| Indicator | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥11,822.6B | ¥13,166.7B | -10.2% |
| Operating Income / Operating Profit | ¥1,009.9B | ¥1,383.1B | -27.0% |
| Ordinary Income | ¥1,585.3B | ¥1,401.0B | +13.2% |
| Net Income / Net Profit (attributable to owners of the parent) | ¥546.5B | ¥932.3B | -41.4% |
| ROE | 3.6% | 6.4% | - |
For the fiscal year ended March 2026, Revenue was ¥11,822.6B (YoY -¥1,344.1B, -10.2%), Operating Income was ¥1,009.9B (YoY -¥373.2B, -27.0%), Ordinary Income was ¥1,585.3B (YoY +¥184.3B, +13.2%), and Net Income attributable to owners of the parent was ¥546.5B (YoY -¥385.8B, -41.4%). While domestic power generation operations experienced margin contraction due to normalization of market prices and timing lags in fuel cost pass-through, raising operating-stage pressure, equity-method investment gains from overseas expanded sharply to ¥638.8B (prior year ¥14.5B), more than 44x, which boosted Ordinary Income. The booking of Special Losses of ¥518.2B (impairment ¥329.9B, loss on retirement of fixed assets ¥188.3B) led to a large decline in Net Income, but Operating Cash Flow was ¥2,242.7B—4.1x Net Income—indicating solid cash generation. Dependence on overseas operations increased, while domestic generation margin compression and one-off losses resulted in persistently low profitability and capital efficiency.
【Revenue / Net Sales】 Revenue was ¥11,822.6B, a YoY decline of -10.2%. By segment: Generation Business ¥8,404.5B (71.1% of total, YoY -11.1%), Overseas Business ¥2,279.0B (19.3%, -6.9%), Transmission & Transformation Business ¥492.7B (4.2%, -1.2%), Power-related Peripheral Businesses ¥496.4B (4.2%, -16.2%), and Other ¥150.1B (1.3%, -12.9%). All segments posted revenue declines. The primary driver was normalization of wholesale electricity market prices in domestic power generation (a reversal from last year’s spike) and declines in sold electricity volumes. Overseas Business was also negative YoY due to yen appreciation and reduced sales at equity-accounted affiliates. The largest drop was in the Generation Business, where market-linked sales price declines directly squeezed operating-stage profitability.
【Profitability】 Operating Income was ¥1,009.9B, down -27.0% YoY, and Operating Margin deteriorated 2.0ppt to 8.5% from 10.5% the prior year. The fuel cost adjustment mechanism and timing differences with market price movements reduced gross margin in the Generation Business, and fixed cost burden including Depreciation & Amortization of ¥1,160.7B (YoY -0.3%) remained heavy, leading to a significant decline at the operating level. Conversely, non-operating income expanded to ¥974.0B (prior year ¥400.0B), 2.4x, led by equity-method investment gains of ¥638.8B (prior year ¥14.5B). Improvements in performance at overseas equity affiliates and foreign exchange translation effects were the main drivers, resulting in Ordinary Income of ¥1,585.3B (YoY +13.2%). Dividend income received amounted to ¥23.5B, and other non-operating income added ¥210.1B. Non-operating expenses were ¥398.6B, primarily interest expense of ¥319.3B (prior year ¥330.0B), so interest burden edged down slightly. Special Losses of ¥518.2B comprised impairment losses ¥329.9B and loss on retirement of fixed assets ¥188.3B, reflecting energy-transition-related adjustments and profitability reviews of aging domestic assets. Pre-tax profit was ¥1,067.1B (YoY -23.8%); after Income Taxes of ¥328.8B, Profit for the Year was ¥585.4B. After deducting Non-controlling Interests of ¥153.0B, Net Income attributable to owners of the parent was ¥546.5B (YoY -41.4%). In summary, revenue and operating profit declined, but Ordinary Income increased due to reliance on non-operating income (notably equity-method gains).
Segment profit (on an Ordinary Income basis) was: Generation Business ¥453.5B (prior year ¥685.5B, -33.9%), Transmission & Transformation Business ¥17.8B (prior year ¥28.4B, -37.3%), Power-related Peripheral Businesses ¥169.9B (prior year ¥340.9B, -50.2%), Overseas Business ¥948.6B (prior year ¥345.0B, +175.0%), and Other ¥4.2B (prior year ¥6.2B). Overseas Business was the sole segment with substantial profit growth and drove overall Ordinary Income. Investment balance in equity-method affiliates declined to ¥2,695.2B (prior year ¥2,929.2B), but of the ¥638.8B equity-method gains, ¥653.1B originated overseas, accounting for the majority. Generation and power-related peripheral businesses saw profit margins cut roughly in half due to market normalization, highlighting deterioration in domestic business profitability. Segment assets of the Overseas Business were ¥11,637.5B, representing 31.1% of total assets, indicating progress in portfolio diversification.
【Profitability】Operating margin was 8.5%, down 2.0ppt from 10.5% the prior year; Net Profit Margin (attributable to owners of the parent) was 4.6%, down 2.4ppt from 7.0%. ROE was 3.6% (based on Equity ¥15,344.8B), roughly flat YoY; ROA (using Ordinary Income/Total Assets) was only 1.5%, indicating low capital efficiency. Equity-method investment gains accounted for 59.9% of Pre-tax Profit, indicating a very high dependence on non-operating income. 【Cash Quality】Operating Cash Flow / Net Income was 3.83x; Operating Cash Flow / EBITDA (Operating Income + Depreciation) was 1.04x, showing good cash conversion. Free Cash Flow was ¥310.2B, covering dividend payments of ¥181.3B by 1.71x, supporting dividend sustainability. 【Investment Efficiency】Capital expenditures (tangible & intangible asset acquisitions) were ¥1,773.8B, exceeding Depreciation & Amortization of ¥1,160.7B, so investment remained in excess of depreciation. ROIC is estimated at approximately 3.3%, low for improvement in capital-intensive business efficiency. 【Financial Health】Equity Ratio was 41.0%, improving 4.6ppt from 36.4% the prior year. Debt/Equity was 1.09x (Interest-bearing Debt ¥16,775.7B / Equity ¥15,344.8B), within acceptable range. Debt/EBITDA (Interest-bearing Debt / EBITDA) was 4.6x—somewhat high—and EBIT / Interest was 3.16x, showing moderate interest coverage. Current Ratio was 167.3%, Quick Ratio 147.9%; Cash & deposits were ¥3,969.6B against Short-term Borrowings of ¥82.7B, indicating very ample liquidity.
Operating Cash Flow was ¥2,242.7B (YoY -10.4%). The composition included Operating CF subtotal ¥1,990.6B plus interest & dividends received ¥1,084.9B, interest paid -¥317.8B, and income taxes paid -¥515.1B. Working capital changes were modest: Inventories increase -¥47.8B, Trade receivables decrease +¥43.5B, Trade payables decrease -¥63.0B, limiting cash impact. Investing Cash Flow was -¥1,932.5B, centered on tangible & intangible asset acquisitions -¥1,773.8B and acquisition of subsidiaries’ shares -¥287.6B. Free Cash Flow remained positive at ¥310.2B, and total shareholder returns (dividends ¥181.3B and share buybacks ¥204.6B) totaled ¥385.9B, nearly covered. Financing Cash Flow was -¥642.2B: repayment of long-term borrowings ¥1,243.5B and proceeds ¥1,298.5B resulted in net increase ¥55.0B; bond issuance ¥807.1B and redemptions ¥939.0B resulted in net decrease ¥131.9B; short-term borrowings slightly increased. Cash and Cash Equivalents decreased ¥242.2B from ¥3,730.9B at the beginning of the period to ¥3,488.7B at year-end, but total liquidity including deposits remained ample at ¥3,969.6B, providing strong short-term safety. Operating Cash Flow was 4.1x Net Income ¥546.5B, reflecting that Special Losses (impairments and retirements) were non-cash and contributed to high cash-generation capacity.
Of Ordinary Income ¥1,585.3B, Operating Income accounted for ¥1,009.9B, yielding an Ordinary/Operating ratio of 1.57x, reflecting high dependence on non-operating income of ¥974.0B—particularly equity-method gains of ¥638.8B (40.3% of Ordinary Income) that dominate the profit structure. These equity-method gains stem from performance at overseas equity affiliates and foreign exchange translation effects; while some persistence is expected, they are subject to volatility depending on affiliates’ market conditions and operations. Dividend income received was ¥23.5B, relatively small; of total interest & dividend receipts of ¥108.5B, a large portion is estimated to be overseas-related. Non-operating expenses of ¥398.6B were mainly interest expense ¥319.3B—ongoing interest burden but slightly down YoY, indicating a stable interest environment. Special Losses of ¥518.2B (impairment ¥329.9B, loss on retirement of fixed assets ¥188.3B) are non-recurring elements, seen as restructuring and aging-asset responses in domestic generation. Because impairments and retirements are non-cash, they are a primary reason Operating CF reaches four times Net Income. Pre-tax Profit of ¥1,067.1B and Income Taxes of ¥328.8B imply an effective tax rate of 30.8%. Deferred tax assets ¥274.2B and deferred tax liabilities ¥205.3B result in net deferred tax assets ¥68.9B, reflecting cautious expectations for future taxable income. Comprehensive Income was ¥1,252.3B (Owners of the parent ¥1,079.8B), exceeding Net Income; Other Comprehensive Income ¥505.8B comprised Foreign Currency Translation Adjustments ¥260.3B, Net Gains on Available-for-sale Securities ¥181.5B, and Remeasurements of Defined Benefit Plans ¥84.2B—mainly non-cash valuation gains. Realization of these valuation gains depends on markets and FX, but the divergence from cash profitability is limited and overall earnings quality is assessed as robust.
Full Year guidance: Revenue ¥13,800.0B (vs. current period +16.7%), Operating Income ¥1,250.0B (+23.8%), Ordinary Income ¥1,250.0B (-21.2%), Net Income attributable to owners of the parent ¥610.0B (+11.6%), EPS forecast ¥460.21, Dividend forecast ¥50. The projected ~20% revenue increase assumes recovery in domestic generation selling prices and volumes and expansion of Overseas Business. The ~20% increase in Operating Income assumes margin improvement (Operating Margin to 9.1%, +0.6ppt). Ordinary Income is forecast to decline by ~20%, reflecting normalization (reversal) of the equity-method gains that surged this period. Net Income is projected to rise 11.6% as Special Losses ¥518.2B from the current period cease, but volatility from non-recurring items remains a risk. Progress rates at the interim point were: Revenue 85.7%, Operating Income 80.8%, Ordinary Income 126.8%, Net Income 89.6%—Ordinary Income has already exceeded the full-year forecast while Operating Income lags, making domestic margin recovery in the second half the key. Dividend forecast ¥50 equals the current period’s per-share payout (¥100 total: interim ¥50 + year-end ¥50) and implies a forecast payout ratio of 10.9%, extremely conservative. Dividend sustainability is high, but there is significant room for dividend increases.
Annual dividend was ¥100 (interim ¥50, year-end ¥50). Dividends paid totaled ¥183.0B relative to Net Income attributable to owners of the parent ¥546.5B (based on weighted average shares outstanding excluding treasury stock of 179.8 million shares), yielding a payout ratio of 33.5%. Forecast dividend for the next fiscal year is ¥50, which against forecast EPS ¥460.21 implies a payout ratio of 10.9%, a very conservative level that maintains a stable dividend policy. Share buybacks of ¥204.6B were executed; combined with dividends, total shareholder returns were ¥387.6B, exceeding Free Cash Flow ¥310.2B, but the ample cash balance (Cash & deposits ¥3,969.6B) makes this manageable. Total Return Ratio on an FCF basis was 124.9%, temporarily exceeding FCF, but on an Operating CF basis it was 17.3%, indicating no sustainability issues. Equity Ratio was 41.0%, indicating ample capital buffer, and there is sufficient room to continue both dividends and share buybacks. The dividend policy prioritizes stability and is driven by cash capacity rather than strictly earnings-linked distribution.
Domestic generation margin volatility: Operating Margin fell to 8.5% from 10.5% the prior year (-2.0ppt), and the fuel cost adjustment mechanism and timing lags with market prices compressed gross margins. Fluctuations in wholesale electricity market prices and mismatches in timing of fuel cost pass-through will likely continue, leaving operating-stage profitability exposed to external conditions. With Generation Business accounting for 71.1% of revenue composition, margin swings materially affect company-wide results.
Concentration risk on overseas equity-method investments: Equity-method investment gains of ¥638.8B represented 59.9% of Pre-tax Profit ¥1,067.1B, skewing Ordinary Income structure toward non-operating gains. Overseas equity affiliates are sensitive to market conditions, FX, and operational factors, so volatility in equity-method gains can swing consolidated profitability significantly. The next fiscal year’s guidance forecasts Ordinary Income down -21.2% YoY, reflecting a normalization of equity-method gains.
Recurrence risk of Special Losses and asset efficiency risk: This period included Special Losses of ¥518.2B (impairment ¥329.9B, loss on retirement of fixed assets ¥188.3B), causing Net Income to fall 41.4%. Aging domestic generation assets and energy transition-related adjustments may trigger further impairments/retirements, exerting downward pressure on Net Income and equity accumulation. Capital expenditures are ¥1,773.8B annually, exceeding Depreciation & Amortization ¥1,160.7B, so invested capital continues to expand while ROIC (~3.3%) remains low, leaving capital efficiency improvement elusive.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 8.5% | 19.9% (6.5%–38.3%) | -11.4pt |
| Net Profit Margin | 4.6% | 5.6% (3.8%–22.2%) | -1.0pt |
Operating Margin ranks below the industry median by 11.4ppt, and Net Profit Margin is 1.0ppt below the median.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -10.2% | -0.5% (-0.9%–13.1%) | -9.7pt |
Revenue growth is 9.7ppt below the median, reflecting larger-than-peer revenue decline due to market price normalization.
※ Source: Company compilation
Expansion of Overseas Equity-method Gains has materially supported Ordinary Income, but if operating-stage profitability continues to decline (Operating Margin 8.5%, -2.0ppt YoY), core business competitiveness may weaken. The next fiscal year assumes Operating Income recovery, but simultaneous achievement of domestic generation margin improvement and sustained high overseas equity-method gains will be critical.
Booking of Special Losses ¥518.2B reduced Net Income by 41.4%, yet Operating CF was 4.1x Net Income, as impairments and retirements are non-cash and supported cash generation. Dividend payout ratio 33.5% and FCF coverage 1.71x support dividend sustainability, and share buybacks were implemented. Liquidity is ample at ¥3,969.6B, so total return resources are sufficient; however, recurrence risk of impairments/retirements remains, leaving Net Income stability uncertain.
Capital efficiency is low with ROE 3.6% and ROIC 3.3%, and leverage is somewhat high with Debt/EBITDA 4.6x. Capex exceeds depreciation, expanding invested capital without visible return improvement; raising capital productivity is a medium-term priority. Liquidity and financial safety are strong (Current Ratio 167.3%, Cash / Short-term debt 48x), but structural profitability improvements and enhanced capital efficiency will be key evaluation points going forward.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your responsibility; please consult qualified professionals as needed before making investment decisions.