Power monopoly Korea Electric Power Co. posted on Friday a 67% rise in second-quarter profit on robust electricity sales in April and May.
KEPCO posted net profit of 265.6 billion won (US$288.3 million) in the quarter to June 30, in line with a median forecast of a 258 billion won profit from five analysts.
Analysts paint a rosy outlook for KEPCO in the second half as the power utility expects a rise in electricity rates towards the end of the year and a slowdown in the pace of oil price rises.
"The annual operating profit will likely expand in 2007 for the first time in four years on stable oil prices and an expected rate hike at the end of 2007," said Yun Hee-do, analyst at Korea Investment and Securities.
The power monopoly, which provides more than 95% of electricity in South Korea, posted a 159.3 billion won profit a year ago. Electricity sales grew nearly 6% in the second quarter compared to a year ago, despite high liquefied natural gas (LNG) and coal usage compared to
cheap nuclear power due to prolonged maintenance at nuclear power plants ahead of summer.
Fuel costs rose only 8% in the first half of 2007 from a year ago due to a better fuel mix, KEPCO said, compared to an annual average of 20% during 2003 to 2006 on continued run-ups in oil prices and a poorer fuel mix.
KEPCO posted 6.5 trillion won in sales, compared to 6.07 trillion won a year ago, and in line with a Reuters survey forecast of 6.57 trillion won.
Shares in KEPCO, which has a market value of about $31 billion, gained 9.2% in the second quarter, underperforming the wider market's 20% gain.
The Korea Deposit Insurance Corp. (KDIC) plans to sell its 5.02% stake in KEPCO this year. Although worries of a possible overhang have surfaced, analysts say the share price has already reflected such concerns.