KOGAS Q2 operating profit falls 13% on lower returns, subsidy costs

The headquarters of Korea Gas Corp. in Daegu / Yonhap

Korea Gas Corp. (KOGAS) said Friday its second-quarter net profit dropped more than 66 percent from a year earlier mainly due to weak operating profit from a decrease in interest rates and utility rate subsidies for low-income households.

KOGAS reported a net profit of 85.1 billion won ($61.3 million) in the April-June period, down 66.4 percent from a year ago.

Its operating income fell 13.1 percent on-year to 404.6 billion won, while revenue increased 1.9 percent to 7.63 trillion won.

The earnings fell short of market expectations. The average estimate of net profit by analysts stood at 150.3 billion won, according to a survey by Yonhap Infomax, the financial data firm of Yonhap News Agency.

The Korean company said its operating income fell as the return on its investment on wholesale supply decreased following a decline in interest rates.

An increase in gas bill subsidies for low-income households can also be attributed to the weak operating profit, it added.

KOGAS said its accumulated debt decreased 14.8 percent to 6.9 trillion won in the second quarter thanks to the company's efforts to improve its financial stability.