Korea Gas Corp. (036460), the world’s biggest importer of liquefied natural gas, reported first-quarter profit in line with estimates as rising financial costs capped earnings.
Net income rose to 411.3 billion won ($350 million) in the three months ended March 31 from 406.2 billion won a year earlier, the Seongnam, South Korea-based utility said in a regulatory filing. That compares with the mean estimate of 413.7 billion won in a Bloomberg survey of 10 analysts.
Kogas, as the utility is known, is bolstering investments in overseas gas fields amid limited domestic sales growth and a government initiative to control inflation. The company’s domestic gas sales volume rose 3 percent to 12.15 million metric tons in the first quarter, according to its website.
“As its cash margins are determined by the government, a rise in its financial costs cramped earnings,” said Bum Sujin, an analyst at Samsung Securities Co., who has a buy recommendation on the utility.
Operating profit, or sales minus the costs of goods sold and administrative expenses, rose 12 percent to 720.4 billion won. Sales jumped 34 percent to 11.87 trillion won as it raised gas tariffs last year.
Debt at Kogas rose 32 percent to 29.4 trillion won as of March 31 from a year earlier, prompting a 21 percent rise in financial costs, according to a statement on the company’s website today.
The shares fell 1.3 percent to close at 41,000 won today before the earnings announcement. The benchmark Kospi (KOSPI) Stock Index advanced 1.4 percent.
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