KEP — Korea Electric Power Corporation

KEPCO Q2 2025 Earnings Call Summary

1. Key Financial Results and Metrics

• Revenue: KRW 46.174 trillion, up 5.5% year-over-year.
• Electricity Sales Revenue: KRW 4.157 trillion, up 5.9%.
• Other Revenue: KRW 2.016 trillion, down 2.1%.
• Cost of Sales and SG&A Expenses: KRW 40.285 trillion, down 2.3%.
  • Fuel Costs: KRW 9.252 trillion, down 14.6%.
  • Power Purchase Costs: KRW 17.358 trillion, up 1.1%.
• Operating Profit: KRW 889.5 billion for the first half of 2025.
• Net Cost for the Period: KRW 3.538 trillion.
• Interest Expense: KRW 2.211 trillion, down from the previous year.

2. Strategic Updates and Business Highlights

• Electricity Sales Volume: 28.4 terawatt hours, down 0.05% year-over-year due to reduced industrial sales.
• Generation Mix: Increased nuclear generation due to new plant introduction; however, a slight decrease in expected nuclear generation for the full year.
• RPS Costs: KRW 1.959 trillion on a consolidated basis.
• Borrowings: KRW 131.9 trillion on a consolidated basis.

3. Forward Guidance and Outlook

• Electricity Sales Outlook: Anticipated slight decline for the full year due to economic growth adjustments and manufacturing sector downturn.
• Utilization Rates: Expected mid-80% for nuclear, upper 40% for coal, and mid-20% for LNG in 2025.
• Tariff Adjustments: Limited room for industrial tariff increases; potential for increases in other sectors under government consultation.

4. Bad News, Challenges, or Points of Concern

• Declining Metrics: Slight decrease in electricity sales volume and other revenue sources.
• Competitive Pressures: Companies like LG Chemical and SK are opting for direct power purchases from the exchange, impacting KEPCO's sales volume and cost structure.
• Financial Health: Accumulated deficits and limited room for tariff increases raise concerns about future profitability and dividend payouts.

5. Notable Q&A Insights

• Direct Power Purchases: KEPCO acknowledged the trend of industrial customers moving to direct purchases, which may impact sales and cost structures.
• Nuclear Market Entry: KEPCO is exploring entry into the U.S. nuclear market but has not disclosed specific plans.
• SMP Outlook: Lower than expected SMP levels attributed to demand fluctuations and changes in curtailment methods.
• Dividend Policy: The government has not indicated changes to KEPCO's dividend payout ratio, which remains at 15%. Future adjustments will depend on financial health and investment needs.
• Regional Tariff System: Plans to introduce a regionally differentiated tariff system by early 2026 are underway, with ongoing consultations with stakeholders.

This summary encapsulates KEPCO's financial performance and strategic direction while highlighting both opportunities and challenges faced by the company.