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Korea Electric Power (KEP) Q1 Net Income, Revenues Up Y/Y

South Korean utility major Korea Electric Power Corporation KEP reported first-quarter 2016 net income of KRW2,163 billion ($1,730.4 million), up  76.8% from KRW1,223 billion in the year-ago quarter.

During the quarter, the company’s revenues grew 3.7% year over year to KRW 15,685 billion ($12,548 million). The increase was primarily driven by 2.3% growth in power sales revenues and a 35.3% surge in sales at the overseas business.

The company’s operating income surged 61% to KRW3,605 billion from KRW2,240 billion in the year-ago quarter.

Cost of goods sold/selling, general and administrative expenses fell 6.2%. Fuel costs declined 19.9% primarily due to a 20.5% decrease in the unit cost of fuel and a 12.2% rise in nuclear generation, owing to higher nuclear generation capacity.

Meanwhile, cost of purchased power tanked 15.3%. Purchased power volume climbed 9.6% due to the introduction of new, highly efficient independent power producer plants. However, the unit cost of purchased power decreased 24.8% as fuel price reduced. Depreciation costs rose 5.6% mainly due to the newly introduced power plant and transmission facilities. Maintenance costs were up 9.6% due to increased facility investment and scheduled overhaul.

Total electricity sold during the quarter was 130,466 gigawatt-hours (“GWh”), up 1.8% year over year. The increase was driven by higher demand in the agricultural (4.4%), commercial (3.5%), street-lighting (3.4%), residential (2.2%), industrial (1.5%) and educational segments, partially offset by lower demand of overnight power (5%).

Korea Electric Power is an integrated electric utility engaged in the generation, transmission and distribution of electricity in South Korea. The company is a dominant player in Korea’s electricity sector. It is poised to capitalize on the growth opportunities in this market and benefit from the industry restructuring initiatives of the Korean government.

Zacks Rank & Key Picks

Korea Electric Power has a Zacks Rank #3 (Hold). A few better-ranked players in the utility sector are Spark Energy, Inc. SPKE, Calpine Corp. CPN and Avista Corp. AVA. While Spark Energy sports a Zacks Rank #1 (Strong Buy), both Calpine Corp. and Avista Corp. carry a Zacks Rank #2 (Buy).

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KOREA ELEC PWR (KEP): Free Stock Analysis Report
 
CALPINE CORP (CPN): Free Stock Analysis Report
 
AVISTA CORP (AVA): Free Stock Analysis Report
 
SPARK ENERGY (SPKE): Free Stock Analysis Report
 
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