Korea Electric Power (KEP) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The consolidated operating profit for Q3 2025 was KRW 11.541.4 trillion, with sales revenue increasing by 5.5% to KRW 73 trillion [4][5] - Electricity sales revenue reached KRW 70 trillion, up by 5.9%, while other revenue, including overseas business income, decreased by 0.9% to KRW 3.115 trillion [4][5] - Cost of sales and SG&A expenses totaled KRW 62.205 trillion, down by 2.7%, with fuel costs decreasing by 16% to KRW 14.026 trillion [5] Business Line Data and Key Metrics Changes - Electricity sales volume in Q3 reached 419.9 terawatt hours, up 0.4% year-over-year, primarily due to a summer heat wave [6] - For the full year of 2025, electricity sales are projected to decline slightly due to lower economic growth and a downturn in the manufacturing sector [6] Market Data and Key Metrics Changes - The bituminous coal price was around $105 per tonne, while LNG prices based on JKM were approximately $1,000 per tonne [7] - The generation mix for nuclear power increased due to new nuclear power plants coming online, while coal generation remained stable and LNG generation decreased slightly [7][8] Company Strategy and Development Direction - The company expects an increase in nuclear generation and a decrease in coal generation for 2025, with a maintained LNG mix [8] - The company is closely monitoring interest rate volatility and its impact on short-term corporate bonds, indicating a proactive approach to financial management [13] Management's Comments on Operating Environment and Future Outlook - Management highlighted the need for further investments in the power grid to support renewable energy and stable electricity supply, reinforcing the necessity for tariff increases [19] - The company is exploring opportunities in the U.S. nuclear market and is looking into various options for participation [23] Other Important Information - As of 2025, borrowings stood at KRW 86.1 trillion on a separate basis [9] - The RPS costs for 2025 were KRW 2.876 trillion on a consolidated basis [8] Q&A Session Summary Question: Impact of interest rate volatility on corporate bonds - Management acknowledged monitoring the situation closely but reported no special signs detected yet [13] Question: Introduction of localized marginal pricing - The wholesale pricing system is expected to be introduced in 2025, followed by retail pricing in 2026 [14] Question: Basis for potential electricity tariff increases - Management indicated that the need for investments in grid expansion and achieving greenhouse gas reduction targets would be strong bases for tariff increases [19] Question: Updates on nuclear power projects in the U.S. - Management stated they are exploring various options for participation in the U.S. nuclear market [23] Question: Status of HVDC project and its impact on transmission capacity - The first phase of the HVDC project is expected to be completed by October 2026, providing an additional four gigawatts of transmission capacity [23] Question: Exchange rate volatility and its impact on fuel costs - Management confirmed that they have an open position regarding foreign exchange rates and settle LNG prices based on average exchange rates [34] Question: Future directions for shareholder return policy - Management stated that the dividend policy will consider the net profit of the year, but specific details could not be disclosed at this time [40]