Chubu Electric Power Company (9502) FY2026 Q3 Earnings Report

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Executive Summary

Cumulative results for Q3 FY2025 represented lower revenue but higher earnings. Although operating income from the core business declined, the expansion of equity-method investment gains drove the increase in final profit. Revenue was ¥2兆5,663.6億円 (-3.2% YoY), and operating income was ¥1,685.7億円 (-8.4% YoY), while ordinary income was ¥2,407.3億円 (+8.3% YoY) and net income attributable to owners of the parent was ¥2,025.7億円 (+21.2% YoY). The primary factor behind the earnings growth was the expansion of JERA’s equity-method investment gains to ¥948.1億円 (+81.6% YoY), supported by the impact of fuel procurement and increased profits from overseas and renewable power-generation businesses.

Factors Affecting Results

【Revenue】Revenue was ¥2兆5,663.6億円, representing a 3.2% decline YoY. External customer revenue in the core Miraiz retail electricity business declined 1.1%, while revenue from other businesses fell 25.0%; the decrease in fuel-cost adjustments and related items weighed on the top line. Power Grid remained firm, with external customer revenue increasing 1.1% due to higher regional demand.

【Profit and Loss】Operating income was ¥1,685.7億円 (-8.4% YoY), indicating a decline in the profitability of the core business. However, ordinary income rose substantially to ¥2,407.3億円 (+8.3% YoY), and net income increased to ¥2,025.7億円 (+21.2% YoY). This was driven by a 61.9% YoY expansion in non-operating income to ¥1,054.1億円, of which equity-method investment gains of ¥948.1億円 accounted for approximately 90%. The Company also recorded ¥117億円 in contract termination costs related to an inappropriate incident at the Hamaoka Nuclear Power Station as a one-time factor. In conclusion, the results represent lower revenue but higher earnings.

Segment Analysis

On a segment profit basis (ordinary income basis), Miraiz, the core business, has the largest proportion of external sales—equivalent to approximately 80% of consolidated revenue—but segment profit declined to ¥1,113.1億円 (-2.4% YoY) due to higher fixed power-supply costs and the reversal of the prior year’s favorable hydropower conditions. Power Grid posted a substantial increase in segment profit to ¥303.7億円 (+45.8% YoY), supported by higher wheeling revenue and lower supply-demand balancing costs. Because JERA is accounted for under the equity method, its revenue is not consolidated; however, segment profit increased to ¥987.3億円 (+64.2% YoY), making it the largest contributor to earnings growth and effectively driving group profits. Segment profit from other businesses expanded to ¥1,139.0億円 (+81.8% YoY). There are substantial differences in profit margins among segments, with higher earnings at Power Grid and JERA offsetting the decline at Miraiz.

Key Financial Metrics

Profitability: ROE (annualized) of 8.9% and operating margin of 6.6%.
Financial soundness: Equity Ratio of 41.0% and current ratio of 105.5%.
Per-share metrics: Basic EPS of ¥268.18 (¥221.12 in the previous year, +21.3%).

Cash Flow Analysis

As this dataset does not include detailed cash flow statement data (Operating Cash Flow, Investing Cash Flow, and Financing Cash Flow), this section describes developments that can be observed indirectly from balance sheet items. Long-term borrowings increased by ¥1,556.4億円 YoY, while bonds increased by ¥306.9億円, indicating progress in securing long-term funding to support capital expenditures and financing needs. Cash and deposits stood at ¥3,524.2億円, up from ¥2,935.5億円 in the previous-year period.

Earnings Quality

The difference between ordinary income of ¥2,407.3億円 and net income attributable to owners of the parent of ¥2,025.7億円 primarily reflects profit attributable to non-controlling interests of ¥18.6億円 and differences in tax expenses. The gap is approximately -16% of ordinary income and is mainly attributable to tax effects. Non-operating income of ¥1,054.1億円 is equivalent to 4.1% of revenue, with approximately 90% consisting of equity-method investment gains of ¥948.1億円. This is not a one-time factor but reflects structural fluctuations in the earnings of affiliate JERA’s fuel procurement and overseas businesses, and is positioned as a recurring source of earnings. Conversely, the ¥117億円 in contract termination costs related to the Hamaoka Nuclear Power Station is a one-time factor.

Earnings Forecast and Guidance

Progress against the full-year forecasts—revenue of ¥3兆5,500億円, ordinary income of ¥2,300億円, and net income of ¥1,850億円—is 72.3% for revenue, 104.7% for ordinary income, and 109.5% for net income. Compared with standard progress of 75%, profit progress is substantially ahead, primarily due to the boost from JERA’s equity-method income, which includes timing differences between periods. The Company has not revised its earnings or dividend forecasts, and its assumptions may incorporate a decline in profit levels in Q4 due to the adjustment of timing differences in fuel-cost adjustments and seasonal factors.

Shareholder Returns

The full-year dividend forecast is ¥70 (including a Q2 dividend of ¥35), an increase from ¥30 in the previous year. Based on forecast EPS of ¥244.90, the Payout Ratio is approximately 28.6%. Information regarding share buybacks is not included in the disclosed data; accordingly, the Company is evaluated based on a dividend-only Payout Ratio.

Catalysts

【Short Term】The reflection of timing differences in fuel-cost adjustments in Q4, wholesale electricity market conditions, and fluctuations in JERA’s equity-method investment gains will be key to achieving the full-year forecast. 【Long Term】Investments to strengthen the transmission and distribution network, responses to renewable-energy connections, and progress in the conformity review of the Hamaoka Nuclear Power Station under the new regulatory standards will affect the capital structure and profitability over the medium to long term.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (utilities)

Profitability and Returns

As industry median data has not been provided, the Company’s positioning is evaluated on a standalone basis.

Growth and Capital Efficiency

Revenue declined YoY, and the Company’s relative industry position cannot be evaluated due to insufficient median data.

※Source: Compiled by the Company

Risk Factors

1. Dependence on JERA’s equity-method income: Equity-method investment gains of ¥948.1億円 account for approximately 90% of non-operating income, creating a structure in which fuel prices, wholesale electricity prices, and foreign-exchange fluctuations significantly affect consolidated ordinary income.

2. Timing differences in fuel-cost adjustments: Timing differences in fuel-cost adjustments at JERA and Miraiz are factors contributing to earnings volatility. The high progress rates against the full-year forecasts—104.7% for ordinary income and 109.5% for net income—include the effects of these timing differences.

3. Costs related to the Hamaoka Nuclear Power Station: The Company recorded ¥117億円 in contract termination costs during the current period in connection with an inappropriate incident in the conformity review under the new regulatory standards. Similar one-time costs may arise in the future.

Key Earnings Highlights

1. The operating margin declined to 6.6% from approximately 6.94% in the previous-year period. While the profitability of the core business is trending downward, the structure in which expansion of equity-method investment gains offsets this decline continues.

2. Cumulative Q3 progress against the full-year profit forecasts substantially exceeded the standard level, reaching 104.7% for ordinary income and 109.5% for net income. As the Company has maintained its forecasts unchanged, its plan may assume a decline in profit levels in Q4.

3. Power Grid’s segment profit increased 45.8% YoY, demonstrating structural improvement driven by higher wheeling revenue and lower supply-demand balancing costs.

Theoretical Share Price (Reference Value)

Sensitivity: ¥3,664–¥3,880 at ±1% for the cost of equity, and ¥3,759–¥3,777 at ±0.1 for ω.

Notes:

• As net income progress against the full-year forecast is 110%, exceeding the standard level of 75%, forecast EPS has been adjusted upward within a range capped at +10% (because companies with progress ahead of schedule tend to exceed their forecasts; the adjustment may be excessive for businesses with strong seasonality).
• As forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the quarter-end have been used (there is a timing difference from the full-year forecast).
• As net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest-rate reference month: 2026-07 / Mechanically calculated value based solely on publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee future share prices.)

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This report is an earnings analysis document automatically generated by AI through integrated analysis of XBRL earnings summary data and PDF earnings presentation materials. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting professionals as necessary.

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