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Korea Electric Reports Bigger-Than-Expected Quarterly Profit

Nov. 14 (Bloomberg) -- Korea Electric Power Corp., the nation’s monopoly power distributor, had a bigger-than-expected quarterly profit as the company bought more power from base-load plants with cheaper fuel costs.

Net income more than tripled to 939.6 billion won ($866 million) in the three months ended Sept. 30, from a revised 266.1 billion won a year earlier, the Seoul-based utility known as Kepco said today in a regulatory filing. That beat the 735.5 billion won mean estimate of 15 analysts compiled by Bloomberg. Sales rose 17 percent to 13.7 trillion won.

Today’s result is the first quarterly profit in four for Kepco as it struggled to pass on rising fuel costs in prices. The government in August rejected Chief Executive Officer Kim Joong Kyum’s request to raise power tariffs by 16.8 percent, instead approving an average 4.9 percent increase. Kim offered to resign this month as a result.

The stock gained 1.7 percent to close at 27,100 won today in Seoul trading after the earnings announcement, compared with a 0.2 percent increase in the benchmark Kospi index.

The company’s operating profit, or sales minus the cost of goods sold and administrative expenses, rose 39 percent to 1.98 trillion won in the third quarter, compared with the mean estimate of 1.39 trillion won in a survey of 16 analysts compiled by Bloomberg.

Further Out

South Korea increased operations of base-load power plants in the third quarter, mainly fueled with lower-cost coal and nuclear, Kim Sang Ku, an analyst at Kiwoom Securities Co., said today.

That benefit may be diluted in the current quarter as Korea Hydro & Nuclear Power Co., which runs 23 reactors, shut two units at the Yonggwang atomic plant this month to replace substandard components.

The cost of buying electricity from other sources if one nuclear reactor is shut may rise by 3.4 billion won a day, Cecila Oh, an investor relations official at Kepco, said on a conference call today.

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

To contact the editor responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net

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