Korea Electric Power Corporation

Good morning and good evening. First of all, thank you all for joining this conference call. And now we'll begin the conference of the fiscal year 2025 first quarter earnings results by Capco. This conference will start with a presentation followed by a 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 on the fiscal year 2025 first quarter earnings results by Capco.

Hello, everyone. I am Lee Jung-taek, CEO of Korea Power Corporation. I would like to thank everyone who attended the Korea Power's 1st quarter of 2025 performance announcement IR Conference Call. Today's conference call is scheduled to be held in both Korean and English languages. First, we will receive a brief response after the performance announcement. The performance data to be announced today is the IFRS connection standard, and if all comparisons are not mentioned separately, Good afternoon. This is Lee Jung-taek, head of...

and IR team at KEPCO. We sincerely thank you all for joining us for our KEPCO's Q1 2025 earnings conference call despite your busy schedule. Today's conference call will be conducted in both Korean and English and after a brief presentation, we will proceed with the Q&A session. The figures presented today are preliminary based on IFRS consolidated standard and all comparisons are made year over year unless otherwise stated. Please also note that any management plans, targets, and estimated financial figures mentioned during the call reflect our current outlook and are subject to uncertainty and investment risk. We will now present the QR2025 Profit and Loss Details in Korean and then provide the same content in English.

Hello, I'm Yang Cheong, the Director-General of IR. First, let's look at the sales results. In the first quarter of 2025, the net sales profit was recorded at 3.7536 trillion won. If we look at the specific figures, the net sales profit increased by 4% and was recorded at 24.224 trillion won. In the second quarter, the net sales profit increased by 4.7% and was recorded at 23.211 trillion won. In the third quarter, the net sales profit decreased by 10.2% and was recorded at 1.128 trillion won. The net profit and sales cost decreased by 6.9%, which is 20.470.4 billion won. The total fuel cost decreased by 18.7%, which is 5.1 billion won. The purchasing power cost decreased by 4.8%, which is 8.7568 billion won. The price-to-market ratio increased by 5.1%, which is 2.950.8 billion won. The net profit and sales cost decreased by 34.6 billion won compared to the previous year. Good afternoon. This is Yang Si-young, General Manager of our IR team.

Let us begin by reviewing the operating profit. The consolidated operating profit for Q1 2025 was 3.75 trillion won. And if you look into the details, revenue was 24.2 trillion won, up by 4%. Of this, electricity sales revenue accounted for 23.2 trillion won, up by 4.7%. And other revenue, including overseas business income, recorded 1.1 trillion won, down by 10.2%. Cost of sales and SG&A expenses totaled 20.47 trillion won down by 6.9%. Among these, fuel cost is 5 trillion won down by 18.7% and power purchase cost is 8.75 trillion won down by 4.8% affected by fuel price changes. Depreciation expenses came to 2.95 trillion won, increased by 5.1%. Among non-operating items, interest expense amounted to 1.1 trillion won, down by 34.6 billion won from the same period last year. Based on the factors mentioned, Q1 2025 consolidated operating profit was 3.75 trillion won, and net profit for the period was 2%. Hello, I'm Um Tae-seob from IR.

Next, I would like to talk about the main interests. First, I would like to talk about the performance and prospects of the power sales. In the first quarter, the power sales decreased by 0.5%. In the first quarter, the power sales decreased by 0.5%. In the first quarter, the power sales decreased by 0.5%. In the first quarter, the power sales decreased by 0.5%. Good afternoon.

This is Youngtae Sub, senior IR manager of the IR team. I will now go over the key points of interest. First, on electricity sales performance and outlook. Electricity sales volume in Q1 reached 141 terawatt hours, showing 0.5% decline due to decreased industrial sales from sluggish export. For full year 2025, we project sales to go down slightly due to the impact of lower economic growth and slowdown in manufacturing industry.

Next, I would like to talk about fuel price and S&P trend. In the first quarter of 2025, the fuel price of U.N.T.A. was about $105.3 per tonne according to Australia TAN, and J&G recorded about 160,000 won per tonne according to JKM. Also, the S&P was about 115.6

Next, I will cover fuel price by type and the S&P trend. In Q1 2025, the two-minute coal price based on Australian coal was around 105.3 dollars per ton, while LNG based on JKM was approximately 1.06 million won per ton. Additionally, the system marginal price was around 115.6 won per kilowatt hours.

If we look at the power group 4 power mix, in the case of the 1st quarter of 2025, the power supply increased due to the increase in the entry and use rate of new power supplies. In the case of coal, the power supply decreased due to the decrease in the use rate of coal. LNG decreased in the amount of equipment and the amount of base power, so the power supply decreased rapidly. According to the annual standards for 2025, the power supply will increase rapidly, the coal will increase rapidly, and the LNG will decrease rapidly. Looking at the generation mix of KEPCOs or GENCOs, our generation mix for nuclear went up from introduction of new plants and higher utilization.

As for coal, generation mix is down from lower utilization, while LNG also declined slightly from decreased capacity and higher base load generation. For full year of 2025, we expect that the nuclear generation will slightly increase, and coal also expected to go up slightly, while LNG mix is expected to go down slightly. Expected utilization rate by generation source for 2025 are for nuclear, it's at the mid 80% range, coal early 50%, and LNG at mid 20% range.

I'll tell you about the cost of RPS. The cost of RPS in the first quarter of 2025 was 78.26 billion won and 97.83 billion won respectively. Lastly, I'll tell you about the status of funding.

In Q1 2025, RPS costs were 782.6 billion won on a consolidated basis and 978.3 billion won on a separate basis. Finally, to go over the funding status, as of Q1 2025,

borrowing stood at 133.2 trillion won on a consolidated basis and 87.7 trillion won on a separate basis.

Next, we will begin the Q&A session. As this session will be preceded with consecutive interpretation in both Korean and English, we ask that you kindly keep your question and answers brief and clear. We will now open for Q&A. Now Q&A session will begin. Please press asterisk 1 if you have any question. For translation, please press asterisk 2 on your phone. The first question will be given by Moon Kyung-won from Merit Securities.

Please go ahead. First of all, it is related to the hand of a separate business. It seems that there was a special profit in the business, but I am curious about what caused it and how much the special profit was. Second, it is related to the amount of bullet control. At the end of last year in the first quarter, Please comment on how the nuclear power control ratio has changed and what changes will be made in the future. Thirdly, it's about the decrease in coal power generation. I think the coal power generation has decreased a lot since last year. I think it's a concept of balancing the balance between the nuclear power generation and the increase in nuclear power generation. Thank you for the opportunity.

I have three questions. First question is on a non-operating profit on a separate basis. It seems that you have had additional or increase in profit before tax. and I would like to understand what drove up this non-operating profit on a separate basis. What is the size of this profit? Second question is on your co-efficient, settlement coefficient. Compared to last year, Q1's coefficient seemed to have changed for coal. How much has changed, and what is your expected change within the full year, 2025? Third question is on the decline a decrease in coal generation volume. It seems that coal generation has gone down. Is it because of the increase of utilization of nuclear power plants to balance off the base generation load, or is there some other reason for that? If you can share the recent outlook for the overall generation mix for coal and nuclear power plants, that would be great.

I would like to answer the question about the profit of a separate business. We have recorded a profit of 1.8 trillion won, which was increased by 1.7 trillion won compared to the previous year.

To answer your first question on the non-operating profit increase on a standalone basis is because we have seen an increase of dividend profit of 1.7 trillion won leading to the dividend line item for our subsidiary company amounting 1.8 trillion won. I will answer the last question. There is a chance that the stock price will rise rapidly compared to last year. There is no chance that the stock price will rise rapidly compared to last year. There is no chance that the stock price will rise rapidly compared to last year. There is no chance that the stock price will rise rapidly compared to last year. To answer your question on an year-on-year basis, there has been a slight increase for the settlement coefficient for coal and nuclear power plants, nuclear energy. So while there has been a slight increase, we have not reassessed the increased amount for the full year yet. Whenever there is a significant change in the fuel price, we will go ahead and carry out this recalculation or reassessment process of the coefficient, but we have not been notified from the power exchange on such a plan to do so. I will answer the third question. This is the reason why coal power has decreased as the nuclear power has increased. In the first quarter, all nuclear power plants were operated except for the second and third quarter, when the nuclear power was stopped. This is according to the annual stop plan released by the exchange. According to this plan, the capital opportunity is expected to be 6 to 7 additional overhauls. This is a year-round changeable situation, so it is currently difficult to accurately predict the growth rate or the growth rate of the capital in the year. The decline in the generation mix of coal from increased generation of nuclear power plant is due to the following reason. In Q1, we have had the operation of Kodi 2 and 3, and except for the Sewol 2 overhaul, all the nuclear power plants were up and running. As of this point, we believe that there will be up to 4 to 6 overhealth in Q4 when you look at the overall full-year plan. But at this point, it's difficult to see how much will go up or down within 2025 full-year. In addition, I would like to talk about the reason for the decrease in the amount of food production. In the case of the development of both the Korean and New Korean raw materials in the East Asian region, And also, if I may cite the additional reason for decreased coal generation mix is because if we were to run all the coal power plant, Hanul and Shinhanul in the east coastline, it will face the limitation of transmission capacity and we will not be able to transmit all the electricity that is generated. The following question is by Yoo Jae Hyun from Mirae SS Securities.

Please go ahead. You told me about the fuel cost in the first quarter. How much do you expect this year? I'd appreciate it if you could give me some guidance on the S&P price. Second, how did the debt difference change this time? Please tell me how much the interest rate was.

Well, we have not been able to receive much materials, but my question would be regarding the fuel cost. You shared with us the fuel cost for Q1, but would also like to further understand the outlook for this year, including S&P price outlook. If you can share your guideline on the overall fuel price, including S&P, that would be great. Second question is on your financial status. What is the size of your borrowing at the moment and the associated interest cost?

Yes. So,

Currently, we don't have an official guideline for the fuel cost outlook for this year, but could you please share the overall trend, if you can, please?

Yes, we don't have an official guideline, but we are working with Bloomberg and other predictors. In 2025, coal will be $170,000 per ton, $170,000 per ton.

While we do not have official guidelines for the fuel cost outlook, we leverage institutional outlook, institutional data, like data coming from Bloomberg to forecast the overall fuel cost outlook. For 2025, our expectation is For coal, it would be 171,000 won per ton. And for LNG, it would be 1.06 million won per ton. And for oil, it would be 1,031 per liter.

Second, I would like to talk about the difference in income and interest rates. As of the first quarter of 2025, our annual income difference was 133.2 trillion won. It is a number that has increased by about 70 billion won by the end of 2024. Let me tell you about the interest rate. In the first quarter of 2025, the interest rate was recorded at about 1.1 trillion won. It is a number that has decreased by about 3.5 billion won compared to the previous year.

To share the overall outstanding borrowing, if you look at our consolidated basis for borrowing for 2025 Q1, it's at 133.2 trillion won, and it's up by 700 billion won compared to the end of 2024. As for the interest cost, in 2025, it is 1.1 trillion won, and on a year-on-year basis, it's down by 35 billion won.

Could you also share plans for further borrowing this year?

Do you have plans to repay your debt within this year or to source additional debt throughout the year?

We will answer the question offline separately. Thank you.

We're ready for next question. Currently, there are no participants with questions. Please press asterisk 1 to give your question. The following question is by Moon Kyung-won from Merit Securities. Please go ahead.

The following question is by Moon Kyung-won from Merit Securities. Please go ahead. I think 60% is falling. This kind of dividend tendency seems to be a bit unusual. I wonder if the dividend tendency will continue in the future. I would appreciate it if you could explain the background of why the dividend tendency suddenly went up.

So it seems that the increase of dividend profit for non-operating profit is somewhat unusual looking at the past trend. The average profitability, I think, is higher than 60%. Do you believe that this number is something that can be sustained going forward? What was the dividend payout ratio for this? And secondly, when do you expect the transmission limitation for East Coast area will be resolved? Are you seeing any kind of solution that is being devised? Yes.

First of all, I would like to answer the first question. The financial status of the current company and the financial status of the subsidiary company and the financial status of the subsidiary company and the financial status of the subsidiary company and the financial status of the subsidiary company and the financial status of the subsidiary company

To answer your first question, the current dividend payout ratio was determined based on the increase of the profit on a consolidated basis for our subsidiaries looking at their current financial status. For the future plans, we will be able to determine the dividend payout ratio looking at their financial status in January next year, as well as accommodating the feedback and comments from our GENCOs.

Second, I would like to talk about the Songun Development Restriction in the East Sea. In order to resolve the Songun Development Restriction in the East Sea, we are conducting a first-stage HVDC project from Sinanul to Singapyeong, and a second-stage HVDC project from Sinanul to the capital. Each of these projects is planned to last 25 to 26 years, but I would like to say that this may be delayed a little.

So the transmission and generation limitation in East Coast area, we are connecting Shinhanul and Shingal plant with HDVC to increase generation, as well as to connect that to the metropolitan area. The plan of completing these connections is scheduled for 2025 and 2026, but the completion date is yet to be seen.

Next question.

The following question is by Jo Yoonhaeng from UBS.

Please go ahead. I'd appreciate it if you could tell us how much the total fuel cost was in the first quarter. Third, I'd like to know how much the actual operation rate is actually affected by the performance of the company. Lastly, I'd like to ask you how much the price of our development-related price was. Thank you.

I would like to ask about some numbers regarding the earnings for this quarter. First question is around the unit fuel cost for Q1. Could you please share that once again? Second is on the nuclear power plant fuel cost. What was the fuel cost for a nuclear power plant in Q1? The third question is on the utilization of the nuclear power plant. And the last question would be the depreciation cost for your generation.

Our estimated fuel cost for Q1 for coal is

190,000 won per ton and for LNG is 1.1 billion won per ton and for oil it's 1,100 won per liter. To answer your second question, for the fuel cost depreciation for nuclear power plant for Q1 was 490 billion won.

I think you've been thinking about it in the past. Please tell me how much you want to raise in the first quarter of the original range.

The third question regarding the nuclear power plant utilization that was reflected in the earnings performance will be shared later offline if we are able to have the number. To answer your last question on the depreciation cost for our six Gencos for Q1 is 1.8 trillion won. Next question is from Lee Min-jae from NH Investment Securities. The following question is by Lee Min-jae from NH Investment Securities. Please go ahead.

Hello, I'm Lee Min-jae from NH Investment Securities. I have three questions. The first one is related to the use rate of coal. I think it's not enough to explain it only with the same type of smelting system. I think it fell a lot. So is there a reason for this? And now, in May, the current carbon emission rate seems to be 30% today, but I wonder if this is possible to achieve 50% annual guidance. Second, the price that was purchased from ICT in January, 2nd, and March seems to have risen a bit, but if you look at it from the point of view of total speed, I think it's about 10 won more expensive than S&P. So I'm curious if there's a reason for this. Lastly, in May, the price of the gas company's high-end fuel cost dropped, but S&P is still maintained. So I'm curious if there's a special reason for this.

I have a question regarding the coal utilization rate. I mean, the declining coal utilization cannot, I believe, be just explained with the limitation of the transmission lines. When you just look at the utilization by your subsidiaries, it has gone down significantly, and the May numbers is somewhere around 30%, and one would wonder whether or not you'll be able to achieve this coal utilization rate of 50% within the year. The second question is regarding the IPP unit cost. It seems that the IPP purchase unit cost has gone up looking at the trend from January to March. Is there a reason for that? And the kilowatt unit price, I believe, is 10.1 higher than S&P cost. It would be great if you can explain the reason behind it. And also, if you look at the disclosed fuel cost for May, the fuel cost has gone down for May while S&P is maintained. What is the reason behind that? Yes, I will answer that question. Regarding the drop in the use rate of coal, there are measures to reduce coal development related to dust pollution every weekend in March. To answer your first question on the declining nuclear power plant utilization, there has been also a limitation on coal generation due to the fine dust particle matters that took place in weekends of March. utilization rate for coal going forward, I would share those numbers offline. Let me please also follow up on the second and third question later on. We'll move on to the next question. The following question is by Yoo Jae-sun from Hana Securities.

Please go ahead. If you look closely, it says that the total cost of 2022 is self-sufficiency. In fact, even if this is a little late, I remember that it changed around June and July next year. But I've been staying for a long time, so I wonder when this will change. The third is related to the second, but it seems that the cost of environmental costs should be increased every year, but it seems that the cost of environmental costs should be increased every year, but it seems that the cost of environmental costs should be increased every year, but it seems that the cost of environmental costs should be increased every year, but it seems that the cost of environmental costs should be increased every year, but it seems that the cost of environmental costs should be increased every year, The fourth question is about power purchase. I think the cost of general hydrogen development will be applied to CHPS from 2025. Of course, I don't think it's going to be applied to the whole year because it starts at 1,300 gigawatts. If this is applied, I would appreciate it if you could tell me the amount and the cost.

I have four questions. First is on the coal utilization rate, not the usage of the coal power plant. And second question is on the estimated number for 2025 HMC. And also third question, it seems that the climate environment tariff or fee has been frozen for some time. When do you expect this number to change going forward? And number four on the CHPS for 2025, What is the expected volume for zero hydrogen and hydrogen for 1,030 kilowatt plant once it's up and running? Let me please get back to you on utilization rate for the coal power plant later on. I'd like to answer the second question. Hanjeon has set the total cost as the year-end settlement standard and the year-end budget standard and has been submitting it to the government until the end of June of the year. After submitting it to the government, it is released on the Hanjeon website through the government's cost verification process. Hanjeon has set the total cost To answer your question on the overall tariff, the total comprehensive cost is based on closed numbers or settled number for last year and also the budget and estimates for the year going forward. total comprehensive costs are submitted to the government in June, where the government goes through the relevant due diligence and it's disclosed on our website. Once it is disclosed and goes through the review process, then we will be able to come up with the budget and that will be disclosed as a budget for KEPCO. I would like to talk about the third, climate-environmental budget. The climate-environmental budget was originally intended to cover the cost of the previous year's climate-environmental budget, but due to the increase in fuel costs 21 years later, not only the cost of the climate-environmental budget, but also the cost of the cost of the cost of the cost of the cost of After considering the situation in general, we will consider the number of children and the environmental cost in general, and decide on the adjustment period and adjustment level of the environmental budget. On the climate and environment cost, in principle, the way the cost is reflected is that it's based on the previous year's climate-related cost, and it's reflected in the next year's tariff. But since 2025, due to surge in fuel costs, we were not able to reflect all the increase in fuel costs alongside with the cost for climate environment. So this is something that we need to negotiate and discuss with the government. And at this point, we do not have the level or the plan on when this will be adjusted and reflected. So for CHPS cost for 2025, while the cost is now being aggregated as we speak on the volume and the amount, that's something that I need to get back to you after discussing with the relevant team. We'll move on to the next question. The next question is from Moon Kyung-won of Merit Chisholm. Please go ahead. The following question is by Moon Kyung-won from Merit Securities.

Please go ahead. I have a question regarding coal individual consumption tax.

It has been reduced to 46.1 to 39.1 per kilowatt, and I believe that this was something that is temporary decline until end of June. Will this be maintained going forward for the two-minute call? What is the outlook? Yes, I will answer your question. As you said, a temporary discount was applied to the two-minute call until the end of June. The government has yet to come up with a plan to extend this discount. To answer your question, as you have mentioned, the individual consumption tax for coal has been discounted until end of June. Whether or not that discount will be extended has not been determined by the government yet. Thank you. Currently, there are no participants with questions. Please press asterisk 1 to give your question. The following question is by Heo Minho from Daesin Securities.

Please go ahead. This year, I'm wondering how much you're looking at the average interest rate for both the average connection standard and the separate standard. I'm wondering how much you're looking at the average interest rate for both the average connection standard and the separate standard. I'm wondering how much you're looking at the average interest rate for both the average connection standard and the separate standard. I'm wondering how much you're looking at the average interest rate for both the average connection standard and the separate standard. I'm wondering how much you're looking at the average interest rate for both the average connection standard. I have questions regarding different costs.

First is on a separate basis, what has been your interest cost? If you can share the average interest costs on a consolidated basis as well as a separated basis for this year. That would be greatly appreciated. And also, what is the financial profit and cost and dividend profit for Q1 on a separate basis? And could you also share again the RPS cost for consolidated and on a separate basis as well as the external power purchase cost? If I look at the interest costs on a separate basis, it is down by 56.2 billion won on a year-on-year basis at 685.5 billion won.

Please allow me to follow up on the interest rate for a consolidated and separate basis later on.

On a separate basis, the financial profit is 1.96 trillion won, and financial cost is 730 billion won, with dividend profit of 1.8 trillion won.

Let me tell you about the RPS cost. In the first quarter, the RPS cost was 7826 billion won, and 97830 billion won.

To also share the RPS cost for Q1, on a consolidated basis, it's 782.6 billion won, and on a separate basis, it's 978.3 billion won.

I'll tell you about the power purchase. The total purchase amount is 144.7 terawatt-hours, and the purchase amount from PPA is 6 terawatt-hours.

On a power purchase, out of 144.7 terawatt hour, we purchased 6 terawatts from PPA and 84.3 terawatts from IPP. We'll move on to the next question. The next question is from Lee Min-jae of NH Investment Securities. The following question is by Lee Min-jae from NH Investment Securities. Please go ahead.

Yes, hello. I have one more question. This year and next year, what is the direction of investment in Songbaejeon? If you could share the overall CAPEX plan for T&D for this year, next year, and the year after, that would be great.

Is there certain areas that you would specifically execute this CAPEX on, like the undersea cables as well as the

Electricity towers.

Currently, we are in the process of developing the 11th Basic Plan for Electricity Power Supply and Demand, which will be available within May. The T&D plan is also being developed alongside with the 11th Basic Plan, and you will be able to access those numbers when this plan becomes available.

Thank you.

The following question is by Heo Minho from Daesin Securities.

Please go ahead. There is a recent issue of buying electricity through a strategic exchange rather than buying it from us. If that's the case, I'd like to ask you to tell me if you have any specific plans for how to add additional cost related to the cost of selling.

I was not able to hear clearly on the financial profit and cost on a consolidated basis. So if you could share that once again, that would be great. And as we have seen the surge in industrial electricity tariffs, there has been an issue of industries purchasing power over KPX. So for KEPCO, what's your plan going forward in providing electricity for the private sector and also to pass through the T&D cost if this becomes an issue going forward. The first question is for you. The annual net income is 113.3 billion won, and the net cost is 1.23 billion won. And the interest rate for the capital law So to mention the cost once again, on a consolidated basis, the financial profit has been 413.3 billion won and the cost is 1.23 trillion won. And on the profit based on the equity method is 125.1 billion won.

Second, I would like to talk about the power of direct purchase. As you said, there was a request for the power of direct purchase, and we agreed to improve the power of direct purchase system by gathering the members of Hanjeon and the industrial department of the power of direct purchase. We extended the period of foreign trade for direct purchase to one year and three years, and added the same amount of welfare cost, which is burdened by Hanjeon, which is a sales business, and added the same amount of welfare We will continue to negotiate in this direction. Secondly, we are currently negotiating with the relevant areas about the net usage fee.

On the direct purchase issue that you have mentioned, currently we are discussing this issue with KPX, the ministry, as well as the members of the power industry to resolve this issue and to improve the overall mechanisms and related rules for direct purchase. We have also increased the mandatory purchase period from one year to three years, and also the welfare-related special costs will be going to all relevant stakeholders, not just on KEPCO. We're also increasing the market liability as well as responsibility of direct purchase of the market. So this is the overall trend for us to improve the... direct purchase arrangement at the moment. And regarding the power grid usage, we're currently carrying out a study regarding this. And once that study is over, we'll be able to share more. I'll take the next question. Currently, there are no participants with questions. Please press asterisk 1 to give your question. 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 2025 first quarter earnings results by Capital. Thank you for your participation.