| Metric | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥7618.6B | ¥8514.0B | -10.5% |
| Operating Income / Operating Profit | ¥678.5B | ¥890.7B | -23.8% |
| Ordinary Income | ¥678.9B | ¥916.1B | -25.9% |
| Net Income / Net Profit | ¥357.1B | ¥434.1B | -17.7% |
| ROE | 7.5% | 9.8% | - |
For the fiscal year ended March 2026, Revenue was ¥7,618.6B (YoY -¥895.4B, -10.5%), Operating Income was ¥678.5B (YoY -¥212.2B, -23.8%), Ordinary Income was ¥678.9B (YoY -¥237.2B, -25.9%), and Net Income attributable to owners of the parent was ¥357.1B (YoY -¥77.0B, -17.7%), resulting in lower revenue and profit. The Generation & Retail Business (Revenue ¥6,301.3B, -11.2%) and Transmission & Distribution Business (¥2,305.3B, -8.5%) were the main drivers of the revenue decline, and the operating margin compressed to 8.9% (down 1.6ppt from 10.5% in the prior year). Meanwhile, the Information & Communication Business (Revenue ¥527.5B, +4.7%) and Construction & Engineering Business (¥589.2B, +6.6%) maintained revenue growth, and portfolio diversification provided downside support. Operating Cash Flow was secured at ¥822.9B (YoY -36.6%), but due to capital expenditure and others, Investing Cash Flow was a large outflow of -¥1,500.1B, leaving Free Cash Flow at -¥677.2B.
[Revenue] The revenue decline to ¥7,618.6B (-10.5%) was primarily due to contraction in the core Generation & Retail Business with external sales of ¥5,846.6B (-11.9%) and Transmission & Distribution at ¥775.9B (-16.0%). Generation & Retail is the largest segment with a revenue composition ratio of 60.5%, and adjustments such as fuel cost pass-through and normalization of market prices appear to have reduced scale. Transmission & Distribution, while 22.1% of revenue, declined due to fluctuations in regulated income and the impact of internal settlements. Conversely, non-power segments performed steadily: Information & Communication at ¥404.4B (+4.7%, 5.3% composition) and Construction & Engineering at ¥242.2B (+6.6%, 3.2% composition), which mitigated the overall decline to some extent. By segment, Generation & Retail was 630,128 million yen (including internal sales, -11.2%), Transmission & Distribution was 230,529 million yen (-8.5%), Information & Communication was 52,751 million yen (+4.7%), Energy was 27,098 million yen (+1.7%), Construction & Engineering was 58,923 million yen (+6.6%), and Others was 42,249 million yen (+17.4%).
[Profitability] Operating Income of ¥678.5B (-23.8%) was recorded after Cost of Sales of ¥712.5B and SG&A of ¥136.1B (SG&A ratio 1.8%), compressing the operating margin to 8.9% (down 1.6ppt from 10.5% prior year). By segment, Ordinary Income (segment profit) for Generation & Retail was ¥348.9B (from ¥413.6B prior year, -15.7%) and Transmission & Distribution was ¥85.4B (from ¥261.1B, -67.3%), with a sharp decline in Transmission & Distribution profits weighing on consolidated operating income. Information & Communication posted ¥112.9B (+6.3%), Construction & Engineering ¥51.8B (from ¥55.5B, -6.6%), and Energy ¥53.7B (-4.3%), which were relatively stable. Ordinary Income of ¥678.9B (-25.9%) was roughly in line with operating income after Non-Operating Income of ¥90.3B (equity-method investment income ¥49.4B, dividend income ¥10.1B, foreign exchange gains ¥1.5B, etc.) and Non-Operating Expenses of ¥89.9B (including interest expense ¥74.0B). Equity-method investment income decreased from ¥54.7B to ¥49.4B but remains a stable income source accounting for about 7.3% of Ordinary Income. Profit before income taxes of ¥678.9B less income taxes of ¥168.9B (effective tax rate 24.9%), and less Net Income attributable to non-controlling interests of ¥1.9B, resulted in Net Income attributable to owners of the parent of ¥357.1B (-17.7%). The smaller decline in Net Income (-17.7%) relative to Operating Income (-23.8%) likely reflects a relative reduction in tax burden and improvement in non-operating items. In conclusion, the company is in a revenue- and profit-decline phase, driven by profit pressure in the core power segments.
In segment Ordinary Income (segment profit) analysis, the Generation & Retail Business remained the primary contributor at ¥348.9B (prior year ¥413.6B, -15.7%), but Transmission & Distribution fell sharply to ¥85.4B (prior year ¥261.1B, -67.3%). Transmission & Distribution's profit margin fell rapidly from 11.0% (previously about 28% assuming prior year ¥261.1B / external sales ¥92.0B) which suggests impacts from fluctuations in regulated income and internal settlement rules. Information & Communication recorded ¥112.9B (prior year ¥106.2B, +6.3%) maintaining a high segment margin of 27.9%, Construction & Engineering recorded ¥51.8B (prior year ¥55.5B, -6.6%) with a margin of 23.2% and was stable. Energy recorded ¥53.7B (prior year ¥56.1B, -4.3%) with a margin of 21.4%, and Others recorded ¥39.3B (prior year ¥29.3B, +34.2%) with a margin of 33.2% and performed well. Revenue composition was Generation & Retail 60.5%, Transmission & Distribution 22.1%, Information & Communication 5.1%, Construction 5.7%, Others 4.1%, Energy 2.6%; although revenue concentration in Generation & Retail is high, profit contributions from non-power segments (Information & Communication, Construction & Engineering, and Energy totaling roughly ¥218B) account for about 32% of consolidated profit, indicating a beneficial effect of diversification.
[Profitability] The operating margin of 8.9% declined 1.6ppt from 10.5% prior year, and Net Profit Margin was 4.7% (on a parental ownership basis, relative to sales), down 0.4ppt from 5.1% prior year. ROE was 7.5% (Net Income attributable to owners of the parent ¥357.1B / average equity ¥4,591.9B), significantly down from prior-year ROE of 15.6% (¥434.1B / assumed ¥2,787B), but the prior-year figure may be affected by timing differences and should be compared cautiously. ROA on an Ordinary Income basis was 4.0% (Ordinary Income ¥678.9B / average total assets ¥17.1T) down from 5.5% prior year. DuPont decomposition explains ROE of 7.5% as Net Profit Margin 4.7% × Total Asset Turnover 0.439x (Revenue ¥7,618.6B / average total assets ¥17.3T) × Financial Leverage 3.65x (total assets ¥17.3T / equity ¥4,775B), and the decline this term is mainly attributable to the compression of Net Profit Margin. [Cash Quality] Operating Cash Flow of ¥822.9B is 2.30x Net Income ¥357.1B indicating high quality, but the OCF/EBITDA ratio relative to EBITDA ¥1,272.9B (Operating Income ¥678.5B + D&A ¥594.4B) is 0.65x, suggesting working capital is tied up. The accrual ratio ((Net Income ¥357.1B - Operating CF ¥822.9B) / total assets ¥17.3T = -2.7%) is favorable, indicating strong cash backing of profits. [Investment Efficiency] Capital expenditures were ¥1,243.5B (acquisition of tangible and intangible assets, cash flow statement basis), approximately 2.1x depreciation ¥594.0B, indicating high ongoing growth/renewal investment. ROIC is estimated at 3.5% ((Operating Income ¥678.5B × (1 - effective tax rate 0.249)) / Invested Capital (equity ¥4,775B + interest-bearing debt ¥9,713B)), leaving room for improvement versus cost of capital. [Financial Soundness] Equity Ratio was 27.5% (equity ¥4,775B / total assets ¥17.3T), improved from 26.1% prior year, but leverage remains high: D/E ratio 2.63x (interest-bearing debt ¥9,713B / equity ¥3,684B, excluding non-controlling interests). Current Ratio 138.8% (current assets ¥3,077B / current liabilities ¥2,218B) and Quick Ratio 119.6% (quick assets ¥2,652B / current liabilities ¥2,218B) indicate good short-term liquidity. Debt/EBITDA was 7.63x (interest-bearing debt ¥9,713B / EBITDA ¥1,273B), high, while interest coverage on an EBIT basis was 9.18x (Operating Income ¥678.5B / interest expense ¥74.0B) and on an EBITDA basis 17.2x, indicating sufficient coverage. Cash and deposits ¥786.0B equate to roughly 1.24 months of monthly sales, providing a cushion.
Operating Cash Flow was ¥822.9B, down ¥474.9B YoY (-36.6%) but maintained 2.30x relative to Net Income ¥357.1B. Operating Cash Flow subtotal (before working capital changes) was ¥1,092.8B; major non-cash adjustments included Depreciation & Amortization ¥594.0B, changes in retirement benefit-related assets -¥175.7B, and equity-method investment loss/gain -¥49.4B. Working capital changes contributed cash inflow from decreased trade receivables of ¥151.4B, while decreased trade payables -¥52.1B and increased payments for consumption taxes and similar -¥71.4B were cash outflows. Income taxes paid were -¥254.2B, interest and dividend received totaled ¥55.3B, and interest paid was -¥71.0B. Investing CF was -¥1,500.1B, driven mainly by acquisition of tangible and intangible assets -¥1,243.5B; proceeds from disposals were minimal at ¥1.8B. Financing CF was a positive ¥153.8B, funded by long-term borrowings ¥515.0B and bond issuance ¥450.0B, which covered long-term borrowings repayments -¥435.0B, bond redemptions -¥250.0B, dividend payments -¥92.9B, and share buybacks -¥32.3B. Free Cash Flow was -¥677.2B (Operating CF ¥822.9B + Investing CF -¥1,500.1B), and total shareholder returns (dividends and share buybacks) of approximately ¥125.2B were executed using external funding. Cash and cash equivalents decreased ¥515.9B from ¥1,301.4B at the beginning of the period to ¥785.5B at the end, considering foreign exchange effects of +¥7.5B. From a working capital management perspective, inventory turnover days are long at 218 days (inventory ¥42.53B / Cost of Sales ¥712.5B × 365), indicating scope for improving inventory efficiency to enhance OCF.
Overall quality of earnings is generally good. Ordinary Income ¥678.9B is nearly equal to Operating Income ¥678.5B, as Non-Operating Income ¥90.3B (equity-method investment income ¥49.4B, dividend income ¥10.1B, foreign exchange gains ¥1.5B, etc.) and Non-Operating Expenses ¥89.9B (centered on interest expense ¥74.0B) largely offset each other. Equity-method investment income ¥49.4B represents about 7.3% of Ordinary Income and functions as a stable earnings source. No extraordinary gains/losses are disclosed in this dataset, suggesting limited impact from one-off items. Profit before tax ¥678.9B less income taxes ¥168.9B (effective tax rate 24.9%) yields Net Income ¥357.1B; the divergence between Ordinary Income and Net Income is about 47.4%, primarily due to tax burden. On an accrual basis, Operating CF ¥822.9B significantly exceeds Net Income ¥357.1B (OCF/NI = 2.30x), demonstrating strong cash backing of earnings. The accrual ratio of -2.7% ((Net Income - Operating CF) / total assets) is within a healthy range and shows no signs of earnings management. Comprehensive income was ¥486.2B, ¥129.1B higher than Net Income ¥357.1B, mainly due to Other Comprehensive Income of ¥24.0B (foreign currency translation adjustments ¥1.9B, valuation differences on available-for-sale securities ¥52.9B, deferred hedge gains/losses ¥18.4B, retirement benefit adjustment -¥90.2B, equity-method investee OCI share -¥6.9B). The negative retirement benefit adjustment of -¥90.2B reflects temporary valuation declines in pension assets or discount rate movements, with limited cash-flow impact. Overall, recurring earnings constitute the bulk of profits, one-off distortions are limited, and cash conversion is good; therefore, earnings quality is assessed as high.
Full-year guidance is for Revenue ¥9,250.0B (YoY +21.4%), Operating Income ¥370.0B (-45.5%), Ordinary Income ¥400.0B (-41.1%), Net Income attributable to owners of the parent ¥230.0B (-35.6%), EPS ¥147.00, and dividend ¥27.50. Compared with the current period results (Revenue ¥7,618.6B, Operating Income ¥678.5B, Ordinary Income ¥678.9B, Net Income ¥357.1B), the plan assumes higher revenue but significantly lower profits. The implied operating margin is roughly 4.0% (¥37.0B/¥925.0B?) — (note: company-stated approximation: 370B/9,250B ≈ 4.0%) — about half of this period’s 8.9%, reflecting conservative assumptions incorporating fuel cost adjustments, normalization of regulated income, and market factors that compress margins. The dividend forecast of ¥27.5 (annual) represents a cut from this period’s ¥50 (interim ¥25 + year-end ¥25), and the forecast payout ratio is about 30.6% (total dividends ~¥57B / Net Income ¥230B), up from this period’s 18.3%. Revenue growth in the guidance assumes a recovery in scale for Generation & Retail and Transmission & Distribution, but profit levels are predicated on continued margin deterioration in core segments; the company expects an ongoing adjustment in profitability next fiscal year.
Annual dividend was ¥50 (interim ¥25, year-end ¥25), and total dividends amounted to approximately ¥92.9B. The payout ratio relative to Net Income attributable to owners of the parent ¥357.1B is about 26.0% (¥92.9B / ¥357.1B), but using shares outstanding per the data of 204,373 thousand shares (207,528 thousand shares - treasury shares 3,155 thousand shares) yields a total dividend amount of about ¥102B and an implied payout ratio of about 28.6%. The actual dividend payment recorded in the cash flow statement was -¥92.9B, and a payout ratio of about 26.0% is deemed appropriate. Share repurchases were ¥32.3B (cash flow statement), making total shareholder returns approximately ¥125.2B and a Total Return Ratio of about 35.1% (¥125.2B / ¥357.1B). The dividend policy emphasizes stable dividends; the next-period dividend forecast of ¥27.5 (annual) is a cut, but at the forecast Net Income ¥230B the payout ratio of about 30.6% indicates intent to maintain a certain level of returns. Free Cash Flow was negative at -¥677.2B, and total returns of ¥125.2B were executed using external financing. From a sustainability perspective, a payout ratio of 26.0% is conservative and mid- to long-term dividend maintenance is feasible, but continued high levels of capex mean additional shareholder return expansion depends on improved Operating CF (e.g., working capital efficiency) and the investment cycle peaking out.
Profit volatility risk in the Transmission & Distribution segment: Segment profit for Transmission & Distribution was ¥85.4B, down 67.3% from ¥261.1B prior year. Fluctuations in regulated income and impacts from internal settlement rules are indicated, and future regulatory changes or revisions to transmission revenues could destabilize profit levels. Transmission & Distribution comprises 22.1% of revenue, so volatility in its profit contribution directly affects consolidated results.
Financial risk associated with high leverage: With a D/E ratio of 2.63x and Debt/EBITDA of 7.63x, leverage is high and rising interest rates could increase interest expense. Interest expense this period was ¥74.0B, up 18.2% from ¥62.6B prior year. Large-scale refinancing of long-term borrowings ¥464.3B and bonds ¥407.0B could expose earnings to higher interest costs. Interest coverage is 9.18x indicating current payment capacity, but continued declines in operating income would erode financial headroom.
Cash conversion deterioration risk due to working capital tie-up: Inventory turnover days of 218 days indicate long inventory holding, and OCF/EBITDA ratio of 0.65x shows low cash conversion efficiency. Days sales outstanding are roughly 42 days (trade receivables ¥87.49B / daily sales ¥2.09B) indicating a certain level. If improvements in working capital management are delayed, operating cash generation may decline, making it difficult to sustain high capital expenditures (¥1,243.5B). Although revenue growth is planned next period, increases in working capital that lead to cash outflows could widen FCF deficits and increase dependence on external financing.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 8.9% | 19.9% (6.5%–38.3%) | -11.0pt |
| Net Profit Margin | 4.7% | 5.6% (3.8%–22.2%) | -1.0pt |
Operating margin is 11.0ppt below the industry median, indicating relatively low profitability within the utility sector. Net profit margin is also 1.0ppt below the median.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -10.5% | -0.5% (-0.9%–13.1%) | -10.0pt |
Revenue growth rate is 10.0ppt below the industry median, showing a significant decline. Fuel cost adjustments and normalization of regulated income appear to have proceeded faster than industry averages.
※ Source: Company compilation
Adjustment phase in operating margin: Operating margin contracted to 8.9% (down 1.6ppt from 10.5% prior year), and next-period guidance suggests a halving to about 4.0%. Transmission & Distribution segment profit fell 67.3% YoY, indicating that fluctuations in regulated income and internal settlement rules are depressing profitability. On the other hand, high-margin non-power segments such as Information & Communication (margin 27.9%) and Construction & Engineering (23.2%) continue to provide support through portfolio diversification. Going forward, changes in segment-level profit structure and the timing of recovery in the core power business earnings will be the focus.
Balance between cash generation and the investment cycle: Operating CF of ¥822.9B is 2.30x Net Income and indicates high quality, but OCF/EBITDA ratio of 0.65x and inventory turnover days of 218 show working capital tying up cash and hindering cash conversion. Capital expenditure of ¥1,243.5B (about 2.1x depreciation) remains high, and Free Cash Flow remains negative at -¥677.2B. Total returns of approximately ¥125.2B (dividends and buybacks) were executed using external financing; in the medium term, improvements in working capital efficiency and a peak out in the investment cycle will determine the sustainability of internally funded shareholder returns.
This report is an AI-generated financial analysis document created by analyzing XBRL financial statement data. It does not constitute a recommendation to invest in specific securities. Industry benchmarks are reference information compiled by the company based on publicly available financial statements. Investment decisions are your responsibility; please consult a professional advisor as necessary before making any investment decisions.