Rising fuel costs driven in part by the war in the Middle East pushed operating profit down 16.6 percent from the same period last year.
With the government maintaining a freeze on electricity rates, Korea Electric Power's debt has swelled to 211 trillion won. The utility now pays roughly 11.5 billion won in interest every day, making financial improvement an urgent priority.
Korea Electric Power said Wednesday that consolidated sales for the first half of this year came to 46.32 trillion won, while operating expenses totaled 41.4 trillion won.
Operating profit reached 4.91 trillion won, down 976.8 billion won from the same period last year. Net profit for the period also fell 21 percent, from 3.54 trillion won to 2.8 trillion won.
A drop in electricity sales volume and higher fuel costs weighed on earnings. Power sales in the first half totaled 266.7 terawatt-hours (TWh), down 0.6 percent year on year. The unit selling price held roughly steady, but the decline in volume cut electricity sales revenue by 193.4 billion won.
Fuel costs at power-generation subsidiaries rose 817.7 billion won, or 8.8 percent, from the first half of last year, largely because thermal coal prices jumped 24.3 percent from $103.1 to $128.2 per ton. Purchased power costs fell 150.9 billion won, however, as greater coal-fired generation reduced the volume of private LNG power purchases.
On a standalone basis, Korea Electric Power's operating profit came to 2.12 trillion won, down 734.7 billion won, or 25.7 percent, from the first half of last year. Sales edged down 1 percent to 45 trillion won, and net profit for the period declined 6.7 percent to 2.88 trillion won.
Despite the return to profit, the company's financial position remains precarious. Consolidated debt — covering Korea Electric Power and its generation subsidiaries — grew 5.1 trillion won, from 205.6 trillion won at the end of last year to 210.7 trillion won at the close of the first half. Borrowings also rose, from 129.8 trillion won to 133.3 trillion won. The company paid 2.1 trillion won in interest expenses in the first half alone, averaging 11.5 billion won a day.
In the second half, the full impact of rising international fuel prices and a weaker won — stemming from the war pitting the United States and Israel against Iran — is expected to materialize. The international oil price averaged $64.9 per barrel in January and February, then surged 61 percent to $104.5 from March through June. Over the same period, the won-dollar exchange rate rose 3.1 percent, from 1,453.3 won to 1,498 won. If the increases in fuel prices and the exchange rate feed through with a lag, the pace of Korea Electric Power's financial recovery could slow.
Korea Electric Power said it plans to "pursue reforms to the power market system to reduce purchased power costs and undertake intensive self-rescue efforts, while also encouraging efficient energy consumption through the seasonal and time-of-use rate structure revamped in April, and rallying the company's full capabilities to overcome the crisis through a public energy-saving campaign."
The company added that through these efforts it intends to "build the national power grid needed on schedule for the three major mega-projects — including AI data centers — and other advanced industries, maximize the efficiency of power facilities and grid operations, and establish a stable power supply system even amid external uncertainty."
oskymoon@heraldcorp.com
