KEPCO CEO's term extended by 1 year
By Lee Hyo-sik
Cho Hwan-eik, CEO of KEPCO
Korea Electric Power Corp. (KEPCO) CEO Cho Hwan-eik will serve as the head of the state-run utility firm for one more year, government officials said Tuesday.
Cho, whose three-year term ended on Dec. 16, 2015, has remained in office as the selection of his successor was delayed.
Instead of appointing a new CEO, the government recently decided to let Cho, a former vice minister of commerce and industry, manage the utility firm, which has significantly bolstered its financial health under his leadership.
“Cho has been credited with turning KEPCO into a profitable and efficiently managed state enterprise over the past few years,” said an official who declined to be named. “He is currently undergoing the approval process.”
The company will hold a shareholders’ meeting next month to approve Cho’s reappointment. It will be made official once approved by President Park Geun-hye. Cho will then become the third KEPCO CEO to serve more than three years.
His consecutive term will likely enable the utility firm to continue its projects in a more coherent manner and will have a positive effect on its share prices.
“The extension of the term will remove uncertainties regarding CEO risks,” a company official said. “We believe the reduction of risks will positively affect share prices.”
KEPCO is widely expected to announce a record net profit for 2015, exceeding 10 trillion won.
Analysts are positive about the company’s earnings outlook, betting its stock will outperform the stock market.
NH Investment & Securities expects the company to post a 10.4 trillion won operating profit this year, up 0.6 percent year-on-year.
“Falling oil prices will cut fuel costs, boosting its bottom line,” the brokerage said in a report.
It said any cuts in the electricity rate this year will be less than 2.5 percent, limiting any negative impact on its earnings.
“Any electricity rate reduction will be limited,” it said. “Any concerns over a negative impact on its earnings will be insignificant.”
NH also said the company will continue to pay higher dividends to shareholders in line with improving earnings.
It forecast a favorable business environment for the company, with earnings remaining solid through 2016 and 2017, and added that the possibility of expansion of dividends will boost the stock value.