Korea Gas Corp Posts 2.1 Trillion Won Operating Profit Last Year, Down 30% Year-on-Year

Sales Down 6.9% to 35.7 Trillion Won
Net Profit Plunges on Lower Oil Prices and Overseas Asset Impairments
Debt-to-Equity Ratio Improves to 397%...Shareholder Dividends for Second Straight Year

Korea Gas Corporation announced in a disclosure on the 26th that, on a consolidated basis for last year, it recorded sales of 35.7273 trillion won and operating profit of 2.1012 trillion won. Sales fell 6.9% year-on-year, and operating profit plunged 30%. Net profit for the year came to 132.3 billion won, down 88.5%.

Sales decreased by 2.6614 trillion won from the previous year. Although the annual sales volume increased by 390,000 tons year-on-year to 34.51 million tons thanks to the stabilization of the individual gas pricing system, sales declined because the average selling price fell by 8.3% (1.59 won/MJ) due to lower oil prices.

Operating profit also decreased by 902.2 billion won compared with the previous year. The company explained that its allowed return on investment fell by 85.9 billion won due to a cut in wholesale prices following lower interest rates, and that one-off factors totaling 345.5 billion won were reflected, including expanded gas bill support for vulnerable groups and a decline in settlement gains from the previous year. In overseas operations, the Mozambique subsidiary saw improved earnings thanks to higher Coral FLNG sales volumes, but other overseas subsidiaries posted lower operating profit as selling prices declined in line with the drop in international oil prices.

Net profit for the year decreased by 1.0167 trillion won from a year earlier. The company recognized an impairment loss of 424.4 billion won on the Mozambique project under a conservative valuation approach and amid falling international oil prices, and a total of 666.9 billion won in impairment losses was booked, including 182.2 billion won for GLNG and 60.3 billion won for Prelude. Korea Gas Corporation conducts an impairment test on its overseas resource development projects every fiscal year and explained that the size of impairment is determined by external variables such as oil prices, interest rates, and the creditworthiness of the host country.

However, financial income and expenses improved. Following a partial victory in the KC-1 (Korean cargo containment system) lawsuit, the company reversed 120.5 billion won of the provisions recognized in 2024, and net interest expenses improved by 208.5 billion won thanks to a decrease in the average balance of borrowings and lower interest rates.

Net profit on a separate basis, which serves as the basis for shareholder dividends, was 699.3 billion won, down 94.1 billion won year-on-year. Compared with the consolidated results, non-operating items such as net foreign exchange gains of 126.2 billion won and dividend income of 322.7 billion won were reflected, and the impact of asset impairment was relatively smaller on a separate basis. Korea Gas Corporation decided to pay a dividend of 1,154 won per share, making it the first time since 2019 that the company has paid shareholder dividends for two consecutive years.

The financial structure also improved. Borrowings decreased by 4 trillion won compared with the end of the previous year, and the debt-to-equity ratio fell by 36 percentage points to 397%. This is the first time since 2021, before the Russia-Ukraine war, that the debt-to-equity ratio has fallen below 400%.

However, accounts receivable for residential-use feedstock costs remain high at 13.8649 trillion won, a level similar to that at the end of the previous year.