| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥339.4B | ¥333.4B | +1.8% |
| Operating Income | ¥71.5B | ¥65.0B | +10.0% |
| Ordinary Income | ¥72.9B | ¥66.5B | +9.7% |
| Net Income | ¥27.1B | ¥22.1B | +22.9% |
| ROE | 13.9% | 13.5% | - |
The fiscal year ended March 2026 reported Revenue of ¥339.4B (YoY +¥6.0B +1.8%), Operating Income of ¥71.5B (YoY +¥6.5B +10.0%), Ordinary Income of ¥72.9B (YoY +¥6.4B +9.7%), and Net Income of ¥27.1B (YoY +¥5.1B +22.9%). The company achieved revenue and profit growth, notably double-digit growth in profitability. Operating margin improved to 21.1% from 19.5% a year earlier (+1.6pt), indicating enhanced profitability. The primary drivers of profit expansion were an increase in high-margin projects in the Energy Solutions business (ES) and profitability improvement in the retail electricity business due to stabilization of power procurement conditions. Tangible fixed assets increased to ¥32.9B (prior ¥14.5B), a 127% rise, with Construction in Progress accumulating to ¥9.9B, signaling a ramp-up of growth investments such as BESS (battery energy storage systems). Cash and deposits stood at ¥163.2B (prior ¥138.5B), indicating ample liquidity and a net cash position while building a financial profile that balances investment and shareholder returns.
[Revenue] Revenue increased slightly to ¥339.4B (YoY +1.8%). By segment, Energy Solutions (ES) was robust at ¥146.9B (YoY +5.4%), while the retail electricity business declined slightly to ¥192.4B (YoY -0.8%). Revenue composition was Retail Electricity 56.7%, ES 43.3%; although Retail Electricity remains larger in scale, the proportion of higher value-added ES is steadily rising. The retail electricity revenue decline likely reflected customer trends and fluctuations in sales volumes, but gross margin improved to 34.6% (prior estimated 32.9%, ~+1.7pt), indicating improved cost of sales efficiency of ¥221.8B.
[Profitability] Operating Income rose to ¥71.5B (YoY +10.0%), a double-digit increase. SG&A was ¥46.0B (SG&A ratio 13.6%, prior 13.4%), up slightly, but was absorbed by an improved gross profit of ¥117.5B (gross margin 34.6%), producing positive operating leverage. Segment Operating Income: ES ¥50.3B (margin 34.2%, prior 31.8%), Retail Electricity ¥28.9B (margin 15.0%, prior 14.4%), both delivering higher profits and margin improvement. After deducting corporate expenses of ¥7.7B, consolidated Operating Income was ¥71.5B, with ES’s high profitability driving profit growth. Non-operating items were net +¥1.4B (mainly dividend income ¥1.3B, interest income ¥0.3B) and stable. Extraordinary items were net -¥1.1B (including ¥1.2B extraordinary losses with ¥1.1B business restructuring costs), a minor one-off impact. Pre-tax income was ¥71.8B, less income taxes of ¥22.9B (effective tax rate 31.9%), yielding Net Income of ¥27.1B (YoY +22.9%). In conclusion, the company achieved revenue and profit growth, with notable margin-driven profit expansion.
The Energy Solutions business reported Revenue of ¥146.9B (YoY +5.4%) and Operating Income of ¥50.3B (YoY +11.0%), maintaining and expanding high profitability with a margin of 34.2% (prior estimated 31.8%). Growth drivers include product sales flows such as commercial solar PV systems and batteries, and expanding stock revenue from grid-scale storage and renewable energy development. Segment assets grew to ¥120.9B (prior ¥95.0B), up 27.4%, with increases in tangible fixed assets and Construction in Progress supporting active investment. Depreciation was ¥1.4B and capital expenditures were ¥19.9B, indicating ongoing asset formation. The Retail Electricity business saw Revenue of ¥192.4B (YoY -0.8%) and Operating Income of ¥28.9B (YoY +3.1%), with margin improving to 15.0% (prior estimated 14.4%) as power procurement costs stabilized and sales/administration efficiency improved. Segment assets were ¥98.7B (prior ¥90.1B), a slight increase. Combined, segment assets totaled ¥219.7B (corporate assets ¥67.0B, consolidated total assets ¥286.7B), reflecting a clear asset allocation shift toward ES.
[Profitability] Operating margin improved to 21.1% (from 19.5%, +1.6pt), and Net Income margin improved to 8.0% (from 6.6%, +1.4pt). ROE of 13.9% is calculated from Net Income ¥27.1B against Equity ¥195.6B, and DuPont decomposition shows Net Income margin 8.0% × Total Asset Turnover 1.18x × Financial Leverage 1.47x. The improvement in gross margin to 34.6% was the main driver of profitability enhancement, supported by a higher share of high-margin ES projects and stabilization of power procurement conditions. [Cash Quality] Operating Cash Flow (OCF) of ¥51.0B is 1.88x Net Income of ¥27.1B, indicating healthy cash generation. Free Cash Flow (FCF) was ¥44.0B (OCF - Investing CF ¥7.0B), covering dividend payments of ¥19.4B by 2.3x, supporting dividend sustainability. However, the ratio of OCF ¥51.0B to EBITDA (Operating Income ¥71.5B + Depreciation ¥2.2B = estimated ¥73.7B) is 0.69x, low due to working capital movements (accounts payable decrease ¥3.2B, tax payments ¥23.0B, etc.) that temporarily slowed cash conversion. [Investment Efficiency] Total Asset Turnover was 1.18x (Revenue ¥339.4B / Total Assets ¥286.7B), flat. CapEx was ¥19.6B versus Depreciation ¥2.2B, giving a CAPEX/Depreciation ratio of 8.9x, a high level consistent with a growth investment phase. The accumulation of Construction in Progress ¥9.9B suggests expected future revenue contribution once assets begin operation and depreciation commences, though risks of completion/acceptance delays exist. [Financial Soundness] Equity Ratio was 68.2% (prior 62.3%), remaining at a high, stable level. Cash ¥163.2B versus interest-bearing debt (long-term borrowings ¥23.4B + short-term borrowings ¥1.3B) ¥24.7B yields Net Cash ¥138.5B. Debt/Equity 0.13x, Current Ratio 367.6%, Quick Ratio 331.9%—liquidity and capital structure are extremely healthy.
OCF was ¥51.0B (YoY +9.7%), starting from pre-tax profit before adjustments ¥71.8B, adding non-cash expenses such as depreciation ¥2.2B, then adjusting for working capital changes and tax payments. Working capital contributed positively from inventory decrease ¥2.6B and trade receivables decrease ¥2.8B, offset by a negative contribution from accounts payable decrease ¥3.2B. After tax payments of ¥23.0B, OCF was ¥51.0B, 1.88x Net Income ¥27.1B, demonstrating strong cash-generating ability. Investing CF was -¥7.0B: capital expenditures of ¥19.6B were partially offset by proceeds from sale of investment securities ¥13.3B and subsidy receipts ¥0.9B. The large increase in tangible fixed assets (centered on Construction in Progress) and reduction in investment securities reflect a balance of growth investment and capital efficiency. Free Cash Flow of ¥44.0B (OCF ¥51.0B + Investing CF -¥7.0B) is ample; after dividend payments ¥19.4B and net repayment of long-term borrowings ¥0.3B under Financing CF, cash increased by ¥24.7B, ending cash balance ¥163.2B. The OCF/EBITDA ratio of 0.69x indicates short-term deterioration in cash conversion driven by accounts payable reduction and concentrated tax payments, but the underlying cash-generating capability is strong and expected to improve with normalization of working capital and commissioning of Construction in Progress.
The difference between Ordinary Income ¥72.9B and Net Income ¥27.1B is mainly income taxes ¥22.9B; impacts from non-operating and extraordinary items were minor. Non-operating income ¥1.8B (mainly dividend income ¥1.3B, interest income ¥0.3B) is stable financial income, with non-operating expenses ¥0.4B (interest expense ¥0.3B), yielding net +¥1.4B. Extraordinary items net -¥1.1B (including ¥1.2B extraordinary losses with ¥1.1B business restructuring costs) were temporary. Most profit is recurring from core operations (Operating Income ¥71.5B), indicating high earnings quality. On an accrual basis, OCF ¥51.0B substantially exceeds Net Income ¥27.1B, with an OCF/Net Income ratio of 1.88x, showing good alignment between accounting profit and cash generation. Conversely, OCF ¥51.0B to estimated EBITDA ¥73.7B ratio of 0.69x reflects temporary cash conversion inefficiency due to working capital movements (accounts payable decrease) and tax timing, which should be monitored as a short-term quality signal. Comprehensive income was ¥51.5B, comprising Net Income ¥27.1B plus Other Comprehensive Income of ¥2.5B (deferred hedge gains/losses, etc.). Fluctuations in deferred hedge gains/losses are due to mark-to-market valuation of power procurement hedges; the divergence between comprehensive income and net income is a transitory valuation difference with limited impact on ongoing earnings power.
Full Year guidance is Revenue ¥371.7B (YoY +9.5%), Operating Income ¥79.0B (YoY +10.5%), Ordinary Income ¥79.3B (YoY +8.8%), and Net Income attributable to owners of the parent ¥53.8B (EPS forecast ¥232.48). Progress against guidance is Revenue 91.3%, Operating Income 90.5%, Ordinary Income 91.9%, Net Income 50.4% (Net Income progress is interim result ¥27.1B / full year forecast ¥53.8B). Revenue and profit progression are around the high-80% to low-90% range, suggesting a somewhat cautious path to the full-year target. Shortfalls are likely due to slight Retail Electricity revenue decline and project timing delays reflected in Construction in Progress ¥9.9B (postponement of completion/revenue recognition). Achieving the full-year plan will depend on recognizing revenue from Construction in Progress as assets become operational in the second half, digesting ES order backlog, and stabilizing the Retail Electricity customer base. Dividend guidance is annual ¥28 (interpretable as interim ¥25 paid, year-end forecast ¥3, but consistency with actual dividend ¥85 requires confirmation), with a maintained payout ratio policy of 40.0%.
An annual dividend of ¥85 (interim ¥25, year-end ¥60) was paid. With weighted average shares outstanding of 23,103 thousand shares, total dividends amounted to ¥19.4B, representing a payout ratio of 71.6% relative to Net Income ¥27.1B. The discrepancy between the actual payout and the full-year guidance of ¥28 / payout ratio 40.0% likely stems from Net Income progression (interim ¥27.1B / full-year forecast ¥53.8B = 50.4%) and dividend timing differences; on a full-year basis the company intends to align with a ~40% payout ratio. Dividend payments of ¥19.4B represent 44.1% of Free Cash Flow ¥44.0B, indicating sustainability relative to cash generation. Given cash ¥163.2B and Net Cash ¥138.5B, liquidity is ample and dividend capacity is strong while allowing for growth investments. Share buybacks were minor at ¥12K, so shareholder returns remain dividend-focused. While maintaining a base payout ratio of 40%, there is potential for dividend increases as investments are monetized.
Project execution risk: The accumulation of Construction in Progress ¥9.9B (3.5% of total assets) indicates large ongoing investments such as BESS projects. Delays in completion/acceptance or equipment procurement could postpone revenue recognition and cash collection, risking missed full-year targets or deterioration of working capital. The high CAPEX/Depreciation ratio of 8.9x reflects an investment-led phase; timeline management for commissioning is key to monetization.
Electricity procurement price volatility risk: Retail Electricity accounts for 56.7% of Revenue; a sharp spike in market prices or inadequate procurement hedging could compress gross margins and reduce Operating Income. Deferred hedge gains/losses ¥2.5B reflect mark-to-market of procurement hedges; market movements can affect Other Comprehensive Income and equity. The reduction in accounts payable to ¥24.7B (prior ¥27.9B) may reflect accelerated supplier payments, and changes in procurement terms could impact cash flow—monitor liquidity effects.
Cash conversion efficiency deterioration risk: OCF/EBITDA ratio of 0.69x indicates a temporary decline in cash conversion due to accounts payable decrease ¥3.2B and tax payments ¥23.0B. In businesses with significant working capital variability, insufficient management of receivables, inventory, and payables can increase OCF volatility and create liquidity risk. If such working capital swings coincide with Construction in Progress completion delays, short-term funding pressure could emerge.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 21.1% | 19.9% (6.5%–38.3%) | +1.2pt |
| Net Margin | 8.0% | 5.6% (3.8%–22.2%) | +2.4pt |
Company operating and net margins exceed industry medians, confirming high profitability within the utilities industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 1.8% | -0.5% (-0.9%–13.1%) | +2.3pt |
Revenue growth is +2.3pt above the industry median, maintaining growth while the sector on average shows slight declines.
※ Source: Company aggregation
High profitability and asset formation in the Energy Solutions (ES) business: ES posts an extremely high operating margin of 34.2%, Revenue ¥146.9B (YoY +5.4%), and Operating Income ¥50.3B (YoY +11.0%), driving profit growth. The accumulation of Construction in Progress ¥9.9B reflects growth investments such as grid-scale BESS; commissioning will drive depreciation and expansion of stock revenue, becoming future profit drivers. ES segment assets of ¥120.9B (+27.4% YoY) indicate capital allocation concentrated on high-return businesses, consistent with strategy.
Balance of net cash position and dividend sustainability: Cash ¥163.2B and interest-bearing debt ¥24.7B produce Net Cash ¥138.5B and Equity Ratio 68.2%, indicating very strong financial health. Free Cash Flow ¥44.0B covers dividend payments ¥19.4B by 2.3x, enabling a balance of CAPEX ¥19.6B and shareholder returns. While maintaining a 40% payout policy, dividend increases are possible as investments are monetized, offering stable returns for long-term shareholders.
Short-term cash conversion efficiency and project execution risk to monitor: OCF/EBITDA 0.69x has temporarily declined due to working capital movements and tax payments, but base cash generation is strong and expected to normalize as Construction in Progress is completed and commissioned. However, the scale of Construction in Progress ¥9.9B contains risks of completion delays or permitting lags that could postpone revenue recognition; project schedule (CIP completion), commissioning capacity (BESS), and order backlog trends will be key to near-term earnings visibility.
This report was auto-generated by AI analyzing XBRL financial statement data and is a financial results analysis document. It does not constitute investment advice for any specific security. Industry benchmarks are reference data compiled by the company from public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.