| 指標 | 当期 | 前年同期 | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥23724.2B | ¥26449.1B | -10.3% |
| Operating Income / Operating Profit | ¥1603.8B | ¥2803.3B | -42.8% |
| Ordinary Income | ¥1264.1B | ¥2567.2B | -50.8% |
| Net Income / Net Profit | ¥859.2B | ¥1847.8B | -53.5% |
| ROE | 7.6% | 18.3% | - |
For the fiscal year ended March 2026, Revenue was 23,724.2B yen (YoY -2,724.9B yen, -10.3%), Operating Income was 1,603.8B yen (YoY -1,199.5B yen, -42.8%), Ordinary Income was 1,264.1B yen (YoY -1,303.1B yen, -50.8%), and Net Income was 859.2B yen (YoY -988.6B yen, -53.5%), representing declines in both revenue and profit. In the core generation and sales business, the phased reduction of electricity bill subsidies and the pass-through of lower fuel costs leading to unit price declines pressured Revenue, while non-operating results were weighed down by higher financial costs (interest expense 310.6B yen, YoY +25.6B yen), suppressing Ordinary Income. Operating margin fell to 6.8% (down 3.8ppt from 10.6% a year earlier), and Net Margin declined to 3.6% (down 3.3ppt from 6.9%), indicating a material deterioration in profitability. Meanwhile, Operating Cash Flow (OCF) remained robust at 3,701.6B yen (YoY -9.8%), maintaining cash generation approximately 4.3x Net Income.
【Revenue】 Revenue decreased to 23,724.2B yen (YoY -10.3%). By segment, the Generation & Sales (発電・販売事業) business recorded 18,434.4B yen (77.7% of total, YoY -10.6%), a substantial decline. Electricity bill relief subsidies fell from 596.0B yen the prior year to 451.9B yen, and price reductions due to fuel price normalization were the primary drivers of the per-unit price decline. Lighting and power charges decreased from 14,992.4B yen to 13,708.6B yen (-8.6%), and inter-area and other power sales fell from 6,936.1B yen to 6,380.3B yen (-8.0%). The Transmission & Distribution business recorded 4,767.0B yen (20.1% of total, YoY +0.3%), a slight increase. Wheeling revenue increased from 1,188.2B yen to 1,315.6B yen (+10.7%), and the stability of regulated revenue provided underlying support. Other businesses declined markedly to 522.8B yen (YoY -51.8%).
【Profitability】 Operating Income fell to 1,603.8B yen (YoY -42.8%). Operating margin worsened to 6.8% (down 3.8ppt from 10.6%). In addition to lower Revenue, insufficient absorption of fixed costs and higher depreciation (2,258.7B yen, YoY +9.8%) pressured profits. Ordinary Income was 1,264.1B yen (YoY -50.8%), a further decline of 339.7B yen from Operating Income. The main cause was increased non-operating expenses: interest expense expanded from 259.3B yen to 310.6B yen (+19.8%), and the interest burden coefficient deteriorated to 0.74 (interest absorbs roughly 26% relative to EBIT). Profit before tax was 1,188.1B yen (YoY -53.7%); after deducting corporate taxes of 328.9B yen (effective tax rate 27.7%), Net Income was 859.2B yen (YoY -53.5%). Comprehensive income was 1,471.3B yen (YoY -15.8%), with Other Comprehensive Income improving by 712.0B yen to 612.1B yen (from -99.9B yen a year earlier), partially offsetting the decline in Net Income. An actuarial gain related to retirement benefits of 395.8B yen contributed. In conclusion, reduced subsidies and unit price normalization caused Revenue decline, and higher financial costs drove profit decline, resulting in lower revenue and profits.
The Generation & Sales business recorded Revenue of 18,434.4B yen (YoY -10.6%), accounting for 77.7% of consolidated sales and remaining the core segment. The phased reduction of electricity subsidies and unit price declines associated with lower fuel prices were the primary factors. The Transmission & Distribution business recorded Revenue of 4,767.0B yen (YoY +0.3%), representing 20.1% of total. Wheeling revenue increased to 1,315.6B yen (YoY +10.7%), and the stability of regulated income supported consolidated results. Other businesses recorded Revenue of 522.8B yen (YoY -51.8%), accounting for 2.2%. This includes integrated equipment engineering, real estate, and DX/IT businesses; the large decline from the prior year is presumed to reflect business reorganization and segment reclassification.
【Profitability】Operating margin was 6.8% (down 3.8ppt from 10.6%), and Net Margin was 3.6% (down 3.3ppt from 6.9%), both sharply lower. ROE was 7.6% (down 12.6ppt from 20.2%), mainly driven by the deterioration in Net Margin. The interest burden coefficient was 0.74; interest expense of 310.6B yen represents about 19% of Operating Income of 1,603.8B yen, indicating high interest sensitivity under elevated leverage. 【Cash Quality】Operating Cash Flow of 3,701.6B yen is 4.3x Net Income of 859.2B yen, with an accrual ratio of -5.0, indicating a cash-driven earnings profile. OCF/EBITDA (Operating CF ÷ [Operating Income + Depreciation]) was 0.96x, a high level demonstrating good cash conversion of earnings. 【Investment Efficiency】Capital expenditure of 3,953.7B yen is 1.75x depreciation of 2,258.7B yen, indicating a growth investment phase. Fixed asset turnover was 0.53x (Revenue ÷ Fixed Assets), reflecting the capital-intensive nature of the power business. 【Financial Soundness】Equity Ratio was 19.8% (improving 1.1ppt from 18.7%) and, with recognition of comprehensive income, shareholders’ equity increased to 1.27兆円 (YoY +12.6%). Debt-to-Equity (D/E) was high at 4.05x. Debt/EBITDA ([Long-term borrowings + Bonds] ÷ EBITDA) was 3.87x, indicating limited headroom for interest coverage. Interest coverage (EBITDA ÷ Interest Expense) was 12.4x, showing current interest-paying capacity is maintained. Current ratio was 104.5%, and quick ratio was 96.9%, suggesting short-term liquidity is generally acceptable.
Operating Cash Flow was 3,701.6B yen (YoY -9.8%), maintaining high cash generation at 4.3x Net Income of 859.2B yen. Non-cash depreciation of 2,258.7B yen provided support, and the subtotal of operating CF (before working capital changes) was 4,266.2B yen. In working capital, accounts receivable decreased by 380.4B yen, inventories increased by 128.3B yen, and accounts payable decreased by 225.7B yen, resulting in a net CF outflow of approximately 270B yen. After payments of corporate taxes of 322.6B yen and interest payments of 293.9B yen, Operating CF remained solid. Investing Cash Flow was -3,756.9B yen, mainly due to acquisition of tangible fixed assets of 3,953.7B yen. Expenditures related to subsidiary share sales of 459.6B yen were also recorded. Free Cash Flow (Operating CF + Investing CF) was -55.4B yen, a slight negative. Financing Cash Flow was +1,151.8B yen, as long-term borrowings raised 3,530.0B yen and bond issuance amounted to 1,926.9B yen, exceeding long-term borrowings repayments of 2,484.7B yen and bond redemptions of 1,550.0B yen, resulting in net financing. Dividends paid were 200.0B yen (Payout Ratio 23.7%). Cash and deposits increased to 5,945.1B yen (YoY +25.3%), strengthening short-term liquidity buffers.
Ordinary Income of 1,264.1B yen versus Net Income of 859.2B yen represents a divergence of 32.0%. The main drivers were corporate taxes of 328.9B yen (effective tax rate 27.7%) and special losses of 76.0B yen. Special losses accounted for 8.8% of Net Income and are relatively small, so the bulk of performance can be explained by recurring factors. Non-operating income was 123.3B yen (including interest income 18.9B yen, dividend income 8.8B yen, and equity-method investment gains 46.3B yen), modest in scale, indicating main profit sources are operating activities. Non-operating expenses were 463.0B yen, with interest expense 310.6B yen making up about 67%, and financial costs under high leverage are compressing Ordinary Income. The accrual ratio is -5.0, and Operating CF exceeds Net Income by 4.3x, reflecting a cash-backed earnings structure. Comprehensive income of 1,471.3B yen exceeded Net Income by 612.1B yen, mainly due to an actuarial gain on retirement benefits of 395.8B yen, foreign currency translation adjustments of 31.6B yen, and available-for-sale securities valuation gains of 89.5B yen. Earnings quality is high, and the recurring earnings base is maintained, but rising financial costs constrain growth in Ordinary Income.
Annual dividend is ¥40 (Interim ¥20, Year-end ¥20), with a Payout Ratio of 23.7%, reflecting a conservative policy. The increase from the prior year’s Payout Ratio of 9.6% is because dividend levels were maintained despite the decline in Net Income (annual dividend increased from ¥30 last year to ¥40). Total return ratio is 23.7% (dividends only; no share buybacks). Total dividends amounted to 200.0B yen, funded by Operating CF and financing since Free Cash Flow was -55.4B yen. Given cash and deposits of 5,945.1B yen and Operating CF generation of 3,701.6B yen, dividend sustainability is secured for the near term, but the ability to increase dividends in the future is limited when considering the need to fund growth investments and repay high leverage.
High leverage and interest-rate sensitivity: D/E of 4.05x and Debt/EBITDA of 3.87x represent high leverage, with an interest burden coefficient of 0.74 (interest absorbs about 19% relative to EBIT). In a rising interest-rate environment, interest payment burdens would expand further and compress Ordinary Income. Long-term borrowings of 1.49兆円 and bonds of 1.61兆円 constitute the bulk of long-term debt, leaving vulnerability to higher refinancing costs.
Variability of electricity tariffs and fuel markets: The Generation & Sales business accounts for 77.7% of Revenue, and fuel price volatility and delays in cost pass-through can compress margins. There is a risk of valuation losses on forward power contracts (the earnings supplementary materials reference “recognition of valuation losses on forward power contracts, etc. (operating expenses)”), and geopolitical developments in the Middle East could cause sudden spikes in fuel procurement costs.
Dependence on regulated revenue and regulatory change risk: Wheeling revenue of 1,315.6B yen is stable, but revisions to the regulated tariff system or changes in rate-base recognition could affect the revenue base. Progress in electricity system reform and changes to wheeling tariff calculation rules could materially affect the profitability of the Transmission & Distribution business.
Profitability & Returns
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Operating margin | 6.8% | 19.9% (6.5%–38.3%) | -13.2pt |
| Net Margin | 3.6% | 5.6% (3.8%–22.2%) | -2.0pt |
Operating margin is 13.2ppt below the industry median and is nearly at the first quartile level (6.5%), placing the company in the lower range within the industry. Net Margin is also 2.0ppt below the median, and profitability trails the industry average.
Growth & Capital Efficiency
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Revenue growth rate (YoY) | -10.3% | -0.5% (-0.9%–13.1%) | -9.8pt |
Revenue growth rate is 9.8ppt below the industry median, and the decrease in sales is large within the industry due to subsidy reductions and unit price normalization.
※Source: Company compilation
Stability of regulated revenue and cash generation: Wheeling revenue grew +10.7% YoY and Operating Cash Flow remains strong at 3,701.6B yen (4.3x Net Income). The cash-driven earnings profile with an accrual ratio of -5.0 underpins financial stability. The predictability of regulated revenue and robust Operating CF support interest-paying capacity despite high leverage.
Sharp deterioration in profitability and rising financial costs: Operating margin deteriorated from 10.6% to 6.8% (down 3.8ppt), and Net Margin fell from 6.9% to 3.6% (down 3.3ppt). With an interest burden coefficient of 0.74, interest payments absorb roughly 19% of Operating Income, and high leverage (D/E 4.05x, Debt/EBITDA 3.87x) constrains profitability improvement. Subsidy reductions and unit price normalization structurally pressure earnings, making short-term reversal difficult. With sustained interest-rate levels and continued capital expenditure (3,953.7B yen, 1.75x depreciation), Free Cash Flow was -55.4B yen, sustaining dependence on external funding.
Medium-term improvement drivers and monitoring points: Stable growth in the Transmission & Distribution business and improvement in comprehensive income (remeasurement gain on retirement benefits of 395.8B yen) strengthened equity, improving the Equity Ratio to 19.8% (YoY +1.1ppt). Continued capital expenditure to expand future supply capacity and higher utilization rates in nuclear and renewable generation are keys to margin recovery. Short-term concerns include valuation loss risk on forward power contracts and fuel market volatility due to Middle East developments; monitoring Debt/EBITDA and interest coverage trends and developments in wheeling tariff regulation is essential.
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