Korea Electric Power (015760) Q2 2024 earnings summary

Executive summary

• Q2/1H 2024 operating income reached KRW 2.5496 trillion, with net profit at KRW 710.4 billion, reflecting a return to profitability after prior losses.

• Operating revenues increased 6.2% year-on-year to KRW 43.8 trillion, driven by higher power sales and improved financial performance.

• The company holds a near-monopoly in transmission and distribution, supplying power to over 25 million customers, with 51% government ownership as of 1H 2024.

• Total assets reached KRW 241 trillion for 1H 2024.

• Strong government support and credit ratings on par with the Korean sovereign (Aa2/AA).

Financial highlights

• Power sales revenue rose to KRW 41.7056 trillion, while consolidated operating revenue for 1H 2024 was KRW 43.8 trillion, up 6.2% year-on-year.

• Operating profit margin improved to 5.8% in 1H 2024 from negative in prior years.

• Net profit margin at 1.6% for 1H 2024.

• Cost of goods sold and SG&A expenses decreased by 17% to KRW 41.2168 trillion, mainly due to lower fuel and power purchase costs.

• Debt reduced from KRW 89.6 trillion at end-2023 to KRW 85.2 trillion at end-June 2024.

Outlook and guidance

• No tariff hikes occurred in H1 2024, but further increases are under consideration for H2 to address accumulated deficits.

• Targeting over 70% carbon-free power generation by 2038, up from 40% in 2023, with renewable capacity expected to reach 120GW.

• Annual power sales are expected to see a slight decline due to continued weakness in the manufacturing sector.

• Fuel unit costs for year-end 2024 are forecasted at KRW 180,000/ton for coal, KRW 1.10 million/ton for LNG, and KRW 992/liter for oil.

• Ongoing investments in grid modernization, renewable energy, and overseas projects are expected to drive long-term growth.