| Metric | Current Period | Same Period Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥7853.0B | ¥5353.8B | +46.7% |
| Operating Income | ¥600.9B | ¥643.7B | -6.6% |
| Ordinary Income | ¥544.8B | ¥576.1B | -5.4% |
| Net Income | ¥366.9B | ¥381.1B | -3.7% |
| ROE | 3.2% | 3.4% | - |
Despite a substantial increase in revenue, Operating Income, Ordinary Income, and Net Income all declined, resulting in an earnings profile of “higher revenue but lower profit,” as deteriorating profitability in the Power Generation and Retail Business weighed on company-wide earnings. Revenue expanded significantly to ¥7,853.0B (+46.7% YoY), while Operating Income fell to ¥600.9B (down 6.6%), Ordinary Income to ¥544.8B (down 5.4%), and Net Income attributable to owners of the parent to ¥361.3B (down 4.2%), all below the previous year. Although quantitative expansion was achieved through increased wholesale electricity sales and wheeling revenues, the segment profit margin of the Power Generation and Retail Business declined sharply to 9.4% (17.6% in the previous year) due to the impact of fuel and procurement costs, among other factors, and the benefits of higher revenue were not fully converted into earnings.
【Revenue】Revenue increased 46.7% YoY to ¥7,853.0B. The main driver was the Power Generation and Retail Business (segment total of ¥665.4B, +46.7%), particularly electricity charges from inter-area and sales to other companies, which increased substantially from ¥743.0B to ¥2,637.9B, supported by expanded sales to wholesale markets. The Transmission and Distribution Business also grew, with revenue reaching ¥227.1B (+15.7%) due to increased wheeling revenues and other factors, while electricity and power charges for households and businesses declined slightly by 2.9% YoY to ¥321.1B.
【Profit and Loss】Operating Income declined 6.6% to ¥600.9B, while Ordinary Income declined 5.4% to ¥544.8B. The primary factor was a substantial decline in segment profit for the Power Generation and Retail Business to ¥623.2B (¥797.9B in the previous year, down 21.9%), as increases in fuel, procurement, and other costs exceeded growth in prices and volumes. The Transmission and Distribution Business narrowed its segment loss to ¥85.2B (¥112.6B loss in the previous year), supporting company-wide earnings, but this was insufficient to offset the deterioration in the Power Generation and Retail Business. Non-operating income and expenses amounted to a loss of ¥56.1B, an improvement from the ¥67.6B loss in the previous year (supported by increases in dividend income and equity-method investment profit), resulting in a somewhat more moderate decline in Ordinary Income than in Operating Income. Net Income attributable to owners of the parent was ¥361.3B (down 4.2%), with lower tax expenses (¥177.9B, compared with ¥194.1B in the previous year) contributing to the reduction in the decline. No extraordinary gains or losses were recorded, and Profit Before Tax was equal to Ordinary Income. In conclusion, the quarter resulted in higher revenue but lower profit.
The Power Generation and Retail Business expanded as the core business, with revenue of ¥665.4B (segment total, +46.7% YoY), but segment profit declined to ¥623.2B (¥797.9B in the previous year, down 21.9%), and the profit margin fell sharply to 9.4% (17.6% in the previous year, down 8.2pt). Its revenue composition also increased from 66.4% to 71.4%, indicating a further increase in the company’s dependence on the Power Generation and Retail Business for overall earnings. The Transmission and Distribution Business generated revenue of ¥227.1B (+15.7%), while its segment loss was ¥85.2B (¥112.6B loss in the previous year), with the profit margin improving to -3.8% (-5.7% in the previous year, +1.9pt). The contrasting developments—deterioration in the Power Generation and Retail Business’s profit margin and a reduction in the Transmission and Distribution Business’s loss—were reflected in company-wide earnings, making normalization of margins in the Power Generation and Retail Business the key to future earnings recovery.
【Profitability】The Operating Income margin was 7.7%, down 4.3pt from 12.0% in the previous year, while the Ordinary Income margin also narrowed to 6.9% (10.8% in the previous year, down 3.8pt). The Net Income margin, based on income attributable to owners of the parent, was 4.6%, down 2.4pt from 7.0% in the previous year, indicating broad-based deterioration in profitability despite higher revenue. 【Cash Quality】Comprehensive Income was ¥363.1B (of which ¥357.5B was attributable to owners of the parent), and its divergence from Net Income attributable to owners of the parent of ¥361.3B remained limited (△1.0%), although adjustments related to retirement benefits made a negative contribution of ¥62.6B. 【Investment Efficiency】ROE was 3.2%, slightly below the approximately 3.4% level in the same period of the previous year based on period-end equity. Total Asset Turnover (quarterly revenue / period-end total assets) was 0.138x, improving from 0.093x in the same period of the previous year, indicating the effect of revenue expansion from an asset-efficiency perspective. 【Financial Soundness】The Equity Ratio was 20.4%, improving 1.0pt from 19.4% in the previous year. The Current Ratio was 112.0%, and the Quick Ratio excluding inventories was 103.6%, indicating that short-term payment capacity was secured. The balance of interest-bearing debt, comprising long-term borrowings of ¥1,568.6B and bonds of ¥1,586.7B, reached ¥3,155.3B, while the Total Liabilities / Net Assets ratio remained high at 3.89x.
As no cash flow statement was disclosed, fund movements are assessed based on changes in the balance sheet. Cash and deposits amounted to ¥4,981.0B, a decline of ¥964.1B (down 16.2%) from ¥5,945.1B in the same period of the previous year, suggesting increased working capital requirements and uses of funds accompanying business expansion. Accounts receivable and notes receivable increased by ¥236.3B (+12.9%) YoY to ¥2,070.0B, indicating that the accumulation of trade receivables associated with higher revenue is tying up working capital. On the funding side, long-term borrowings increased by ¥748.7B (+5.0%), while bonds declined by ¥250.0B (down 1.6%), indicating a shift in the composition of interest-bearing debt toward long-term borrowings. Inventories amounted to ¥902.0B, a slight decrease from the previous year, indicating that the amount of funds tied up in inventory remained limited.
No extraordinary gains or losses were recorded during the period, and Profit Before Tax of ¥544.8B was equal to Ordinary Income. Accordingly, earnings can generally be explained by core operating activities and non-operating income and expenses. Non-operating income and expenses represented a loss of ¥56.1B, a narrower loss than the ¥67.6B recorded in the previous year. This improvement was supported by increases in dividend income to ¥14.5B (¥3.8B in the previous year) and equity-method investment profit to ¥28.7B (¥21.6B in the previous year), although interest expense increased to ¥95.5B (¥71.5B in the previous year), with the increase in interest burden acting as a factor weighing on earnings at the Ordinary Income level. Between Ordinary Income of ¥544.8B and Net Income, the deduction of income taxes and other taxes of ¥177.9B (effective tax rate of 32.7%) and Net Income attributable to non-controlling interests of ¥5.7B resulted in consolidated Net Income of ¥366.9B and Net Income attributable to owners of the parent of ¥361.3B. Comprehensive Income of ¥363.1B was slightly below consolidated Net Income of ¥366.9B, primarily due to the negative contribution of ¥62.6B from adjustments related to retirement benefits. However, foreign currency translation adjustments (+¥19.6B) and deferred hedge gains and losses (+¥27.9B) partially offset this impact, and the magnitude was not sufficient to materially impair earnings quality.
The dividend forecast is ¥20 per share, unchanged from the previous fiscal year’s actual result of ¥20, and no revision to the dividend forecast had been made as of the end of the quarter. As the full-year earnings forecast was not included in the disclosed data, the Payout Ratio was not calculated. The absence of a change in the dividend policy despite the continuing trend of higher revenue can be viewed as evidence of the continuity of shareholder returns.
Deterioration in the profitability of the Power Generation and Retail Business: The segment profit margin was 9.4%, down 8.2pt from 17.6% in the previous year. This indicates a business structure in which fuel procurement costs and fluctuations in electricity market prices can readily affect profitability.
High financial leverage: The Total Liabilities / Net Assets ratio was 3.89x, while the Equity Ratio remained at 20.4%. The company carries ¥3,155.3B in interest-bearing debt comprising long-term borrowings and bonds, and interest expense increased 33.6% YoY to ¥95.5B, indicating relatively high sensitivity to changes in interest rate levels.
Continuing losses in the Transmission and Distribution Business: The segment loss was ¥85.2B, narrower than the ¥112.6B loss in the previous year, but losses continue to be recorded, leaving a negative contribution to company-wide earnings.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Income Margin | 7.7% | 13.4% (9.8%–53.2%) | -5.7pt |
| Net Income Margin | 4.7% | 9.4% (7.2%–39.5%) | -4.8pt |
Both the Operating Income margin and Net Income margin are below the industry median, indicating that profitability is relatively low within the industry.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 46.7% | 10.7% (2.1%–15.7%) | +36.0pt |
The Revenue growth rate substantially exceeds the industry median, indicating that the pace of top-line expansion is outstanding within the industry.
※Source: Compiled by the Company
While Revenue expanded substantially by 46.7% YoY, the Operating Income margin declined 4.3pt to 7.7%. The lack of a corresponding improvement in profitability despite higher revenue is an important point when assessing the quality of the earnings results.
The segment profit margin of the Power Generation and Retail Business declined to 9.4% (17.6% in the previous year), while the loss in the Transmission and Distribution Business narrowed (¥112.6B loss → ¥85.2B loss). The contrasting earnings trends of the two segments are useful in understanding the structure of the business portfolio.
Although the Equity Ratio improved 1.0pt to 20.4%, the Total Liabilities / Net Assets ratio remained high at 3.89x, confirming the coexistence of gradual improvement in financial soundness and a highly leveraged structure.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary 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 available earnings data. Investment decisions should be made at your own responsibility and, where necessary, after consulting with a professional advisor.
---End of Report---