Korea Gas (036460) Q2 2024 earnings summary

Executive summary

• Revenue for H1 2024 was KRW 20,300.5bn, down from KRW 44.6 trillion in H1 2023, reflecting lower sales price, volume, and energy demand normalization.

• Operating profit for H1 2024 was KRW 1,387.3bn, up from KRW 793.4bn in 2Q 2023, but down from KRW 1.55 trillion in H1 2023.

• Net income for H1 2024 was KRW 660.2bn, a turnaround from a net loss of KRW 747bn in FY2023 and up from KRW 72.7bn in 2Q 2023.

• The company supplied 100% of Korea’s natural gas demand (excluding direct imports), maintaining a strong market position.

Financial highlights

• Gross margin improved to 6.8% in H1 2024 from 3.5% in H1 2023.

• EBITDA for H1 2024 was KRW 2.37 trillion, compared to KRW 2.53 trillion in H1 2023.

• Total assets at June 30, 2024, were KRW 54.99 trillion, down from KRW 57.25 trillion at year-end 2023.

• Debt-to-equity ratio stood at 3.7x, with total borrowings of KRW 38.8 trillion and cash of KRW 907 billion.

• Basic EPS for H1 2024 was KRW 7,636, compared to a loss of KRW 8,949 in FY2023.

Outlook and guidance

• Annual capex is forecasted to rise to KRW 2,078.6bn in 2024, with further investments planned through 2027.

• The company expects stable demand for city gas and power generation, with moderate growth in industrial and hydrogen sectors.

• LNG prices are expected to remain volatile due to global geopolitical risks and currency fluctuations.

• Ongoing investments in LNG infrastructure and hydrogen projects are expected to support long-term growth.

• Expansion of pipeline and storage capacity continues, with 440km of new pipeline to be completed by 2026.