Korea Electric Loss Worse Than Estimated on Price Control

Korea Electric Power Corp. (015760), the nation’s monopoly distributor, posted a fourth-quarter loss more than three times analysts’ estimates as state price controls barred it from passing on rising fuel costs to users.

Net loss was 1.7 trillion won ($1.5 billion) in the three months ended Dec. 31, compared with the 1.9 trillion won loss a year earlier, according to figures derived from full-year results announced by the Seoul-based company today in a regulatory filing. The mean of 15 analyst estimates compiled by Bloomberg was a loss of 500.1 billion won. Sales were little changed at 11.78 trillion won.

Kepco bought more power from plants fired by pricier fuel after the closing of two reactors for unscheduled replacement of components. The company raised electricity prices by an average 4 percent in January, the second increase in five months, as the government sought to curb rising demand.

“Under the current structure, it’s inevitable for the utility to lose money, but the quarterly loss was bigger than expected,” said Bum Sujin, an analyst at Samsung Securities Co. in Seoul. “The January state approval of the tariff increase will help the company turn to a profit this year.”

The shares rose 3.3 percent to 33,200 won today. They have gained 9 percent this year, compared with a 0.3 percent advance in the benchmark Kospi stock index.

Operating Loss

Operating loss, or sales minus the cost of goods sold and administrative expenses, was 733.8 billion won in the fourth quarter, compared with the mean estimate of 376.8 billion won in a survey of 16 analyst estimates compiled by Bloomberg.

The cost of buying power from generators using oil and other pricier fuels was 155.70 won a kilowatt hour, compared with 40.9 won from nuclear and coal-fueled generators, according to a Jan. 29 statement from its website. The utility increased purchases from generators using oil and costlier fuel sources to 31 percent of its total purchase in the fourth quarter from 26 percent a year earlier.

Full-year loss narrowed to 3.08 trillion won from 3.29 trillion won in 2011 when operating loss shrank 20 percent to 817.9 billion won, according to the filing today. Sales rose 14 percent to 49.4 trillion won.

To contact the reporter on this story: Sangim Han in Seoul at sihan@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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