| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥35460.4B | ¥36692.3B | -3.4% |
| Operating Income / Operating Profit | ¥2300.4B | ¥2420.4B | -5.0% |
| Ordinary Income | ¥2910.7B | ¥2764.0B | +5.3% |
| Net Income / Net Profit | ¥864.9B | ¥538.8B | +60.5% |
| ROE | 2.7% | 1.9% | - |
FY ending March 2026 results: Revenue ¥35,460.4B (YoY -¥1,231.9B -3.4%), Operating Income ¥2,300.4B (YoY -¥120.0B -5.0%), Ordinary Income ¥2,910.7B (YoY +¥146.7B +5.3%), Net income attributable to owners of parent ¥2,277.9B (YoY +¥257.1B +12.7%). Revenue and operating profit declined due to reduced tariff support and normalization of fuel prices; Ordinary Income turned positive mainly due to a large increase in equity-method investment income of ¥947.0B (prior year ¥611.4B). Net profit increased double-digits driven by a decline in the effective tax rate to 14.8% and a reduction in special losses. Operating margin was 6.5% (prior year 6.6%), and net margin improved to 6.4% (prior year 5.5%).
[Revenue] Revenue ¥35,460.4B, down 3.4% YoY. Primary drivers were a contraction in electricity and gas tariff support subsidies (recognized in other income) to ¥696.1B (prior year ¥933.7B) and lower electricity unit prices as fuel prices stabilized. By segment, Miraiz ¥28,150.7B (share 79.4%, YoY -3.3%), Power Grid ¥4,035.4B (share 11.4%, -1.6%), Other ¥3,274.3B (share 9.2%, -5.9%) — all segments declined YoY. Miraiz was affected by changes in customer composition and unit price declines; Other was impacted by reduced earnings from renewable energy, etc. JERA is an equity-method affiliate and therefore its revenue is not included in consolidated revenue.
[Profitability] Operating Income ¥2,300.4B, down 5.0% YoY. Operating margin contracted 0.1pt to 6.5% from 6.6% a year earlier. Despite revenue decline, rigidity of fixed costs and transmission/distribution maintenance costs pressured margins. Conversely, Ordinary Income rose to ¥2,910.7B (+5.3%) mainly due to expansion of equity-method investment income to ¥947.0B (YoY +54.9%), supported by strong performance in JERA’s fuel and power trading businesses. Non-operating income was ¥1,091.8B vs. non-operating expenses ¥481.6B, net contribution ¥610.3B. Interest expense increased to ¥311.1B (prior year ¥238.6B). Profit before income taxes ¥2,757.6B less income taxes of ¥409.1B (effective tax rate 14.8%), and after deducting non-controlling interests of ¥70.5B, net income attributable to owners of parent was ¥2,277.9B (+12.7%). Special losses consisted primarily of impairment losses of ¥160.6B (up from ¥64.0B prior year), but impact on net profit was limited. In conclusion, despite revenue and operating profit declines, a large rise in equity-method income and lower tax burden resulted in higher final profit.
Segment profit (on an Ordinary Income basis): Miraiz ¥1,379.9B (prior ¥1,170.8B, +17.9%), Power Grid ¥475.9B (prior ¥475.8B, flat), JERA ¥941.8B (prior ¥673.5B, +39.8%). Miraiz improved margins through efficiency in retail electricity and gas businesses and progress in cost control. Power Grid maintained stable transmission/distribution revenue, but profit growth was limited due to increased investments. JERA achieved substantial profit growth via optimized fuel procurement and improved generation/trading conditions, lifting overall segment profits. Other businesses recorded ¥1,270.4B (prior ¥814.9B, +55.9%), reflecting marked improvement in renewable energy and related earnings.
[Profitability] Operating margin 6.5% (prior 6.6%, -0.1pt); net margin improved to 6.4% (prior 5.5%, +0.9pt). ROE 7.7% (prior 7.5%), slightly up, supported by higher net income. [Cash Quality] Operating Cash Flow 3,344.3B is 1.47x of net income ¥2,277.9B; OCF/EBITDA (EBITDA estimate ¥4,023.4B) is 0.83x, indicating room for improvement. A decrease in trade receivables of ¥391.1B and an increase in trade payables of ¥244.2B contributed positively to working capital, but normalized cash generation is somewhat modest. [Investment Efficiency] Total asset turnover 0.46x (prior 0.52x) declined due to asset accumulation. Capital expenditures (purchase of tangible and intangible assets ¥3,134.9B) were 1.82x depreciation ¥1,723.0B, reflecting continued aggressive investment. [Financial Soundness] Equity Ratio improved to 42.0% (prior 39.1%), D/E ratio 1.38x, Debt/Capital 41.0% — leverage remains high. Current ratio 101.4%, quick ratio 76.1% — short-term liquidity is minimally secured, but attention is needed for working capital reversion. Cash and deposits ¥3,366.9B vs. short-term borrowings ¥2,668.4B yields cash/short-term liabilities 1.26x, maintaining a cushion.
Operating Cash Flow ¥3,344.3B (YoY +11.0%) stems from profit before taxes ¥2,757.6B plus depreciation ¥1,723.0B, adjustment for equity-method income △¥947.0B, working capital improvements including decrease in trade receivables ¥391.1B and increase in trade payables ¥244.2B, and payment of corporate taxes △¥695.1B, among others. Operating cash flow subtotal (before working capital changes) was ¥3,962.5B, indicating resilience, with interest and dividend income received ¥379.4B and interest paid △¥302.6B demonstrating cash generation. Investing Cash Flow was △¥3,507.8B, sizable, as capital expenditures (purchases ¥3,134.9B) far exceeded depreciation and acquisition of subsidiary shares △¥105.8B occurred. As a result, Free Cash Flow was △¥163.5B. Financing Cash Flow was +¥874.5B: long-term borrowings +¥4,092.8B and net increase in short-term borrowings ¥6.8B and bond issuance ¥903.4B funded activities, while long-term borrowings repayments △¥2,421.1B, bond redemptions △¥1,200.1B and dividends △¥491.3B were executed. Cash and cash equivalents at period-end increased to ¥3,647.5B (prior ¥2,924.7B).
Recurring income is comprised of stable revenue from power & gas retail and transmission/distribution plus significant equity-method investment income ¥947.0B (32.5% of Ordinary Income). A special loss of ¥160.6B (impairment) was recorded as a one-off factor but is relatively minor against pre-tax profit ¥2,757.6B. Non-operating income ¥1,091.8B equals 3.1% of revenue, below 5%, mainly driven by equity-method gains and including dividend income received ¥11.3B and other ¥119.4B. The effective tax rate of 14.8%, aided by utilization of deferred tax assets, supported net profit. Comprehensive income ¥4,076.0B (attributable to owners of parent ¥4,005.1B) diverges from net income ¥2,277.9B due to translation adjustments ¥46.4B, deferred hedge gains/losses ¥195.9B, retirement benefit adjustments ¥417.7B, and share of other comprehensive income of equity-method affiliates ¥1,038.0B. Operating Cash Flow ¥3,344.3B exceeds net income, indicating good accrual quality, but normalized cash generation is somewhat low due to working capital contributions — attention to reversal risks is warranted.
Annual dividend per share is ¥70 (interim ¥35, year-end forecast ¥35); total dividends approximately ¥491.7B (on an issued shares basis); payout ratio 22.4%, a conservative level. Consolidated payout ratio adjusted for timing effects is 23.9% (prior 24.1%), remaining stable. Share buybacks were ¥0.6B, negligible, so total returns are dividend-focused. Given Free Cash Flow of △¥163.5B, dividends are funded from Operating CF and Financing CF (long-term borrowings and bond issuance). Cash flow flexibility is currently oriented toward active investment; dividends are prioritized to be maintained. Medium-term expansion of dividend capacity depends on normalization of investment levels and improvement in OCF/EBITDA.
Segment concentration risk: Miraiz accounts for 79.4% of revenue; fluctuations in retail electricity & gas demand, regulatory tariff policies, and reversals of timing benefits from fuel cost adjustments (one-off timing gain this period +¥7.0B) can materially affect earnings. Gradual reduction of tariff support subsidies is also a quantifiable downside.
Rising dependence on equity-method income: JERA-related equity-method investment income accounts for 32.5% of Ordinary Income, increasing sensitivity to commodity prices, FX, and supply-demand conditions. JERA’s performance volatility may amplify consolidated earnings volatility.
Increased leverage and interest burden: Total interest-bearing debt ¥22,382.4B, Debt/EBITDA 5.56x indicates high leverage; interest expense rose to ¥311.1B (prior ¥238.6B). Further increases in interest rates could materially pressure financial health via higher interest payments.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.5% | 19.9% (6.5%–38.3%) | -13.4pt |
| Net Margin | 2.4% | 5.6% (3.8%–22.2%) | -3.2pt |
Operating margin is 13.4pt below the industry median, with competitive pressure in power retail and regulated transmission/distribution revenue structure suppressing margins. Net margin underperforms by 3.2pt, though equity-method income provides some uplift.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -3.4% | -0.5% (-0.9%–13.1%) | -2.9pt |
Revenue growth rate is 2.9pt below the industry median, reflecting reduced tariff support and unit price declines. The company lags peers in growth.
※Source: Company compilation
Divergence between equity-method profit-driven net income growth and operating base: With operating margin slightly down at 6.5%, equity-method investment income expanded to ¥947.0B and lifted net income. Dependence on JERA exceeds 30% of Ordinary Income, creating a structure where commodity, FX and market conditions directly impact consolidated performance. The disappearance of timing gains from fuel cost adjustments (+¥7.0B) and contraction of tariff support subsidies could affect future earnings trends.
Balance between ongoing aggressive investment and leverage resilience: CapEx is 1.82x depreciation and Free Cash Flow is △¥163.5B, with funding through long-term borrowings and bond issuance, yielding Debt/EBITDA 5.56x. Interest coverage (EBIT / interest expense 7.39x, EBITDA / interest expense 12.93x) remains healthy, but changes in the interest rate environment or delays in monetizing investments could pressure financial health. While maintaining a conservative payout ratio of 22.4%, de-leveraging and improvement of operating margins are medium-term priorities.
This report is an AI-generated earnings analysis prepared from XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company from publicly disclosed financial statements. Investment decisions are your responsibility; consult a professional advisor as needed before acting.