| Metric | Current Period | Prior-Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥7865.5B | ¥8582.8B | -8.4% |
| Operating Income / Operating Profit | ¥874.6B | ¥1010.3B | -13.4% |
| Ordinary Income | ¥850.1B | ¥913.6B | -6.9% |
| Net Income / Net Profit | ¥376.7B | ¥435.0B | -13.4% |
| ROE | 8.3% | 10.9% | - |
For the fiscal year ended March 2026, Revenue was ¥7,865.5B (YoY -¥717.2B, -8.4%), Operating Income was ¥874.6B (YoY -¥135.7B, -13.4%), Ordinary Income was ¥850.1B (YoY -¥63.5B, -6.9%), and Net Income attributable to owners of the parent was ¥376.7B (YoY -¥58.3B, -13.4%), resulting in year-on-year declines in both sales and profits. The primary drivers of the revenue decline were lower power sales and a reduction in tariff support subsidies (¥227.7B → ¥180.1B). While normalization of fuel costs and cost controls sustained double-digit profitability, an impairment loss of ¥87.4B related to the retirement of the Fukui Thermal Mikuni Unit 1 pressured net income. Results materially exceeded the full-year plan (Operating Income ¥400B, Ordinary Income ¥350B, Net Income ¥250B): Operating Income achieved 219% of plan, Ordinary Income 243%, and Net Income 151%.
[Revenue] Revenue declined to ¥7,865.5B (-8.4%). Lighting and power charges were ¥5,338.7B (-3.9%), and inter-area/other power sales were ¥1,368.7B (-17.9%), reducing core revenues. Tariff support subsidies shrank to ¥180.1B (prior year ¥227.7B), creating headwinds across other revenue lines. By segment, Generation & Sales recorded external customer sales of ¥6,563.0B (-8.4%), Transmission & Distribution ¥583.3B (+10.4%), and Other ¥719.3B (-19.2%). Transmission & Distribution showed steady entrusted transmission revenue of ¥191.4B (+5.1% YoY), but Generation & Sales was affected by lower market prices and reduced sales volumes.
[Profitability] Operating Income was ¥874.6B (-13.4%) and the operating margin was 11.1% (down 0.7pp from 11.8% prior year). Segment profits: Generation & Sales improved to ¥663.6B (+8.0%), while Transmission & Distribution decreased to ¥196.3B (-10.5%) and Other declined to ¥39.0B (-69.7%). The Generation & Sales profit improvement was supported by declining fuel costs and efficiency gains. Non-operating items included interest income ¥16.1B, foreign exchange gains ¥32.8B, and equity-method investment gains ¥36.6B, while interest expense rose to ¥85.1B (prior year ¥73.8B). Ordinary Income was ¥850.1B (-6.9%), with improved non-operating income partially offsetting lower operating income. Extraordinary items included an impairment loss of ¥87.4B, resulting in income before income taxes of ¥783.3B (-18.6%). After deducting income taxes of ¥236.2B (effective tax rate 30.2%), Net Income was ¥376.7B (-13.4%). In conclusion, the company experienced declines in both revenue and profit.
The Generation & Sales segment reported segment profit of ¥663.6B (prior ¥614.4B, +8.0%), representing a segment profit margin of 10.1% relative to external sales. Improved fuel cost conditions and cost control delivered higher profit despite lower sales. Transmission & Distribution reported segment profit of ¥196.3B (prior ¥219.4B, -10.5%) with a high segment profit margin of 33.6%, though profit declined YoY. Other businesses reported segment profit of ¥39.0B (prior ¥128.9B, -69.7%), indicating material deterioration in profitability for non-core activities such as maintenance and construction contracting. After corporate eliminations, Ordinary Income was ¥850.1B, with Generation & Sales remaining the primary profit contributor.
[Profitability] Operating margin was 11.1% (prior 11.8%, -0.7pp), maintaining double-digit margins. Net profit margin was 4.8% (prior 5.1%), slightly lower, but excluding the one-off ¥87.4B impairment, recurring earning capacity appears stable. ROE stood at 8.3%, consistent with the decomposition ROE = Net Profit Margin 4.8% × Total Asset Turnover 0.43 × Financial Leverage 4.08x.
[Cash Quality] Operating Cash Flow / Net Income was 3.12x (Operating CF ¥1,174.6B ÷ Net Income ¥376.7B), indicating strong cash conversion of profits. Operating CF / EBITDA (Operating CF ¥1,174.6B ÷ EBITDA ¥1,509.0B) was 0.78x, below the high-quality benchmark of 0.9x, driven by working capital headwinds such as a reduction in accounts payable of ¥119.4B.
[Investment Efficiency] Capital expenditure was approximately 1.42x depreciation (Investing CF total ¥485.7B ÷ Depreciation ¥634.4B), an appropriate level for maintenance and renewal of grid and generation assets. Goodwill was small at ¥41.6B (goodwill / equity 0.9%), implying limited impairment risk.
[Financial Health] Equity Ratio was 24.5% (prior 20.5%, +4.0pp), showing improvement. D/E was 3.08x (interest-bearing debt total ¥9,809B ÷ Equity ¥4,513B), exceeding 2.0 and at a cautionary level; Debt/EBITDA was 6.5x indicating high leverage. Interest coverage (Operating Income / Interest Expense) was 10.27x and EBITDA / Interest Expense was 17.7x, suggesting good ability to service interest. Current Ratio was 128.2% and Quick Ratio 116.2%, indicating solid short-term liquidity.
Operating CF was ¥1,174.6B (prior ¥1,522.9B, -22.9%), equal to 3.12x Net Income of ¥376.7B, demonstrating strong cash conversion. Operating CF subtotal (before working capital changes) was ¥1,375.8B, supported by non-cash charges including depreciation ¥634.4B and impairment recognized ¥47.0B. Changes in working capital included a decrease in trade receivables generating cash inflow of ¥113.2B and inventory reduction contributing ¥17.7B, while a decrease in accounts payable of ¥119.4B acted as a headwind—accounts payable fell substantially from ¥637.7B to ¥461.5B (-27.5%). Income taxes paid were ¥154.8B and interest paid ¥82.6B. Investing CF was -¥485.7B (prior -¥2,340.7B), a large improvement; fixed asset acquisitions were ¥900.1B, about 1.42x depreciation, an appropriate level. Financing CF was -¥579.1B, reflecting bond redemptions ¥916.0B and long-term borrowings repayments ¥466.7B, while bond issuances ¥280.0B and long-term borrowings ¥588.3B provided refinancing. Dividends paid were ¥46.8B. Free Cash Flow (Operating CF + Investing CF) was a substantial positive ¥688.9B, adequately covering debt repayments and dividends reflected in Financing CF. Cash and deposits declined to ¥1,854.8B (prior ¥2,393.7B) but liquidity remains ample with a short-term debt ratio of 0.3%, negligibly small.
The gap between Ordinary Income ¥850.1B and Net Income ¥376.7B is ¥473.4B, composed of extraordinary losses ¥87.4B (impairment ¥87.4B), income taxes ¥236.2B, and non-controlling interests ¥2.4B. The impairment relates to the retirement decision for Fukui Thermal Mikuni Unit 1 and should be evaluated separately from recurring earnings capacity. Of non-operating income totaling ¥150.4B, equity-method investment gains ¥36.6B (prior ¥9.8B) increased significantly and contributed to recurring earnings. Foreign exchange gains of ¥32.8B were also recorded, partly reflecting gains on foreign-currency-denominated liabilities. Non-operating expenses of ¥174.9B were mainly interest expense of ¥85.1B, up from ¥73.8B. Comprehensive income was ¥736.0B (Net Income ¥376.7B + Other Comprehensive Income ¥188.9B), including valuation gains on securities ¥121.0B, retirement benefit adjustments ¥27.8B, and deferred hedge gains/losses ¥26.8B, showing notable improvement in unrealized gains/losses. The operating CF to Net Income multiple of 3.12x indicates high accrual quality. The accounts payable decline of ¥119.4B can be attributed to normalization of fuel and material procurement and is not indicative of earnings management; the lower Operating CF / EBITDA ratio of 0.78x reflects this working capital movement rather than signs of manipulation.
The full-year plan projected Revenue ¥7,600B, Operating Income ¥400B (YoY -54.3%), Ordinary Income ¥350B (YoY -58.8%), and Net Income ¥250B. Actuals exceeded plan significantly: Revenue ¥7,865.5B (vs plan +3.5%), Operating Income ¥874.6B (vs plan +118.7%), Ordinary Income ¥850.1B (vs plan +142.9%), and Net Income ¥376.7B (vs plan +50.7%). Achievement ratios were Operating Income 219% of plan, Ordinary Income 243%, and Net Income 151%. The upside is likely due to better-than-assumed fuel cost environment, improved cost control, and increased equity-method investment gains. The large divergence between planning assumptions and actuals underscores the sensitivity of performance to fuel prices and market prices.
Annual dividend was ¥25 per share (interim ¥10, year-end ¥15), unchanged from prior year ¥25 (interim ¥7.5, year-end ¥17.5), with a smoothing of distribution timing. Payout Ratio was 6.4% (dividend ¥25 vs EPS ¥260.74), very low, reflecting a clear priority on internal reserves. Share repurchases were minimal at ¥0.1B, so Total Return Ratio is dividend-centric. Against Free Cash Flow of ¥688.9B, total dividends paid ¥46.8B (FCF coverage 14.7x) indicate extremely high sustainability. With cash and deposits of ¥1,854.8B and Operating CF ¥1,174.6B, financial flexibility is ample and there is scope to raise payout, though prioritizing correction of high D/E 3.08x via retained earnings accumulation and interest-bearing debt reduction would be a rational capital allocation decision.
Interest-rate sensitivity risk due to high leverage: D/E 3.08x and interest-bearing debt total ¥9,809B (of which bonds ¥5,297B) indicate high reliance on debt. In a rising-rate environment, interest expense will increase (current period ¥85.1B, prior ¥73.8B). Debt/EBITDA 6.5x is relatively high, limiting resilience to EBITDA declines in a downturn. Interest coverage of 10.27x is currently comfortable, but the large outstanding bond balance leaves refinancing risk from maturity concentration and spread widening.
Fuel price and electricity market price volatility: The Generation & Sales business is affected by time lags in the fuel cost adjustment mechanism. Market price declines and lower sales drove this period’s revenue down (Revenue -8.4%). Tariff support subsidies shrinking from ¥227.7B to ¥180.1B means future policy changes or market shifts could materially affect margins. Operating margin fell from 11.8% to 11.1%, and delayed cost pass-through or adverse market conditions could further compress margins.
Impairment and retirement risk for thermal assets: This period included an impairment loss of ¥87.4B due to retirement of Fukui Thermal Mikuni Unit 1. Continued decarbonization and shifts in generation mix could lower utilization rates or prompt early retirements, leading to additional impairments. Goodwill is minimal at ¥41.6B, so intangible asset risk is limited, but depending on the composition of tangible fixed assets ¥1,161.8B, future impairments could still pressure net income.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 11.1% | 19.9% (6.5%–38.3%) | -8.8pt |
| Net Profit Margin | 4.8% | 5.6% (3.8%–22.2%) | -0.9pt |
Operating margin trails the industry median by 8.8pp, reflecting retail electricity competition and fuel-cost pass-through structure; however, it remains above the IQR lower bound (6.5%). Net profit margin is roughly in line with the industry median (delta -0.9pp), placing the company near the sector median.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -8.4% | -0.5% (-0.9%–13.1%) | -7.9pt |
Revenue growth of -8.4% substantially underperforms the industry median of -0.5%, reflecting pronounced impact from reduced power sales and subsidy contraction compared with peers.
※ Source: Company compilation
The significant outperformance versus the full-year plan (Operating Income 219%, Ordinary Income 243% achieved) reflects improved fuel cost conditions and progress on cost control. The impairment is a one-off, but the ongoing risk of future impairments to thermal assets remains; monitor asset mix changes amid the decarbonization transition.
High cash generation is maintained with Operating CF ¥1,174.6B and FCF ¥688.9B. Despite a low Payout Ratio of 6.4%, FCF coverage of 14.7x indicates sustainability. Correcting high leverage (D/E 3.08x) is a priority; accumulation of internal reserves and reduction of interest-bearing debt are key to improving capital efficiency.
This report is an earnings analysis document automatically generated by AI based on XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company from public financial statements. Investment decisions are your responsibility; please consult a professional advisor as needed.