South Korea’s state-run utility company Korea Electric Power Corp. (KEPCO) upset the market with unexpected operating loss for the fourth quarter due to a surge in expenses from a fall in operating rate of nuclear power plants and a one-off cost relating to the closure of Korea’s oldest nuclear power plant.
KEPCO said in a regulatory filing on Tuesday that it swung to operating loss worth 129.4 billion won ($120 million) in the fourth quarter ended December from a year ago, far below the market consensus for an operating profit of 764.7 billion won. Sales edged up 1.8 percent on year to 15.56 trillion won.
For full 2017, its operating profit plummeted 58.7 percent to 4.95 trillion won from a year ago. Sales retreated 0.6 percent to 59.81 trillion won, and net income plunged 78.9 percent to 1.51 trillion won.
Disappointed investors dumped KEPCO shares, letting its shares to hit a new intraday 52-week low of 32,400 won on Wednesday. KEPCO shares fell 1.19 percent, 400 won, to end at 33,100 won from the previous session, underperforming Kospi’s 1.03 percent gain.
The utility company explained the losses largely owed to the one-time costs from a rise in power purchase following a fall in operating rate at its nuclear power plants, nuclear waste processing and reactor decommissioning following the closure of the country’s oldest nuclear power plant Kori-1 last year.
The company’s electricity sales in 2017 rose about 300 billion won from 2016, but sales in its overseas business lost 700 billion won over the same period, leading the company to report broad losses, according KEPCO.
Compared to 2016, the company’s operating expenses also soared last year after it spent 3.5 trillion won for power purchase, 2.5 trillion won for fuel purchase, and 800 billion won for depreciation cost of newly built generators and transmission facilities.
Meanwhile, its business arm KEPCO KPS disclosed in a separate filing on the same day that its operating profit in the fourth quarter soared to 36.6 billion won, almost 37 times higher than a year ago. Sales fell 7.5 percent to 342.6 billion won, while net income jumped to 30.5 billion won.
Shares of KEPCO KPS Wednesday ended 1.04 percent down at 38,050 won from the previous session.
By Ko Min-suh and Lee Ha-yeon
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]