| Metric | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥14812.0B | ¥14251.2B | +3.9% |
| Operating Income | ¥-342.7B | ¥647.0B | -153.0% |
| Ordinary Income | ¥114.3B | ¥1012.8B | -88.7% |
| Net Income | ¥-97.8B | ¥-8578.7B | +98.9% |
| ROE | -0.3% | -25.1% | - |
Despite higher revenue, the Company’s operating result fell from a profit to a loss, resulting in a year-on-year increase in revenue but a decline in profit. Revenue increased to ¥14,812.0B (+3.9% year on year), while Operating Income turned negative at -¥342.7B (¥647.0B in the previous year), causing the Operating Income margin to deteriorate by 6.8pt to -2.3% from +4.5% in the previous year. Ordinary Income remained positive at ¥114.3B (-88.7% year on year), supported primarily by non-operating income, including ¥777.9B in equity-method investment gains. Quarterly Net Income attributable to owners of the parent was -¥97.9B (-¥8,576.9B in the previous year); the result deteriorated further from the pretax loss of -¥43.3B due to the recognition of ¥157.0B in extraordinary losses and the burden of income taxes. Although the substantial loss recorded in the previous year was significantly reduced, the current-period results were primarily characterized by a decline in earnings power at the operating level.
【Revenue】Revenue increased by +3.9% year on year to ¥14,812.0B. By segment, on a gross basis including intersegment transactions, Holdings grew by +33.2%, Renewable Power by +22.8%, and Power Grid by +14.5%. Meanwhile, Energy Partner (Retail), which forms the core of the revenue mix, declined by -5.4%, and Fuel & Power decreased by -14.3%. Subsidy income of approximately ¥96.4B related to the electricity and gas charge relief support program also constituted a portion of revenue.
【Profit and Loss】Operating Income turned negative at -¥342.7B (¥647.0B in the previous year), and the Operating Income margin deteriorated by 6.8pt to -2.3% (previous year: +4.5%). By segment, Energy Partner turned to a loss of -¥509.3B, deteriorating by -¥815.3B from the previous year’s ¥306.0B profit, while Power Grid also turned to a loss of -¥312.2B, deteriorating by -¥537.1B from the previous year’s ¥225.0B profit. Thus, the two core segments both fell into the red. In contrast, Holdings expanded its profit to ¥3,027.5B (+¥1,397.5B), Fuel & Power to ¥567.0B (+¥172.6B), and Renewable Power to ¥281.8B (+¥46.0B). Ordinary Income remained positive at ¥114.3B, boosted by equity-method investment gains of ¥777.9B (¥574.9B in the previous year), although interest expense of ¥290.4B remained a significant burden. Due to the recognition of ¥157.0B in extraordinary losses, a temporary factor, among other items, the Company recorded a pretax loss of -¥43.3B, while quarterly Net Income attributable to owners of the parent was -¥97.9B. The results represent higher revenue but lower profit due to the shift to an operating loss.
Total segment profit for the quarter, measured on an Ordinary Income basis, amounted to ¥3,054.8B (¥2,791.2B in the previous year). After incorporating adjustments of -¥2,940.5B (previous year: -¥1,778.5B, primarily the elimination of dividends received between segments), Ordinary Income was ¥114.3B. Energy Partner, responsible for retail operations, recorded revenue of ¥10,870.9B on a gross basis but turned to a segment loss of -¥509.3B, compared with a profit of ¥306.0B in the previous year. Power Grid, responsible for transmission and distribution, recorded revenue of ¥5,928.3B and a segment loss of -¥312.2B, compared with a profit of ¥225.0B in the previous year. The combined results of the two segments deteriorated by approximately -¥1,352.4B from the previous year, making them the primary factor behind the deterioration in consolidated results. In contrast, Holdings, which performs the functions of a holding company, recorded a substantial increase in segment profit to ¥3,027.5B (¥1,629.9B in the previous year), apparently supported by intra-group dividend income and other factors. Fuel & Power (¥567.0B, +¥172.6B) and Renewable Power (¥281.8B, +¥46.0B) also contributed to the increase in profit. The deterioration in profitability at the two core electricity business segments—retail and transmission and distribution—may have resulted from fuel and procurement costs and the time lag in reflecting regulatory adjustments.
【Profitability】The Operating Income margin was -2.3% (previous year: +4.5%), while the Net Income margin attributable to owners of the parent was -0.7% (previous year: -60.2%). Both remained negative, as deteriorating profitability at the operating level weighed on profitability indicators. ROE was -0.3%. Although this represented an improvement from the substantial loss in the previous year (Net Income: -¥8,576.9B), ROE remained negative. 【Cash Quality】The interest coverage ratio (Operating Income/interest expense) was -1.18x, indicating that the operating loss was insufficient to cover interest expense of ¥290.4B and that the Company faces challenges in generating cash from earnings. Accounts receivable were ¥6,080.3B (+2.7% year on year), while inventories were ¥1,546.3B (-3.7% year on year), with no sharp deterioration in working capital observed. 【Investment Efficiency】Total asset turnover remained low. While equity-method investment gains of ¥777.9B were the primary factor driving Ordinary Income higher, improvement in the capital efficiency of the core businesses remains a work in progress. 【Financial Soundness】The Equity Ratio remained broadly flat at 22.3%. Current and quick ratios were low at 46.2% and 42.7%, respectively, while cash and deposits declined substantially to ¥6,009.6B (-35.9% year on year). Against total liabilities of ¥119,458.3B, net assets were ¥34,244.5B, resulting in a high debt-to-net-assets ratio of 3.49x and continued high leverage.
As no cash flow statement was disclosed for the quarter, cash trends are analyzed based on changes in key balance sheet items. Cash and deposits declined to ¥6,009.6B, down -¥3,362.7B (-35.9%) from ¥9,372.3B in the same period of the previous year, indicating a reduction in liquidity on hand. Meanwhile, short-term borrowings remained broadly flat at ¥29,753.2B (¥29,263.5B in the previous year), while bonds increased to ¥34,010.0B (¥33,210.0B in the previous year). Accordingly, there has been no material change in the Company’s reliance on borrowings and bonds for financing. Accounts receivable were ¥6,080.3B (+2.7% year on year), and inventories were ¥1,546.3B (-3.7% year on year), with no sharp deterioration in working capital observed. However, given the deterioration in operating results and the substantial burden of interest expense, the decline in cash on hand is considered to reflect funding needs related to business operations, interest payments, and other requirements.
Ordinary Income of ¥114.3B was achieved because non-operating income of ¥897.2B, centered on equity-method investment gains of ¥777.9B, offset the Operating Loss of -¥342.7B. In terms of earnings quality, this indicates a high degree of dependence on non-operating factors rather than recurring operating results. Extraordinary losses of ¥157.0B were recorded as a temporary factor and reflected in the pretax loss of -¥43.3B. Income taxes of ¥54.5B were relatively substantial in relation to the pretax loss, and this tax burden was one factor weighing on the net loss. Comprehensive Income was ¥61.3B, exceeding Net Loss of -¥97.9B. This divergence was primarily attributable to the recognition of ¥267.6B in other comprehensive income at equity-method investees, partially offset by adjustments related to retirement benefits of -¥73.5B and deferred hedge gains or losses of -¥24.6B, among other items. The divergence between Net Income and Comprehensive Income should be noted because it includes non-recurring factors such as valuation changes at equity-method investees.
The full-year dividend forecast remains ¥0 per share, unchanged from the previous year’s actual result (no dividend), and no revision to the dividend forecast had been made as of the end of the quarter. As quarterly Net Income attributable to owners of the parent was a loss of -¥97.9B, calculation of the Payout Ratio is not meaningful under the circumstances. Given that cash and deposits declined by -35.9% year on year and that the Current Ratio remained low at 46.2%, the Company appears to be in a phase in which securing internal funds is likely to take priority for the time being. No information regarding share repurchases has been disclosed.
Liquidity Risk: The Current Ratio was 46.2%, and the cash-to-short-term-borrowings ratio was 0.20x (cash of ¥6,009.6B versus short-term borrowings of ¥29,753.2B), indicating low short-term liquidity metrics. Cash and deposits declined by -¥3,362.7B (-35.9%) from the previous year, indicating a reduction in the liquidity cushion.
Interest Rate and Leverage Risk: The debt-to-net-assets ratio was 3.49x (total liabilities of ¥119,458.3B/net assets of ¥34,244.5B), a high level, while the interest coverage ratio was -1.18x (Operating Income of -¥342.7B/interest expense of ¥290.4B), indicating that Operating Income was insufficient to cover the interest burden. The balance of bonds reached ¥34,010.0B, and changes in financing costs could have a significant impact on earnings.
Risk of Deteriorating Profitability in Core Segments: Energy Partner (Retail) and Power Grid (Transmission and Distribution), which account for a large share of revenue, recorded segment losses of -¥509.3B and -¥312.2B, respectively, representing a combined deterioration of approximately -¥1,352.4B from the previous year. If profitability improvements in the two segments are delayed, dependence on non-operating income, including equity-method investment gains, may continue.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Income Margin | -2.3% | 13.4% (9.8%–53.2%) | -15.7pt |
| Net Income Margin | -0.7% | 9.4% (7.2%–39.5%) | -10.1pt |
The Company is substantially below the industry median, and its profitability indicators rank low within the industry.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (Year on Year) | 3.9% | 10.7% (2.1%–15.7%) | -6.8pt |
The Revenue growth rate also falls below the industry median, indicating a relatively moderate pace of revenue growth.
Source: Compiled by the Company
Despite higher revenue, Operating Income fell from a profit of ¥647.0B to a loss of -¥342.7B, and the Operating Income margin deteriorated by 6.8pt to -2.3%. The fact that revenue growth does not directly translate into improved earnings is an important factor when assessing profitability trends in the core businesses.
Ordinary Income of ¥114.3B was supported by non-operating income centered on equity-method investment gains of ¥777.9B, in contrast to the results of the business segments, namely Energy Partner at -¥509.3B and Power Grid at -¥312.2B. The divergence between Ordinary Income and the operating result indicates that the source of earnings has shifted away from the core businesses.
While cash and deposits declined by -35.9% from the previous year, financial metrics of a 3.49x debt-to-net-assets ratio and a -1.18x interest coverage ratio were observed. Trends in liquidity and interest expense will therefore be key areas for monitoring going forward.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, and you should consult a professional adviser as necessary.
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