| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥6510.9B | ¥6560.1B | -0.8% |
| Operating Income / Operating Profit | ¥317.8B | ¥308.9B | +2.9% |
| Ordinary Income | ¥378.8B | ¥324.1B | +16.9% |
| Net Income / Net Profit | ¥266.0B | ¥247.1B | +7.6% |
| ROE | 5.6% | 5.5% | - |
For the fiscal year ended March 2026, Revenue was ¥6,510.9B (YoY -¥49.2B, -0.8%), a slight decline, while Operating Income was ¥317.8B (YoY +¥8.9B, +2.9%), Ordinary Income was ¥378.8B (YoY +¥54.7B, +16.9%), and Net Income was ¥266.0B (YoY +¥18.9B, +7.6%), delivering year-over-year profit growth. Gross margin improved to 27.5% from 25.4% a year earlier, a 2.1pt improvement, and operating margin expanded to 4.9% (prior 4.7%). At the bottom line, special gains of ¥101.7B, including investment securities disposal gains of ¥95.6B, lifted Net Income, while special losses of ¥47.7B including impairment losses of ¥26.7B were recorded. By segment, the core Gas segment generated Revenue of ¥4,265.9B and Operating Income of ¥192.1B—about 60% of the group total. Electricity’s Operating Income recovered to ¥19.7B (YoY +476.6%), LPG & Other Energy achieved Operating Income of ¥30.6B (YoY +18.2%), contributing to portfolio-wide uplift. Operating Cash Flow was ¥656.1B, 2.5x Net Income, and Free Cash Flow was positive at ¥238.3B, indicating strong cash generation. Comprehensive income was ¥666.8B, far exceeding Net Income, as increases in Other Comprehensive Income (OCI) such as market valuation gains on securities of ¥205.4B boosted equity. The company’s plan for FY2027 is conservative—Revenue ¥6,700B and Operating Income ¥190B—factoring in the fall-off of one-off gains, normalization of fuel cost adjustments, and normalization of electric margins.
Revenue: Revenue was ¥6,510.9B (YoY -0.8%), slightly down. By segment, Gas was ¥4,265.9B (-0.6%) remaining broadly flat, LPG & Other Energy was ¥967.5B (-4.8%) down, while Electricity increased to ¥988.7B (+3.0%). Other segments were ¥610.8B (-0.1%). Top-line decreased modestly due to demand and price factors, but changes in sales mix and improved procurement conditions boosted gross margin. Cost of sales totaled ¥4,717.9B, gross profit ¥1,793.0B, yielding gross margin 27.5% (prior 25.4%), a 2.1pt improvement. Stabilized fuel prices and normalization of power procurement helped improve cost ratios.
Profitability: Operating Income was ¥317.8B (YoY +2.9%). Gross margin improvement and margin recovery in Electricity and LPG contributed, expanding operating margin to 4.9% (prior 4.7%). Ordinary Income was ¥378.8B (YoY +16.9%); non-operating income netted ¥89.4B (including dividends received ¥35.3B and interest income ¥10.5B), contributing a net positive ¥60.9B at the ordinary income level. Net special gains of ¥54.0B (special gains ¥101.7B, including investment securities disposal gains ¥95.6B, less special losses ¥47.7B including impairment losses ¥26.7B and investment securities valuation losses ¥6.0B) increased profit before tax to ¥432.8B. After deducting corporate taxes of ¥118.3B, Net Income was ¥266.0B (YoY +7.6%). The divergence between Ordinary Income and Net Income was driven by net special items (+¥54.0B). Overall, the company achieved higher profits despite slightly lower revenue, confirming improved profitability.
Gas (weight 65.5%): Revenue ¥4,265.9B (YoY -0.6%), Operating Income ¥192.1B (YoY -6.5%), margin 4.5%. Core operations include gas production and sales, equipment sales, and transmission/supply services. Revenue was broadly flat while Operating Income declined, lowering the margin year-over-year. The Gas business remains the revenue and profit base, contributing roughly 60% of consolidated operating profit.
LPG & Other Energy (weight 14.9%): Revenue ¥967.5B (YoY -4.8%), Operating Income ¥30.6B (YoY +18.2%), margin 3.2%. Activities include LPG and LNG sales, and heat supply. Despite lower revenue, profitability improved significantly, delivering double-digit growth in Operating Income.
Electricity (weight 15.2%): Revenue ¥988.7B (YoY +3.0%), Operating Income ¥19.7B (YoY +476.6%), margin 2.0%. Electricity retail business saw revenue growth and a strong recovery in Operating Income from ¥3.4B in the prior year, driven by normalization of electricity procurement conditions and improved margins.
Other (weight 9.4%): Revenue ¥610.8B (YoY -0.1%), Operating Income ¥58.1B (YoY +3.9%), margin 9.5%. Includes LNG tolling, real estate, plant engineering, CN×P business, and information processing. This segment has the highest margin at 9.5%, contributing stable earnings.
Across segments, the stable profit base of Gas combined with Electricity’s sharp recovery and improved margins in LPG & Other helped lift overall portfolio profitability.
Profitability: Operating margin 4.9% (prior 4.7%), Net Income margin 4.1% (prior 3.8%), both improved. ROE 5.6% (prior 5.6%) was flat. Return on Assets (ROA) increased to 4.8% (prior 4.3%), indicating improved asset efficiency. EBIT was ¥317.8B; adding depreciation ¥383.7B yields EBITDA ¥701.5B, with an EBITDA margin of 10.8%. Basic EPS was ¥83.76 (prior ¥62.95), up 33.1%, and BPS expanded to ¥1,311.98 (prior ¥1,148.6).
Cash Quality: Operating Cash Flow (OCF) was ¥656.1B, 2.5x Net Income ¥266.0B; OCF/EBITDA ratio was 0.94x, indicating strong cash generation. The accrual ratio ((Net Income ¥266.0B - OCF ¥656.1B) ÷ Total Assets ¥8,094.6B) ≈ -4.8%, negative, indicating strong cash backing for profits.
Investment Efficiency: Total asset turnover was 0.80x (Revenue ¥6,510.9B ÷ Total Assets ¥8,094.6B). Financial leverage was 1.70x (Total Assets ¥8,094.6B ÷ Equity ¥4,775.2B). Using DuPont decomposition: ROE 5.6% ≈ Net Income margin 4.1% × Total asset turnover 0.80 × Leverage 1.70.
Financial Soundness: Equity Ratio was 59.0% (prior 59.1%), remaining high. Interest-bearing debt (short-term borrowings ¥18.0B + long-term borrowings ¥541.4B + bonds ¥975.0B) totaled ¥1,534.4B. Debt/EBITDA was 2.19x and Debt/Equity was 32.1%, conservative levels. Current ratio was 164.3% (Current assets ¥1,808.6B ÷ Current liabilities ¥1,101.0B), and quick ratio 138.4%, indicating healthy short-term liquidity.
Operating Cash Flow was ¥656.1B (YoY -21.0%). Starting from profit before tax ¥432.8B, addbacks included depreciation ¥383.7B, impairment losses ¥26.7B and other non-cash items, then adjusted for working capital changes and tax payments ¥105.2B. Operating CF before working capital changes was ¥721.9B; a decrease in trade receivables of ¥81.2B was a positive contribution, while a decrease in trade payables of ¥64.4B was a negative contribution, leading to a slight net outflow in working capital. Investing Cash Flow was -¥417.8B, primarily due to acquisition of tangible and intangible fixed assets ¥409.7B. Net proceeds from sale and purchase of investment securities resulted in net outflow of ¥23.0B (sale proceeds ¥100.4B less purchase ¥123.4B), with cash inflows from asset sales partially offsetting investment spending. Free Cash Flow (Operating CF + Investing CF) was positive at ¥238.3B, indicating solid cash generation after Capex. Financing Cash Flow was -¥267.5B; major outflows were share buybacks ¥300.1B and dividend payments ¥81.3B, while bond issuance ¥99.6B and long-term borrowings ¥197.9B supplemented funding. Cash and cash equivalents decreased by ¥20.9B during the period to a year-end balance of ¥429.9B. With Operating CF/Net Income at 2.5x, OCF/EBITDA 0.94x, and Free Cash Flow ¥238.3B, cash backing for profits is high quality; part of the special gains (proceeds from securities sales) is also visible in Investing CF, confirming cash generation from asset disposals.
Recurring earnings consist of Operating Income ¥317.8B and net non-operating income ¥60.9B (non-operating income ¥89.4B - non-operating expenses ¥28.5B); non-operating income includes dividends received ¥35.3B and interest received ¥10.5B. Non-operating income as a percentage of Revenue is 1.4%, indicating no excessive reliance on non-operating sources. One-off items include special gains ¥101.7B (investment securities disposal gains ¥95.6B) and special losses ¥47.7B (including impairment losses ¥26.7B and investment securities valuation losses ¥6.0B). The net special gain of ¥54.0B boosted profit before tax. Operating Cash Flow was ¥656.1B, 2.5x Net Income ¥266.0B, and the accrual ratio was -4.8%, showing robust cash backing for earnings; however, part of Net Income depends on low-repeatability special gains such as securities disposal gains, which are expected to lapse next year. Comprehensive income ¥666.8B substantially exceeded Net Income ¥266.0B; OCI totaled ¥400.8B, comprising market valuation gains on securities ¥205.4B, actuarial gains/losses related to retirement benefits ¥81.8B, deferred hedge gains/losses ¥34.4B, and equity-method affiliates’ OCI ¥33.5B, among others, with unrealized gains boosting equity. The divergence between Ordinary Income and Net Income (Net Income approximately -29.8% vs Ordinary Income) reflects the impact of special items and tax effects; core earning power should be assessed at the Ordinary Income level.
The company’s plan for the fiscal year ending March 2027 is Revenue ¥6,700B (YoY +2.9%), Operating Income ¥190B (YoY -40.2%), Ordinary Income ¥250B (YoY -34.0%), Net Income attributable to owners of the parent ¥230B (YoY -27.1%), EPS ¥63.19, and Dividend ¥11.25 (post-stock-split basis). The plan anticipates a significant YoY decline in Operating Income (-40.2%), reflecting normalization of electric margins, the lapse of special gains, smoothing of fuel cost adjustments, and higher maintenance and depreciation—conservative assumptions. Revenue is forecast to increase slightly, but profit levels are expected to revert to a normal range due to the loss of one-off items. The dividend forecast of ¥11.25 (post-split basis) suggests a substantive re-evaluation of payout levels; the high level of returns in the current period was supported by one-off gains and market conditions. Full-year progress may skew to the second half based on this year’s performance; timing lags in fuel cost adjustments and the trend in power retail spreads will be key to progress.
Annual dividend was ¥90 (interim ¥45 + year-end ¥45), with payout ratio 31.3% (calculation: ¥90 ÷ EPS ¥287.83). Total dividends amounted to ¥7.96B, with coverage versus Free Cash Flow ¥238.3B at 3.0x, indicating healthy coverage. Share buybacks of ¥300.1B were executed, bringing total return to ¥379.7B; Total Return Ratio was approximately 132% (Total return ¥379.7B ÷ Net Income ¥286.0B) at a high level. However, the current period’s Net Income was boosted by one-off gains such as investment securities disposal gains ¥95.6B, so the sustainability of total returns depends on balancing Operating CF generation (¥656.1B) with investment plans. The FY2027 dividend forecast is ¥11.25 (post-split basis), indicating a practical reduction in payout level and reflecting the one-off nature of current-period funding sources. Note that a 4-for-1 stock split was implemented effective April 1, 2026; dividends for FY2025 and FY2026 are presented as the actual pre-split amounts (¥90), while the FY2027 forecast is presented on a post-split basis (¥11.25). Sustainable return policy will depend on continued Operating CF generation and balancing with capital expenditures (Capex/Depreciation ≒ 1.07x), and on shifting to cash generation not reliant on one-off asset disposals.
Fuel-cost adjustment timing lag risk: In gas and electricity retailing, the fuel cost adjustment mechanism has timing lags, and during rapid procurement price spikes margins can be temporarily compressed. While gross margin improved this period due to stabilized fuel prices, turnaround risks could impair profitability. Regulatory or制度 changes affecting tariff approval processes or changes in renewable energy surcharges may also impact revenues.
Market price volatility risk of investment securities: Investment securities balance is ¥2,113.3B (YoY +24.3%), accounting for 26.1% of total assets, with valuation gains of ¥822.5B recorded in equity. Market deterioration could reverse valuation gains, reducing comprehensive income and net assets, lowering the Equity Ratio and increasing OCI volatility. The company recorded investment securities disposal gains ¥95.6B as special gains this period; the lapse of these one-off gains could reduce Net Income in subsequent years.
Procurement price volatility and spread compression risk in electricity retail: The electricity retail business (Revenue ¥988.7B, Operating Income ¥19.7B) achieved significant margin recovery this period, but risks remain from potential re-escalation of procurement prices and intensified retail competition leading to margin compression. Increased customer churn or declines in demand base would also pressure profitability; the company’s FY2027 plan assumes normalization (lower margins) for electricity.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 4.9% | 19.9% (6.5%–38.3%) | -15.0pt |
| Net Income Margin | 4.1% | 5.6% (3.8%–22.2%) | -1.6pt |
| Profitability ranks low within the sector; operating margin is 15.0pt below the median. Structural improvement of thin-margin operations is a key challenge. |
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -0.8% | -0.5% (-0.9%–13.1%) | -0.3pt |
| Revenue growth is around the median; with the sector in low-to-negative growth territory, the company remains broadly flat. |
※ Source: Company compilation
Sustainability of gross margin improvement and recovery in power profitability: Gross margin improved to 27.5% (+2.1pt YoY), and Electricity Operating Income rose +476.6%. Stabilized fuel prices and normalized power procurement helped, but the FY2027 plan assumes Operating Income -40.2%. The timing lag in fuel-cost adjustments for gas and electricity retail and effectiveness of customer retention measures will determine sustainability of core earnings.
Moving away from one-off gain dependence and sustainability of return policy: Current period Net Income benefited materially from special gains including investment securities disposal gains ¥95.6B, enabling dividends ¥90 and share buybacks ¥300.1B for a Total Return Ratio of 132%. However, the FY2027 dividend forecast ¥11.25 (post-split basis) signals a re-evaluation; after one-off gains lapse, returns are expected to normalize to levels supported by Operating CF. Operating CF ¥656.1B (2.5x Net Income) and Free Cash Flow ¥238.3B remain high-quality sources, and the balance between Capex (Capex/Depreciation ≒ 1.07x) and returns will be central to future shareholder return policy.
Financial position and volatility management of investment securities: Equity Ratio 59.0%, Debt/EBITDA 2.19x, Current Ratio 164.3% show strong financial health, but investment securities ¥2,113.3B (26.1% of total assets) materially affect equity via valuation. OCI within comprehensive income (OCI ¥400.8B including market valuation gains on securities ¥205.4B) boosted equity, but adverse market moves could reverse these gains. Managing unrealized gains in the long-term investment portfolio, timing of disposals, and AOCI volatility will affect net assets and dividend capacity.
This report was automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the firm based on published financial statements. Investment decisions are your own responsibility; consult a professional advisor as needed.