Korea Electric Power Q2 2026 Earnings Report

Korea Electric Power EPS Results

• Actual EPS: $0.14
• Consensus EPS: $0.45
• Beat/Miss: Missed by -$0.31
• One Year Ago EPS: N/A

Korea Electric Power Revenue Results

• Actual Revenue: $14.30 billion
• Expected Revenue: $15.04 billion
• Beat/Miss: Missed by -$738.14 million
• YoY Revenue Growth: N/A

Korea Electric Power Announcement Details

• Quarter: Q2 2026
• Date: 8/13/2026
• Time: Before Market Opens
• Conference Call Date: Wednesday, August 12, 2026
• Conference Call Time: 4:00AM ET

Korea Electric Power (NYSE:KEP) (KEP) is a South Korea–based integrated electric utility engaged in the generation, transmission and distribution of electricity. The company’s activities span power plant operation and maintenance, grid management, fuel procurement and power trading, as well as engineering, procurement and construction (EPC) services for large-scale power projects. Its asset base includes a mix of thermal, nuclear, hydro and renewable generation capacity, and the company supports system planning and reliability functions for the national electricity network.

In addition to core utility operations, KEP provides a range of technical and consulting services tied to power infrastructure, including plant construction, refurbishment and decommissioning support. The company is involved in the development and integration of low‑carbon energy technologies and grid modernization initiatives, reflecting broader sector trends toward decarbonization and increased renewable penetration. KEP also participates in fuel and commodity management to secure supplies for thermal and nuclear generation and to optimize dispatch across its portfolio.

Headquartered in Seoul, KEP serves the South Korean market and conducts international project activities and partnerships in overseas markets through project development, EPC contracts and joint ventures. The business traces its roots to the mid‑20th century as a government‑established utility responsible for national electrification and has retained a significant public-sector role in governance and oversight. Corporate leadership and governance are structured through an executive management team and board of directors, with policies and strategic direction influenced by national energy policy and regulatory frameworks.

Korea Electric Power Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: KEPCO reported KRW 4.9 trillion in first-half operating profit and KRW 2.8 trillion in net income. Revenue rose 0.3% year over year, while lower purchased-power costs and reduced interest expense helped offset higher fuel and operating costs.
• Neutral Sentiment: Power sales volume declined 0.6% to 266.7 TWh in the first half as industrial demand weakened amid an economic slowdown. KEPCO expects full-year sales to increase slightly as economic growth and operating days improve.
• Negative Sentiment: Nuclear generation remained weak because of prolonged preventive maintenance, while higher LNG prices linked to the Middle East conflict contributed to greater coal generation. Rising SMP in July and August also suggests continued fuel-cost pressure in the third quarter.
• Neutral Sentiment: KEPCO said tariff increases would help address accumulated losses and meet the goal of bringing the bond-to-capital ratio below two times by the end of 2027, but no timing was provided. A regional electricity-pricing system is expected to be finalized and introduced by year-end, with financial impacts still undisclosed.

Presentation

[Translator]

Good morning and good evening. First of all, thank you all for joining this conference call. Now we will begin the conference of the fiscal year 2026 second quarter earnings resulted by KEPCO. This conference will start with a presentation, followed by a divisional Q&A session. If you have a question, please press asterisk one on your phone during the Q&A. Now we shall commence the presentation. Results by KEPCO.

[Heung-Bok Oh, Head of Finance at KEPCO]

[Non-English content]

[Translator]

Good afternoon, this is Heung-Bok Oh, Head of Finance at KEPCO. I'd like to thank you all for participating in today's conference call for the business results for the second quarter of 2026, despite your busy schedule. Today's call will be conducted in both. We will end with a brief presentation. This will be followed by a Q&A.

[Translator]

Please note, financial information to be disclosed today is preliminary consolidated IFRS figures, and all comparison is on a year-over-year basis unless stated otherwise. Also, business plans, targets, financial estimates and other forward-look statements mentioned today are based on our current targets and forecasts. Please be noted that such statements may involve investment risks and uncertainties.

[Heung-Bok Oh, Head of Finance at KEPCO]

[Non-English content]

[Translator]

Now, we will begin with an overview of the earnings results for the first half of 2026 in Korean, which will be then consecutively translated into English.

[Heung-Bok Oh, Head of Finance at KEPCO]

[Non-English content]

[Translator]

First, I will go over the operating performance. The consolidated operating income in 2026 first half stood at KRW 4,912.7 billion. Revenue increased by 0.3% to KRW 46,317.3 billion. Power sales decreased by 0.4% to KRW 43,964.1 billion. Other revenue, including overseas business revenue, increased by 16.7% to KRW 2,353.2 billion. Cost of goods sold and SG&A rose by 2.8% to KRW 41,404.6 billion.

[Translator]

Fuel cost increased by 8.8% to KRW 10,142.9 billion. Purchase power cost decreased by 0.9% to KRW 17,206.9 billion. Depreciation expense increased by 1.3% to KRW 5,951.5 billion. Of the non-operating items, interest expense decreased by KRW 132.2 billion YoY to KRW 2,79.1 billion. As a result of the foregoing, the 2026 first half consolidated operating income stood at KRW 4,912.7 billion, and net income at KRW 2,796.5 billion.

[Taeseop Eom, Senior Investor Relation Manager at KEPCO]

[Non-English content]

[Translator]

Good afternoon. I am Taeseop Eom, Senior IR Manager. I will now go over the main areas of interest, starting with power sales performance and outlook. 2026 first half power sales volume decreased by 0.6% YoY to 266.7 TWh due to a decrease in industrial demand caused by economic slowdown. For the full year, a higher economic growth rate and number of operating days are expected to slightly increase sales volume.

[Taeseop Eom, Senior Investor Relation Manager at KEPCO]

[Non-English content]

[Translator]

Next, I will go over the fuel price by fuel source and SMP trends. In 2026 first half for the two-minute quote, Australian coal was around AUD 128.2 per ton. JKM LNG was about KRW 939,000 per ton. SMP was approximately KRW 112.3 per kWh.

[Taeseop Eom, Senior Investor Relation Manager at KEPCO]

[Non-English content]

[Translator]

Looking at the subsidiaries generation mix in the first half, the capacity factor of nuclear power decreased and contribution to the generation mix declined. While for coal utilization and contribution to the generation mix both increased due to the decrease of the capacity factor of nuclear power. In case of LNG, contribution to the generation mix increased as the overall volume of base load generation decreased. In 2026, the contribution of nuclear power should slightly increase, coal should slightly decrease, and LNG should largely be maintained. Also in 2026, the capacity factor of each power source is projected to be low to mid 80% for nuclear power, low to mid 50% for coal, and low to mid 20% for LNG.

[Taeseop Eom, Senior Investor Relation Manager at KEPCO]

[Non-English content]

[Translator]

RPS cost as of 2026 first half was KRW 2,533 billion on consolidated basis and KRW 2,938.9 billion on standalone basis. Lastly, on funding as of 2026 first half, total borrowings on consolidated basis was KRW 133.3 trillion and KRW 84.8 trillion on standalone basis.

[Taeseop Eom, Senior Investor Relation Manager at KEPCO]

[Non-English content]

[Translator]

Now we will move on to the Q&A session. Since we will be conducting the Q&A session in Korean and English with consecutive interpretation, please make your questions and answers clear and brief. Thank you.

[Operator]

[Non-English content].

[Translator]

Now Q&A session will begin. Please press asterisk one if you have any questions. For cancellation, please press asterisk two on your phone.

[Operator]

[Non-English content]

[Translator]

The first question will be given by Sung Jong Hwa from LS Securities. Please go ahead.

[Jong Hwa Sung, Analyst at LS Securities]

[Non-English content]

[Translator]

Good afternoon. Thank you for the opportunity today. I have one question on the contribution of nuclear power to the generation mix. Since Q3 last year, we have seen the contribution of nuclear power to the generation mix decline quite significantly on a YoY basis. This Q2, I think we also saw a decline. That means this trend has been continuing for four consecutive quarters. In your keynote today, you mentioned that for the full year, the contribution of nuclear power should show a slight increase. As I just mentioned, in the first half of this year already, we have seen significant decline on YoY basis.

[Translator]

When we listen to the earnings call of your subsidiary, they mentioned that the preventive maintenance can be prolonged. Given all of these factors, does this mean in the second half we will see a significant increase in the nuclear power contribution on a YoY basis to make sure that on a full year basis, nuclear power generation contribution still increases slightly, like you mentioned in your keynote? Or for this year, will you be managing these numbers more tightly? Thank you.

[Company Representative at KEPCO]

[Non-English content]

[Translator]

Yes, thank you for the question. As mentioned in the keynote, the capacity factor of nuclear power is being expected to be around early or mid 80% by KEPCO. Like you've mentioned, there has been some issues in the prolonged preventive maintenance of some of the nuclear power generation units. As a result of that, in the first half, the capacity factor numbers were quite weak. However, we are monitoring the situation in the second half very closely. We are adding Saeul Unit 3 to the Grid, and we are planning to implement preventive maintenance in existing nuclear power plants in a more timely manner to make sure that we can maintain appropriate level of nuclear power generation contribution for the full year.

[Jong Hwa Sung, Analyst at LS Securities]

[Non-English content]

[Operator]

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[Translator]

The following question is given by [inaudible] from UBS. Please go ahead.

[Analyst at UBS]

[Non-English content]

[Translator]

Thank you for the opportunity today. First one is regarding cost. If you look at the numbers of the first half and try to estimate Q2 numbers based on the first half results, there seems to be an increase in fuel cost, but more visibly an increase in other operating costs. What would be the factors that drove the other operating costs on a YoY basis in Q2? My second question is regarding the tariff. I understand that the Ministry of Climate, Energy and Environment is preparing to announce a corporate differentiated tariff system. What would be the financial impact if this new differentiated charging system is introduced?

[Company Representative at KEPCO]

[Non-English content]

[Translator]

Yes, I will take your first question regarding the non-operating cost drivers. We already talked about KHNP and that the preventive maintenance period has been prolonged. This has generated around KRW 101.3 billion in other operating expense. Another factor is coming from the Korea Southern Power. They supply fuel or coal to private operators, and there was an increase of KRW 70.3 billion in terms of the material costs associated with the supply of coal to private operators.

[Company Representative at KEPCO]

[Non-English content]

[Translator]

Regarding your second question on the differentiated electricity pricing system. I think you are referring to the regional differentiation of electricity pricing. I believe that unfortunately, it is too early to disclose any detailed financial impact.

[Company Representative at KEPCO]

[Non-English content]

[Translator]

Just to give you a little bit more color on the timing and progress. There should be a public hearing on the regional pricing differentiation during the second half. Towards latter half of the year, I believe this system will be finalized and this will be introduced by the end of this year. It will also be in junction with the reform of the regional wholesale power pricing mechanism.

[Operator]

[Non-English content]

[Translator]

The following question is by Pierre Lau from Citibank. Please go ahead.

[Pierre Lau, Analyst at Citibank]

Hello, good afternoon. I have three questions on KEPCO. The first one is, given that we have lower global oil prices, as Middle East contract seems to have more stability now, do KEPCO expect the fuel cost in third quarter to be lower than that in second quarter, or should it be similar? The second question is, what is KEPCO expectation regarding tariff rise? Could we expect any tariff rise for the rest of this year, or we have to wait until 2027? The third question is, does KEPCO think it's able to lower the ratio of corporate bond issuance to the sum of capital and research to below 2x by end of 2027? Thank you.

[Company Representative at KEPCO]

[Non-English content]

[Translator]

I'll take your first question on the fuel cost. If we just look at the SMP in Q2 of 2026 and compare that on a YoY basis, it's lower than last year Q2. But if we look at the July and August numbers. SMP in 2025, July was KRW 121, and this year it has been around KRW 133. The SMP in August in 2025 was around KRW 117 for the full month. This year to date, it's around KRW 151. There can be many different factors that cause the SMP to increase on a YoY basis, but I think one of the main drivers will be the increase of international fuel costs. There is a time lag between the actual increase in the market and when it is actually reflected in the SMP. I think this time lag has started to kick in July and August.

[Company Representative at KEPCO]

[Non-English content]

[Translator]

Yes. In terms of the tariff hikes, in order to address the accumulated operating loss and to also meet the bond issuance requirements, increase in tariff will be very helpful. At the same time, there are various factors that need to be considered when raise the tariff, such as inflation and overall macroeconomic situation. We will be monitoring the domestic and international markets and economies very closely, and we will be discussing with the government to try to achieve the tariff hike in the future.

[Heung-Bok Oh, Head of Finance at KEPCO]

[Non-English content]

[Translator]

Regarding your last question on bond issuance cap. I do not believe it is an issue of whether we can meet these two times requirements by end of 2027. We will be making utmost effort to ensure that we can meet those requirements by 2027 year end. We are not really focusing on reducing the overall bond issuance amount. However, I think we are working more on increasing profit generation from operating activities. Like just mentioned when answering the second question, working closely with the government to achieve an appropriate level of tariff to make sure that we can meet these requirements by the end of 2027.

[Taeseop Eom, Senior Investor Relation Manager at KEPCO]

[Non-English content]

[Operator]

[Non-English content]

[Translator]

The following question is by Jaeseon Yoo from Hana Securities. Please go ahead.

[Jaeseon Yoo, Analyst at Hana Securities]

[Non-English content]

[Translator]

Thank you for the opportunity to engage. The first half last year, KHNP other provisional liabilities was KRW 471.3 billion. What would be this number for the first half of this year?

[Company Representative at KEPCO]

[Non-English content]

[Translator]

Yes. The number for this half, from January to June, was KRW 307.8 billion. There has been some write-backs, so it is actually a minus cost KRW 164.1 billion.

[Heung-Bok Oh, Head of Finance at KEPCO]

[Non-English content]

[Operator]

[Non-English content]

[Translator]

Currently, there are no participants with questions. Please press asterisk one to give your question.

[Operator]

[Non-English content]

[Translator]

The following question is by Sung Jong Hwa from LS Securities. Please go ahead.

[Jong Hwa Sung, Analyst at LS Securities]

[Non-English content]

[Translator]

I have one question on the three mega projects announced by government. I believe there is a critical role to play by KEPCO as the central power provider. But in order to do so, you will have to significantly increase the capacity and also expand the power Grid, which should require considerable amounts of CapEx.

[Translator]

We just discussed the bond issuance cap, reducing it from 5x-2x. You said in order to meet these requirements, you will be working to boost the profit generation of KEPCO. However, even considering all of these factors, I believe that given the sheer amount of capital required for such a large national project, KEPCO will be needing additional amounts of capital and funding. What is your solution in terms of funding such large national projects?

[Heung-Bok Oh, Head of Finance at KEPCO]

[Non-English content]

[Translator]

Thank you for the question. The AI mega project and the Grid expansion that you just mentioned are mid to long-term projects, meaning that it does not necessarily mean we need the full amount upfront at once. At the same time, we do face the challenge of reducing the bond issuance amount to 2x of capital. I think we need to take a balanced approach. We need to develop a mid long-term CapEx plan and calculate the total CapEx amount that may be necessary for these projects.

[Translator]

Try to distribute that across multiple quarters and years, and also have strict management approach towards the magnet of funds that we already have. We will be working closely with government departments, the multiple stakeholders and all of the relevant departments and subsidiaries of KEPCO to try to come up with the most optimal way to approach these funding needs. At the same time, of course, we will be also working to ensure that such CapEx does not undermine the business management of overall capital.

[Taeseop Eom, Senior Investor Relation Manager at KEPCO]

[Non-English content]

[Operator]

[Non-English content]

[Translator]

Currently, there are no participants with questions. Please press asterisk one to give your question.

[Operator]

[Non-English content]

[Translator]

Once again, if you have a question, please press asterisk one.

[Heung-Bok Oh, Head of Finance at KEPCO]

[Non-English content]

[Translator]

Yes. I would like to take this opportunity to make a correction in the keynote presentation today regarding the contribution of the different fuel sources to the generation mix. We mentioned earlier that the coal contribution increased. The main factors were the increase in LNG prices triggered by the Middle Eastern conflict, and also higher bituminous coal prices as well. I don't think that was very clearly stated in the presentation earlier. I would like to make this correction. Thank you.

[Operator]

[Non-English content]

[Translator]

Once again, if you have a question, please press asterisk one.

[Operator]

[Non-English content]

[Translator]

As there are no further questions, we will now end the Q&A session. For any additional inquiries, please contact our IR department. This concludes the fiscal year 2026 second quarter earnings resulted by KEPCO. Thank you for the participation.

Participants

Analysts

• Translator
• Heung-Bok Oh, Head of Finance at KEPCO
• Taeseop Eom, Senior Investor Relation Manager at KEPCO
• Jong Hwa Sung, Analyst at LS Securities
• Company Representative at KEPCO
• Analyst at UBS
• Pierre Lau, Analyst at Citibank
• Jaeseon Yoo, Analyst at Hana Securities