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Korea Electric Power Management Discusses Q1 2012 Results - Earnings Call Transcript

[Foreign Language – Korean]

[Interpreted] Now we will provide the overview in English starting with operating income. In the first quarter of 2012, KEPCO reported a net operating loss of KRW 105 billion, which improved KRW 370 billion compared to operating loss of KRW 476 billion in 2011.

Our continued operating loss was mainly due to increases in operating expenses, such as fuel cost and power purchase cost, which were not fully offset by increases in operating revenues related to increases in power sales revenues from tariff hikes, and increases in power sales volume.

Taking a closer look, operating revenue rose 23.2% to KRW 13.3 trillion, power sales revenue increased 20.9% totaling in KRW 12.5 trillion. This increase was attributable mainly to 12.2% increase in unit tariff, 2.5% power sales volume growth, driven by increase in demand from the industrial sector, as well as recognition of account receivables related to the fuel cost adjustment announced.

Moving on to main operating costs, COGS, selling and administrative expenses went up 18.8% to KRW 13.6 trillion, of which fuel costs jumped 16.6% to KRW 6.9 trillion, primarily due to 0.6% increase in power generation, affected by increased power demand or a 15.9% hike in unit cost of fuel such as coal and LNG. Meanwhile, purchased power cost surged 41% to KRW 2.9 trillion. Such rise is attributable to 21.7% increase in unit cost of purchased power and 15.9% hike in purchased power volume due to rising power demand.

Now let me explain KEPCO’s financial income and expenses in the non-operating segment. Our non-financial loss stood at KRW 428 billion in the first quarter of 2012, which is KRW 151 billion up, compared to KRW 277 billion in 2011. This was mainly due to the income expense, which went up 9.8% to KRW 551 billion in [inaudible], and increase in interest bearing debt, and a decrease in FX gain [ph] and pacified the present decline in FX rate in 2012.

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