Korea Electric Power Corporation (KEPCO) announced in a regulatory filing today (August 12) that its preliminary consolidated operating profit for the second quarter of this year dropped 47.2% year-on-year to KRW 1.1286 trillion.

Revenue stood at KRW 21.9189 trillion, down 0.1% from the same period last year.

Net profit plummeted 76.4% to KRW 277.5 billion.

However, KEPCO has maintained a surplus for 12 consecutive quarters since successfully turning a profit in the third quarter of 2023.

For the first half of this year, cumulative consolidated revenue rose 0.3% to KRW 46.3173 trillion, while operating profit fell 16.6% to KRW 4.9127 trillion.

The primary factor behind the worsened profitability in the first half was the rise in raw material prices.

As liquefied natural gas (LNG) prices soared due to the Middle East war, power generation from coal—a substitute fuel—increased, and bituminous coal prices also rose, leading to an increase of KRW 817.7 billion in fuel expenditures for power generation subsidiaries.

From January to June this year, the price of bituminous coal averaged USD 128.2 per ton, up 24.3% from USD 103.1 in the same period last year.

Power sales in the first half also decreased by 0.6% year-on-year to 266.7 terawatt-hours (TWh).

Although selling prices remained at a similar level, the decline in sales volume reduced electricity sales revenue by KRW 193.4 billion.

While the company succeeded in achieving a surplus in the first half, evaluations indicate that KEPCO still has a long way to go before its financial structure normalizes.

Consolidated liabilities, including those of KEPCO and its power generation subsidiaries, increased by KRW 5.1 trillion from KRW 205.6 trillion at the end of last year to KRW 210.7 trillion in the first half of this year.

Borrowings also grew from KRW 129.8 trillion to KRW 133.3 trillion.

Consequently, KEPCO paid KRW 2.1 trillion in interest expenses during the first half of this year alone.

This averages out to KRW 11.5 billion per day.

Concerns are also being raised that the pace of financial normalization could slow down as the impacts of international fuel prices and exchange rate hikes driven by the Middle East war take full effect starting in the second half.

A KEPCO official stated, "We will continue to pursue power market system improvements to reduce purchased power costs and implement high-intensity self-rescue efforts," adding, "Through this, we will timely build the national power grid essential for fostering cutting-edge industries, such as our three major mega-projects including artificial intelligence (AI) data centers."

(Photo provided by KEPCO, Yonhap News)