Korea Gas Corp. (036460), the world’s biggest importer of liquefied natural gas, reported second-quarter profit more than doubled, disproving estimates, on higher state- guaranteed fair return rates and earnings from overseas projects.
Net income climbed to 40.3 billion won ($35.7 million) in the three months ended June 30 from 16.2 billion won a year earlier, the Seongnam, South Korea-based utility said in a regulatory filing today. The average of 13 analyst estimates compiled by Bloomberg was a loss of 12.3 billion won. Sales jumped 37 percent to 8 trillion won.
The state utility has benefited from demand for gas in the quarter as the government asked power generators to boost operations of their gas-fueled power plants. The gas exploration and production businesses also contributed more in the quarter than a year earlier, Executive Vice President Kim Key Man said on a conference call with investors today.
“The country’s tight power supply status boosted demand for the fuel during the off-season,” said Shin Ji Yoon, an analyst at KTB Securities Co., who has a buy recommendation on the utility.
Gas sales to power generators rose 8 percent in the first half of this year from a year earlier, outperforming a rise of 1.8 percent in gas sales to households and companies, according to Korea Gas’s presentation documents to investors today. Korea Gas raised gas tariffs by 4.9 percent for households and businesses starting June 30, the first increase in about eight months.
Kim attributed the unexpected profit to an increase in rate bases stemming from higher fair returns guaranteed by the government and from gains consolidated with units, Kim said.
Operating profit, or sales minus the costs of goods sold and administrative expenses, rose 70 percent to 232.6 billion won.
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