South Korea's state-run power company Korea Electric Power Corp. seeks to further reduce its debt ratio to a double-digit figure this year on increased earnings while also working to boost its own profit to over 2 trillion won ($1.82 billion), the company's president has said.
In a meeting with reporters Thursday, KEPCO President Cho Hwan-eik said a debt-to-asset ratio of less than 100 percent will mark normalization of the company that had posted a net loss for five consecutive years until 2013.
KEPCO's debt ratio on a consolidated basis stood at 198.6 percent at the end of last year, down 3.7 percentage points from 202.3 percent at the end of 2013. However, the company's own debt ratio dropped from 135.8 percent to 129.9 percent over the cited period.
"The debt ratio will likely drop to the double digits before the end of this year as we expect to make an additional profit of about 10 trillion won, about half of which will be used to pay off our debts," Cho said.
The additional profit will partly come from the sale of the company's Seoul headquarters to Hyundai Motor Group for 10.55 trillion won but also from the company's own growing profit, which jumped over four times from 238.3 billion won in 2013 to about 1.04 trillion won last year, the company chief noted.
The company's net profit on a consolidated basis came to 2.78 trillion won in 2014. KEPCO has relocated its headquarters to Naju, 350 kilometers southwest of Seoul, as part of the government's grand scheme to relocate its own offices and public enterprises for rural development.
"We can say the company and its management are normalized when its own profit exceeds 2 trillion won, which is the minimum amount to guarantee adequate payouts for investment," he said. "We can say we are now entering the track to normalization."
The large increase in KEPCO's earnings in 2014 came amid a growing demand for a cut in electricity rates to reflect a plunge in global oil prices.
The average price of Dubai crude, which accounts for about 86 percent of the country's total oil imports, has tumbled from $104 per barrel in January 2014 to $53.62 at the end of 2014.
Cho, however, said the rise in profit partly came from the company's own lifesaving measures, under which he and other KEPCO officials voluntarily cut their salaries, as well as cost-cutting technological innovations.
For instance, the company requires thousands of thermal imaging and detector cameras, but each camera used to cost about 100 million won ($90,653) as the cameras, along with their key components such as lens, had to be imported from Japan. The recent development of an indigenous camera lens is expected to cut the camera's price to about one-tenth, according to Cho.
The Ministry of Trade, Industry and Energy said only 2.9 percent of all electricity generated by KEPCO and its affiliates was generated by oil in 2013, confirming the recent drop in oil prices may not warrant an electricity rate cut. (Yonhap)