Korea Electric Power Corporation (KEP) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary and Q&A reveal several concerning factors: operating income underperformed expectations, provisions related to greenhouse gas emissions and nuclear site recovery increased significantly, and management avoided clear answers on several key issues. Additionally, the dividend payout ratio decreased, and there were no notable positive catalysts like new partnerships or strong guidance. The lack of clarity and the financial underperformance suggest a negative sentiment, likely leading to a stock price decline in the range of -2% to -8%.
Key Financial Performance
Consolidated Operating Income KRW 13,524.8 billion, no year-over-year change mentioned.
Revenue KRW 97,434.5 billion, increased by 4.3% year-over-year due to higher power sales.
Power Sales Increased by 4.6% year-over-year, specific revenue figure not provided.
Overseas Business and Other Revenue KRW 4,429.9 billion, decreased by 1.8% year-over-year, no specific reason mentioned.
Cost of Goods Sold and SG&A KRW 83,909.7 billion, decreased by 1.3% year-over-year, no specific reason mentioned.
Fuel Costs KRW 19,036.4 billion, decreased by 13.8% year-over-year, no specific reason mentioned.
Purchase Power Costs KRW 34,052.7 billion, decreased by 1.8% year-over-year, no specific reason mentioned.
Depreciation Expense KRW 11,667.8 billion, increased by 2.3% year-over-year, no specific reason mentioned.
Interest Expense KRW 4,339.5 billion, decreased by KRW 325.6 billion year-over-year, no specific reason mentioned.
Net Income KRW 8,007.2 billion, no year-over-year change mentioned.
Annual Power Sales Volume 549.4 terawatt hour, decreased by 0.1% year-over-year due to economic downturn and reduced industrial demand.
RPS Expense (Consolidated) KRW 3,989.7 billion, no year-over-year change mentioned.
RPS Expense (Stand-alone) KRW 4,818.8 billion, no year-over-year change mentioned.
Consolidated Total Borrowings KRW 129.8 trillion, no year-over-year change mentioned.
Stand-alone Total Borrowings KRW 84.9 billion, no year-over-year change mentioned.
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Operating Highlights
Revenue: Increased by 4.3% to KRW 97,434.5 billion.
Power Sales: Increased by 4.6%.
Cost of Goods Sold and SG&A: Decreased by 1.3% to KRW 83,909.7 billion.
Fuel Costs: Decreased by 13.8% to KRW 19,036.4 billion.
Purchase Power Costs: Decreased by 1.8% to KRW 34,052.7 billion.
Depreciation Expense: Increased by 2.3% to KRW 11,667.8 billion.
Interest Expense: Decreased by KRW 325.6 billion Y-o-Y to KRW 4,339.5 billion.
Generation Mix: Nuclear power's capacity factor and contribution increased, coal's contribution increased, and LNG's contribution decreased in 2025. For 2026, nuclear power's contribution is expected to increase, coal's to decrease, and LNG's to remain flat.
RPS Cost: Annual RPS expense on a consolidated basis was KRW 3,989.7 billion, and on a stand-alone basis, it was KRW 4,818.8 billion.
Funding Situation: As of 2025 Q4, consolidated total borrowings were KRW 129.8 trillion, and on a stand-alone basis, it was KRW 84.9 billion.
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Risk or Challenges
Economic Downturn Impact on Power Sales: Annual power sales volume decreased by 0.1% year-over-year due to the economic downturn, which reduced industrial demand. This poses a risk to revenue growth.
Fuel Price Volatility: Fluctuations in fuel prices, such as bituminous coal and LNG, could impact operating costs and profitability.
Borrowing Levels: High consolidated total borrowings of KRW 129.8 trillion could lead to increased financial risk, especially if interest rates rise or refinancing becomes challenging.
Shift in Energy Mix: Changes in the energy mix, such as increased reliance on nuclear power and reduced LNG contribution, may require significant operational adjustments and could face regulatory or public resistance.
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Guidance & Outlook
Power Sales Outlook: In 2026, the economic growth rate and number of operating days increase should lead to a slight increase in the total sales volume.
Fuel Source Contribution in 2026: The contribution of nuclear power is expected to increase, coal to decrease, and LNG to remain largely flat. Capacity factors for 2026 are projected as follows: nuclear power around mid- to high 80%, coal around mid-40%, and LNG around early to mid-20%.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:What caused the operating income to underperform expectations by KRW 1 trillion in Q4 2025?
A:The underperformance was largely due to other costs, including provisions related to greenhouse gas emissions, which increased by KRW 120.6 billion to KRW 340.6 billion, and provisions for the recovery of nuclear power generation sites, which increased by KRW 411.2 billion. The exact timing of booking these provisions will be discussed internally.
Q:Will the contribution of nuclear power generation increase in 2026 compared to 2025?
A:The capacity factor for nuclear power is expected to be in the mid-high 80% range on an annual basis in 2026, higher than 2025. This is due to preventive maintenance completion and the addition of new power plants.
Q:Why was the stand-alone operating income stronger than the consolidated numbers in Q4 2025?
A:The stand-alone profits appeared stronger because some costs associated with subsidiaries were booked under consolidated financial statements but not on stand-alone numbers.
Q:What caused the before-tax profit to perform strongly compared to operating income?
A:The strong performance was due to valuation losses and gains from FX conversion related to lease liabilities of subsidiaries.
Q:Why did the dividend payout ratio decrease in 2025 compared to 2024?
A:The payout ratio decreased from 16.5% to 13.65%, but the absolute amount of dividends increased due to a significant increase in stand-alone net income. The DPS also increased to KRW 1,541 per share. The 2026 dividend strategy is yet to be determined.
Q:What were the provisional liabilities related to used nuclear fuel and other nuclear-related costs in Q4 2025?
A:Provisional liabilities for nuclear power site recovery increased by KRW 904.5 billion to KRW 24,769 billion. Used nuclear fuel liabilities decreased by KRW 178.4 billion to KRW 2,745.3 billion. Mid- and low-level nuclear waste liabilities increased by KRW 10.2 billion to KRW 1,077.2 billion.
Q:What is the impact of the end of the grace period for the 15% price decrease on bituminous coal?
A:The company has internal estimates for the associated costs but cannot disclose them publicly.
Q:What is the bond issuance limit for KEPCO?
A:The bond issuance cap will be finalized after dividend-related activities, and it is expected to be just over 3x.
Q:What is the status of Korea's nuclear power generation export strategy?
A:The strategy is being developed by the Ministry of Industry, with KEPCO cooperating closely to ensure a high-quality export strategy.
Q:What is the status of the international mediation court case regarding the BNPP construction project?
A:Negotiations are ongoing, but specific numbers cannot be disclosed.
Q:What are the plans for differentiated pricing schemes for industrial power?
A:KEPCO is developing seasonal and time-based pricing schemes, as well as regional pricing schemes, in collaboration with the government. The impact on unit price and timeline is not yet determined.
Q:Were there any unusual one-off costs booked by subsidiaries in Q4 2025?
A:The costs were related to overseas businesses, but no further details were provided.
Q:What was the consolidated SG&A cost for Q4 2025?
A:The exact number is not yet available as the books are still being closed. It will be included in the financial statements after the audit report is released.
Q:What is the status of discussions on improving the cost pass-through system for tariffs?
A:KEPCO is working with the government and related parties to improve the cost pass-through system, which currently reflects fuel prices in tariffs on a quarterly basis.
Q:Review of Unclear Management Responses
A:Management avoided giving direct answers to several questions, including the exact timing of booking provisions, the cost impact of the end of the grace period for bituminous coal, the dividend strategy for 2026, specific numbers related to the BNPP construction project dispute, and the timeline and impact of new pricing schemes for industrial power. Additionally, they did not provide the consolidated SG&A cost for Q4 2025, citing ongoing book closures.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Cost good
Department KEPCO
Depreciation expense
English item
Finance Department
Finance IR
Fuel KRW
IR afternoon
Interest expense
KEPCO General
KEPCO today
KRW Depreciation
KRW Fuel
KRW Power
KRW foregoing
KRW purchase
Power sale
Today English
estimate statement
forecast statement
foregoing income
good SGA
income KRW
information today
item Interest
item income
overview result
power KRW
presentation KEPCO
result Korean
result QA
result schedule
risk uncertainty
session information
statement investment
statement today
target forecast
today conference
today target
uncertainty overview
KEP Transcript
Korea Electric Power Corporation (KEP) Q4 2025 Earnings Call Transcript
Unknown2-26
The earnings call summary and Q&A reveal several concerning factors: operating income underperformed expectations, provisions related to greenhouse gas emissions and nuclear site recovery increased significantly, and management avoided clear answers on several key issues. Additionally, the dividend payout ratio decreased, and there were no notable positive catalysts like new partnerships or strong guidance. The lack of clarity and the financial underperformance suggest a negative sentiment, likely leading to a stock price decline in the range of -2% to -8%.
Korea Electric Power Corporation (KEP) Q2 2025 Earnings Call Transcript
Unknown8-12
The earnings call presents a mixed outlook. While KEPCO shows positive financial performance with increased revenue and profit, concerns arise from the trend of direct power purchasing reducing sales, limited tariff increase room, and lack of clarity on U.S. market entry. The Q&A reveals uncertainties around tariff adjustments and fuel price outlook. These factors, alongside the absence of market cap data, suggest a neutral sentiment, with potential minor fluctuations in stock price.
Korea Electric Power Corporation (KEP) Q1 2025 Earnings Call Transcript
Unknown5-14
The earnings call presents a mixed picture: revenue and operating profit have increased, but there are concerns about high borrowing levels and lack of clarity on debt repayment plans. The Q&A revealed management's avoidance of certain questions, adding uncertainty. Positive aspects include reduced costs and increased non-operating profit. However, the absence of a share buyback program and unresolved transmission issues offset these positives. Overall, the sentiment is neutral due to balanced positive and negative factors.
Korea Electric Power Corporation (KEP) Q3 2024 Earnings Call Transcript
Unknown11-18
The earnings call indicates mixed signals: strong operating profit and sales growth, but significant borrowing and rising interest expenses pose risks. The lack of a share buyback or dividend program, coupled with regulatory costs, adds uncertainty. The Q&A revealed limited guidance on future costs and unclear responses, affecting sentiment. Overall, financial performance is solid, but risks and lack of clear positive catalysts suggest a neutral stock price movement over the next two weeks.
KEP Report
Frequently Asked Questions
Where does this earnings call transcript come from?
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