| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥20303.0B | ¥20690.2B | -1.9% |
| Operating Income / Operating Profit | ¥1748.1B | ¥1607.3B | +8.8% |
| Ordinary Income | ¥2045.2B | ¥1896.5B | +7.8% |
| Net Income / Net Profit | ¥563.4B | ¥525.2B | +7.3% |
| ROE | 3.0% | 3.0% | - |
The fiscal year ended March 2026 recorded Revenue of ¥2兆303億円 (YoY -¥387億 -1.9%) with slight decline, while achieving Operating Income ¥1,748B (YoY +¥141B +8.8%), Ordinary Income ¥2,045B (YoY +¥149B +7.8%), and Net income attributable to owners of parent ¥1,528B (YoY +¥184B +13.6%). In a revenue-decline but profit-increase scenario, gross margin improved to 21.5% (up +1.9pt from 19.6%), and operating margin rose to 8.6% (up +0.8pt from 7.8%). Declines in domestic energy revenue were partially offset by growth in Life & Business Solutions (Revenue +13.2%) and Overseas Energy (Revenue +12.2%), with Overseas Energy's high margin (47.0%) notably boosting company-wide profitability. The gap between Ordinary Income and Net Income reflects tax burden (effective tax rate 24.7%) and non-recurring items (gain on sale of investment securities ¥254B, impairment loss ¥234B), but core operating profitability remained firm. Operating Cash Flow was ¥3,407B (YoY +20.1%), generating 2.2x of Net Income, and FCF was ¥989B, broadly covering dividends (¥420B) and share buybacks (¥635B), preserving financial flexibility.
[Revenue] Revenue was ¥2兆303億円 (YoY -1.9%), a slight decline. By segment, Domestic Energy recorded ¥1兆6,434B (Revenue composition 80.9%, YoY -5.4%), with the core business decline driving the company-wide revenue drop. This likely reflects fuel cost adjustments, fluctuations in power market conditions, and intensified competition in the customer base. Conversely, Life & Business Solutions expanded solidly to ¥3,198B (composition 15.8%, +13.2%), contributed by non-energy areas such as real estate development, information processing, and fine materials. Overseas Energy maintained double-digit growth at ¥1,438B (composition 7.1%, +12.2%), aided by expansion in natural gas development and investment projects. Although the consolidated segment mix remains concentrated in Domestic Energy (sales share 81%), diversification of revenue sources is gradually progressing due to expansion in Life & Business Solutions and Overseas Energy.
[Profitability] Operating Income was ¥1,748B (+8.8%). Gross margin improved to 21.5% (up +1.9pt from 19.6%), driven by lower cost of sales ratio. SG&A was ¥2,627B (SG&A ratio 12.9%, up +1.1pt from 11.8%) and increased in absolute terms, but absolute spending control amid revenue decline worked, producing positive operating leverage. By segment, Domestic Energy Operating Income was ¥687B (margin 4.2%, YoY -8.2%) and declined, while Overseas Energy was ¥676B (margin 47.0%, +25.4%) and Life & Business Solutions ¥374B (margin 11.7%, +30.2%) delivered substantial profit increases and drove consolidated profit. Notably, Overseas Energy’s high margin was significantly supported by equity-method investment income (¥207B), reflecting realized benefits from capital alliances and joint ventures. Ordinary Income was ¥2,045B (+7.8%), as non-operating income ¥546B (including dividends received ¥49B and equity-method investment income ¥239B) offset non-operating expenses ¥249B (including interest paid ¥138B), raising ordinary income margin to 10.1% (up +0.9pt from 9.2%). Profit before income taxes was ¥2,029B (+7.2%); special gains ¥218B (mainly gain on sale of investment securities ¥254B) and special losses ¥234B (impairment loss ¥234B, valuation loss on investment securities ¥114B) largely offset each other. After deducting income taxes of ¥502B, Net income attributable to owners of parent was ¥1,528B (+13.6%), with net margin improving to 7.5% (up +1.0pt from 6.5%). In conclusion, despite revenue decline, cost efficiency and high profitability in Overseas Energy and Life & Business Solutions raised company-wide profitability.
Domestic Energy: Revenue ¥1兆6,434B (YoY -5.4%), Operating Income ¥687B (YoY -8.2%), margin 4.2%. This core segment, accounting for 80.9% of revenue, operates city gas, electricity retail, LNG sales, etc. Revenue and profit declines reflect fuel cost adjustments, power market fluctuations, and intensified competition following retail liberalization. Equity-method investment income was ¥32B (up from ¥27B, +18.7%).
Life & Business Solutions: Revenue ¥3,198B (+13.2%), Operating Income ¥374B (+30.2%), margin 11.7%. Activities include real estate development and leasing, information processing services, fine materials and carbon material product sales, achieving high growth and profitability in non-energy domains. Equity-method investment income was zero, with business structure centered on consolidated subsidiaries.
Overseas Energy: Revenue ¥1,438B (+12.2%), Operating Income ¥676B (+25.4%), margin 47.0%. Engages in natural gas development, investment, and energy supply; equity-method investment income ¥207B (up from ¥180B, +15.2%) contributed at a scale comparable to operating income. High profitability from capital alliances and joint ventures has become a key driver of consolidated profit.
Inter-segment internal sales were ¥767B (prior year ¥795B), yielding consolidated Revenue of ¥2兆303億円 after adjustments. Operating income adjustment was +¥10B (prior year +¥31B), reconciling segment total ¥1,739B to consolidated ¥1,748B. Segment operating margins were Domestic Energy 4.2%, Life & Business Solutions 11.7%, Overseas Energy 47.0%; Overseas Energy’s exceptionally high margin continues to lift overall portfolio profitability.
[Profitability] Operating margin 8.6% (up +0.8pt from 7.8%), net margin 7.5% (up +1.0pt from 6.5%), ROE 8.2% (up +0.5pt from 7.7%). ROE decomposition: net margin 7.5% × total asset turnover 0.611 × financial leverage 1.79, with net margin improvement driving ROE rise. Gross margin 21.5% (up +1.9pt from 19.6%) aided by lower cost of sales ratio. Operating margin improvement driven by high profitability in Overseas Energy (47.0%), profit growth in Life & Business Solutions (11.7%), and absolute SG&A control.
[Cash Quality] Operating Cash Flow / Net Income = 2.23x, OCF / EBITDA = 1.10x, indicating high cash backing for earnings. Accrual ratio is -5.7%, in a favorable range, suggesting high earnings quality.
[Investment Efficiency] Total asset turnover 0.611x (down from 0.646x), pressured by accumulated capital expenditures (tangible fixed assets ¥1兆4,948B, YoY +4.7%). ROIC data not disclosed, but back-calculation from ROE and leverage implies after-tax operating income / total assets roughly at ~5%.
[Financial Soundness] Equity Ratio 54.4% (up +1.6pt from 52.8%), current ratio 184.1%, quick ratio 134.6%—solid liquidity. Interest-bearing debt (long-term borrowings ¥3,032B + corporate bonds ¥4,910B + short-term borrowings, etc.) totals approximately ¥8,300B, Debt/EBITDA 0.98x, and interest coverage ratio 22.5x (approximate: Operating Income + equity-method income + interest income / interest expense), indicating conservative leverage. Payout Ratio 28.5% (actual dividend ¥120 / EPS ¥391.15), sustainable level. Total Return Ratio approximately 66% (dividends ¥420B + share buybacks ¥635B / Net income attributable to owners of parent ¥1,528B), consistent with financial capacity.
Operating Cash Flow was ¥3,407B (YoY +20.1%), generating 2.23x of Net Income ¥1,528B. Pre-working-capital subtotal of OCF was ¥3,141B; reductions in inventories (+¥48B) and receivables (+¥211B) contributed cash inflow, while decrease in payables (-¥67B) partially offset, but overall working capital improvement supported OCF. After income taxes paid ¥356B, interest and dividends received ¥760B, and interest paid ¥138B, OCF stood at ¥3,407B. Investing Cash Flow was -¥2,419B, led by capital expenditures ¥2,385B (1.77x depreciation ¥1,351B), partially offset by proceeds from sale of securities ¥65B and proceeds from sale of shares of subsidiaries ¥215B. Financing Cash Flow was -¥1,292B, including share buybacks ¥635B, dividends ¥420B, repayments of long-term borrowings ¥720B, corporate bonds issued ¥410B, and increase in short-term borrowings etc. +¥140B. FCF was ¥989B (OCF ¥3,407B + Investing CF -¥2,419B), covering dividends ¥420B by 2.35x and broadly funding dividends + share buybacks ¥1,055B within FCF scope. Cash and deposits declined to ¥590B (prior year ¥828B, -¥238B), but liquidity indicators remain healthy; reductions due to share buybacks, dividends, and capital expenditures are within financial capacity. OCF / EBITDA = 1.10x (EBITDA estimated ¥3,100B = Operating Income ¥1,748B + Depreciation ¥1,351B), confirming cash generation exceeding depreciation. OCF / Net Income >2x and accrual ratio -5.7% indicate strong cash backing of earnings and high earnings quality.
Recurring earnings consist mainly of Operating Income ¥1,748B, interest income received ¥128B, and equity-method investment income ¥239B, totaling ¥2,115B and forming the bulk of Ordinary Income ¥2,045B. Non-operating income ¥546B is 2.7% of Revenue, below the 5% threshold, indicating no excessive reliance on non-operating items. One-off items include special gains ¥218B (mainly gain on sale of investment securities ¥254B, and gain on sale of fixed assets ¥22B) and special losses ¥234B (impairment loss ¥234B, valuation loss on investment securities ¥114B), netting to -¥16B. The impairment loss ¥234B is non-cash and added back to OCF. The divergence between Ordinary Income ¥2,045B and Net income attributable to owners of parent ¥1,528B is mainly due to income taxes ¥502B (effective tax rate 24.7%) on profit before tax ¥2,029B; net impact from special items is limited. Accrual quality is strong: OCF / Net Income = 2.23x, accrual ratio -5.7%. The gap between OCF subtotal ¥3,141B and Net Income ¥1,528B is explained by depreciation ¥1,351B (non-cash), impairment loss ¥234B (non-cash), equity-method investment income ¥239B (non-cash), and working capital improvement. Underlying earning power is supported by high profitability in Overseas Energy (margin 47.0%) and profit growth in Life & Business Solutions (11.7%), compensating Domestic Energy declines and enabling consolidated profit increase; the sustainability of recurring earnings is assessed as high.
For FY ending March 2027, company guidance projects Revenue ¥2兆700億円 (YoY +2.0%), Operating Income ¥1,500B (YoY -14.2%), Ordinary Income ¥1,900B (YoY -7.1%), EPS ¥377.75, and dividend ¥65. While Revenue is expected to be slightly higher, Operating Income is planned to decline 14.2%, reflecting conservative assumptions. This likely incorporates normalization of fuel prices and FX, narrowing spreads in electricity and gas retail markets, increased maintenance plans, and regulatory compliance costs. Progress rates (this period results / full-year plan) show Operating Income at 116.5% (this period ¥1,748B / plan ¥1,500B), already exceeding plan and implying conservative guidance that assumes significant profit decline in H2. Ordinary Income progress rate is 107.6%, signaling cautious expectations for non-operating income. The dividend forecast ¥65 is a large reduction from current-year actual ¥120 (interim ¥60 + year-end ¥60), suggesting the company may maintain interim dividend or reduce it and leave year-end dividend undecided. EPS projection ¥377.75 is below current FY EPS ¥391.15, consistent with planned operating profit contraction. By segment, assumptions include normalization of Domestic Energy profitability, variability in Overseas Energy equity-method investment income, and continued growth in Life & Business Solutions, forecasting a revenue increase but profit decline company-wide. Given current results exceed plan materially, upward revision potential remains if fuel and FX conditions and market trends are favorable.
Dividends totaled ¥120 (interim ¥60 + year-end ¥60), Payout Ratio 28.5% (actual dividend ¥120 / EPS ¥391.15 × average shares outstanding 390M assumed), with total dividends of approximately ¥420B. FCF coverage is 2.35x (FCF ¥989B / dividends ¥420B), providing ample cushion. Share buybacks of ¥635B were conducted; combined dividend and buybacks totaled ¥1,055B with Total Return Ratio about 66% (¥1,055B / Net income attributable to owners of parent ¥1,528B), consistent with financial capacity. Treasury stock increased from prior year ¥230B to ¥638B (reflecting acquisition amount ¥635B), improving shareholder value on the float-adjusted shares outstanding (3.98億株 less treasury stock 14.03M shares). Guidance for next fiscal year dividend ¥65 indicates a conservative stance, consistent with guidance for Operating Income -14.2%. The company appears to maintain a stable-dividend base while leaving room for performance-linked adjustments; strong FFO (OCF ¥3,407B − capex ¥2,385B ≈ FCF ¥1,022B) to interest-bearing debt relationship and low leverage (Debt/EBITDA 0.98x) underpin continued returns.
Segment concentration risk: Domestic Energy accounts for 81% of revenue and is susceptible to regulatory developments in city gas and electricity retail, changes to fuel cost adjustment mechanisms, and customer attrition / price erosion due to retail liberalization. This fiscal year Domestic Energy recorded Revenue -5.4% and Operating Income -8.2%, driving consolidated decline. Although the share has fallen slightly (82% prior → 81% current) due to expansion of Overseas Energy and Life & Business Solutions, Domestic Energy volatility still materially impacts consolidated performance. The Company’s guidance for Operating Income -14.2% next year likely embeds compression in Domestic Energy margins and fuel price normalization.
Fuel price and power market volatility: LNG procurement prices, margins on thermal generation, and fluctuations in electricity retail markets directly affect gross margin and operating profit. Though gross margin improved to 21.5% (up +1.9pt), guidance assumes profit contraction due to normalization of fuel and market conditions. Equity-method investment income in Overseas Energy (¥207B) is also exposed to commodity price and FX volatility, with country and operational risks. A special loss including impairment loss ¥234B (and valuation loss on investment securities ¥114B) was recorded, indicating potential ongoing asset valuation risk.
Energy transition and regulatory response risk: Progress in decarbonization could structurally reduce city gas demand and shift consumption toward renewables, hydrogen, and other alternatives, pressuring long-term revenue base. Capex is high at ¥2,385B (1.77x depreciation), likely including investments for decarbonization and renewable assets, but uncertain returns could cap capital efficiency. Total asset turnover 0.611x (down from 0.646x) shows continued decline in asset efficiency; project selection and ROIC improvement are medium-term challenges.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 8.6% | 19.9% (6.5%–38.3%) | -11.3pt |
| Net Margin | 2.8% | 5.6% (3.8%–22.2%) | -2.9pt |
Operating margin is 11.3pt below industry median, placing the company mid-to-lower due to segment concentration and regulatory/competitive environment.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -1.9% | -0.5% (-0.9%–13.1%) | -1.4pt |
Revenue growth is 1.4pt below industry median, with Domestic Energy declines constraining company growth. Overseas Energy and Life & Business Solutions expansion maintain growth above the industry lower quartile.
※ Source: Company compilation
Sustainability of revenue-decline / profit-increase and margin improvement: This fiscal year achieved Operating Income +8.8% and Net Income +13.6% despite Revenue -1.9%, with improvements of Gross margin +1.9pt, Operating margin +0.8pt, Net margin +1.0pt. Drivers include structural portfolio improvement from high-margin Overseas Energy (47.0%) and profit growth in Life & Business Solutions (11.7%, Operating Income +30.2%), and absolute SG&A control producing operating leverage. However, next-year guidance projects Operating Income -14.2% and incorporates normalization of fuel and FX and margin compression; some margin gains may depend on favorable external conditions. If Domestic Energy’s decline persists (Revenue -5.4%, Operating Income -8.2%), the extent to which Overseas Energy and Life & Business Solutions can continue to drive consolidated profit will be a key focus.
Strong cash generation alongside shareholder returns: OCF ¥3,407B (2.23x Net Income), OCF / EBITDA 1.10x, supporting strong cash backing. FCF ¥989B covers dividends ¥420B by 2.35x and broadly funds dividends + buybacks ¥1,055B within FCF. Leverage is low (Debt/EBITDA 0.98x, Equity Ratio 54.4%), interest coverage 22.5x. Total Return Ratio ~66% aligns with financial capacity. Capex aggressive at ¥2,385B (1.77x depreciation), yet financing, returns, and investment balanced within OCF. Next-year dividend guidance ¥65 is conservative vs. current-year ¥120, consistent with guidance for Operating Income decline; stable-dividend policy with performance linkage appears intended, and favorable FFO / interest-bearing debt supports continuation of returns.
Room to improve capital efficiency and mid-term growth strategy: ROE rose to 8.2% (up +0.5pt), with decomposition showing net margin 7.5% × total asset turnover 0.611 × leverage 1.79. Total asset turnover declined from 0.646 due to accumulated capex (tangible fixed assets +4.7%), constraining capital efficiency. Progress in monetizing large-scale investments (decarbonization, renewables, overseas projects) and improving ROIC will be critical. Segment concentration remains high (Domestic Energy 81%), so increasing the share and maintaining high profitability of Overseas Energy and Life & Business Solutions is key to strengthening resilience against regulatory and market volatility. With guidance assuming Operating Income -14.2%, restoring mid-term growth trajectory will require Domestic Energy margin recovery, expansion of non-energy segments, and improved asset turnover.
This report was auto-generated by AI analyzing XBRL financial statement data and is a financial analysis document. It does not constitute 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; consult a professional as needed before making investment decisions.