| Indicator | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2618.2B | ¥2544.4B | +2.9% |
| Operating Income / Operating Profit | ¥124.6B | ¥105.3B | +18.4% |
| Ordinary Income | ¥125.8B | ¥106.1B | +18.6% |
| Net Income / Net Profit | ¥6.4B | ¥33.8B | -81.0% |
| ROE | 0.5% | 3.0% | - |
For the fiscal year ended March 2026, Revenue was 2,618B yen (YoY +74B yen +2.9%), Operating Income was 125B yen (YoY +19B yen +18.4%), Ordinary Income was 126B yen (YoY +20B yen +18.6%), and Net Income attributable to owners of the parent was 71B yen (YoY +9B yen +12.3%), achieving revenue and profit growth. Operating margin improved to 4.8% (up +0.7pt from 4.1% a year earlier) and gross margin improved to 31.0% (up +0.7pt from 30.3%), indicating enhanced profitability. By segment, the core Gas Business recorded Operating Income of 79B yen (+39.3%) showing significant profit growth, Power & Other Energy Business turned profitable to 12B yen (+442%), while the Real Estate Business, despite revenue expansion, saw Operating Income decline to 33B yen (-20.2%). Operating Cash Flow was 253B yen (down from 386B yen -34.3%), Investing Cash Flow was -338B yen, and aggressive investment led to Free Cash Flow of -85B yen. Dividends were maintained at 70 yen per year (same as prior year), share buybacks of 20B yen were executed, bringing the Total Return Ratio to approximately 65%.
[Revenue] Revenue was 2,618B yen (+2.9%). By segment, Gas Business was 1,535B yen (-3.5%) and declined, while Power & Other Energy Business was 314B yen (+35.0%) and Real Estate Business was 477B yen (+15.4%) which drove growth. The decline in the Gas Business was mainly due to price adjustments associated with normalization of fuel prices and impacts on sales volumes. Power & Other Energy saw substantial revenue growth due to normalization of wholesale/retail prices and effective hedging strategies, and Real Estate expanded steadily in both development and leasing. Revenue composition was Gas 54.4%, Real Estate 18.2%, Power 12.0%, LPG 10.0%, and Other 5.4%, indicating a portfolio with high dependence on Gas.
[Profitability] Cost of sales was 1,806B yen, resulting in a gross margin of 31.0% (up +0.7pt from 30.3%), and gross profit was 813B yen (+5.5%). Operating Income was 125B yen (+18.4%) and operating margin improved to 4.8% (up +0.7pt from 4.1%), reflecting improved profitability. Non-operating items were net +1B yen (non-operating income 34B yen, non-operating expenses 32B yen), a minor effect; major items included dividend income received 12B yen and interest expense 21B yen. Extraordinary items were net -1B yen (extraordinary gains 16B yen, extraordinary losses 17B yen), with gains mainly from sale of investment securities 12B yen and gain on sale of fixed assets 3B yen, and losses mainly from impairment losses 6B yen and loss on disposal of fixed assets 3B yen. Profit before income taxes was 125B yen; after corporate taxes of 50B yen (effective tax rate 39.9%) and non-controlling interests of 4B yen, Net Income attributable to owners of the parent was 71B yen (+12.3%). The divergence between Ordinary Income 126B yen and Net Income attributable to owners of the parent 71B yen is driven primarily by tax burden and net extraordinary items, and the impact of one-off factors is limited. In conclusion, revenue and profit increased, and profitability improvements in operating margin and gross margin strengthened the earnings profile.
The Gas Business recorded Revenue 1,535B yen (-3.5%), Operating Income 79B yen (+39.3%), and margin 5.2% (improved +1.6pt from 3.6% prior year). Despite revenue decline from unit price adjustments due to fuel price normalization, improved spreads and cost efficiencies delivered substantial profit growth. The Real Estate Business posted Revenue 477B yen (+15.4%), Operating Income 33B yen (-20.2%), and margin 7.0% (down -3.1pt from 10.1% prior year). Although revenue expanded, profit declined due to lower margins on development projects, suppressing company-wide margins. Power & Other Energy Business achieved Revenue 314B yen (+35.0%), Operating Income 12B yen (+442%), and margin 3.9% (improved +2.9pt from 1.0%), turning profitable as wholesale/retail spread improvements and effective hedging contributed to a large margin improvement. LPG Business had Revenue 261B yen (-2.9%), Operating Income 0.01B yen (+101%), and margin 0.0%, remaining effectively low-margin. Other Businesses posted Revenue 236B yen (+6.1%), Operating Income 0.6B yen (-79.2%), and margin 0.3%, a profit decline. The Gas Business accounted for 63.5% of Operating Income, and improvement in the core business margin drove company performance.
[Profitability] Operating margin was 4.8% (up +0.7pt from 4.1%), and gross margin was 31.0% (up +0.7pt from 30.3%), indicating improved profitability. ROE was 0.5% (down from 6.3% prior year), attributable to a large denominator of equity with Net Income attributable to owners of the parent of 71B yen (annualized) against average shareholders' equity of 1,152B yen. ROA (on Ordinary Income basis) was 2.8% (up +0.4pt from 2.4%). EBITDA (Operating Income + Depreciation & Amortization) was 282B yen, and EBITDA margin was 10.8%, which better indicates cash-generation capability relative to Net Income margin of 0.2%. [Cash Quality] Operating Cash Flow was 253B yen, 3.5x Net Income 71B yen, indicating high quality. OCF/EBITDA was 0.90x, and accrual ratio was -3.9%, both favorable. [Investment Efficiency] Capital expenditure (tangible + intangible) totaled over 323B yen, about 2.1x depreciation of 157B yen, reflecting active growth and renewal investment. [Financial Health] Equity Ratio was 26.5% (improved +3.3pt from 23.2%), Current Ratio was 93.9% indicating some short-term liquidity caution. Interest-bearing debt was 1,802B yen, Debt/Equity ratio was 2.78x, and Debt/EBITDA was 6.4x, maintaining high leverage. Interest coverage was 5.9x on an EBIT basis and 13.4x on an EBITDA basis, showing capacity to service interest.
Operating Cash Flow was 253B yen (down 133B yen -34.3% from 386B yen prior year). Subtotal (pre-tax CF) was 291B yen; working capital changes contributed with inventory decrease +61B yen and trade receivables decrease +34B yen providing cash, while trade payables decrease -51B yen was a cash outflow. After payment of corporate taxes -32B yen, Operating Cash Flow was 3.5x Net Income 71B yen, indicating high quality. Investing Cash Flow was -338B yen, primarily due to acquisition of tangible and intangible fixed assets -298B yen, loan advances -57B yen, and acquisition of investment securities -33B yen. Loan repayments +13B yen and sale of investment securities +25B yen contributed cash inflows. As a result, Free Cash Flow (Operating CF + Investing CF) was -85B yen. Financing Cash Flow was +29B yen, with long-term borrowings raised +440B yen, long-term borrowings repaid -348B yen, bond redemptions -106B yen, and short-term borrowings increased +90B yen to secure external funds, and shareholder returns included dividend payments -26B yen and share buybacks -20B yen. Cash decreased by -56B yen to an ending balance of 235B yen, and with short-term borrowings of 460B yen, the cash/short-term liabilities ratio was 0.51x, signaling maturity mismatch risk.
Earnings quality is good: Operating Income of 125B yen was generated from core operations, and non-operating items net +1B yen (non-operating income 34B yen, non-operating expenses 32B yen), which is minor at 0.05% of Revenue. Major non-operating income items were dividend income received 12B yen and interest income received 2B yen, reflecting recurring income. Non-operating expense was mainly interest expense 21B yen, which is within a reasonable range relative to interest-bearing debt of 1,802B yen. Extraordinary items were net -1B yen (extraordinary gains 16B yen, extraordinary losses 17B yen), minor, with gains from sale of investment securities 12B yen and sale of fixed assets 3B yen, and losses from impairment 6B yen and disposal of fixed assets 3B yen. The difference between Ordinary Income 126B yen and Profit before tax 125B yen is the net extraordinary loss of -1B yen, and the gap to Net Income 71B yen is primarily due to corporate taxes 50B yen (effective tax rate 39.9%) and non-controlling interests 4B yen. Operating Cash Flow is 3.5x Net Income, OCF/EBITDA is 0.90x, and accrual ratio is -3.9%, indicating strong cash generation and limited reliance on one-off profits. Goodwill amortization of 0.5B yen is 0.2% of EBITDA and has negligible impact; distortions specific to JGAAP are small.
Full year forecast: Revenue 2,530B yen (YoY -3.4%), Operating Income 100B yen (YoY -19.8%), Ordinary Income 120B yen (YoY -4.6%), Net Income attributable to owners of the parent 80B yen (YoY +12.0%), EPS 222.27 yen, and dividend of 35 yen are assumed. Compared with current fiscal results (Revenue 2,618B yen, Operating Income 125B yen, Ordinary Income 126B yen, Net Income 71B yen), this guidance is conservative, likely incorporating timing lags in unit price adjustments from fuel price normalization, normalization of power spreads, and increases in depreciation and fixed costs. Operating Income is projected to decline by -20% year-on-year, but Ordinary Income is expected to fall only -5%, assuming improvement in non-operating items. Forecast dividend 35 yen is half of current-year dividend 70 yen (interim 35 yen + year-end 35 yen), implying a cut is assumed. Progress cannot be evaluated on a full-year basis at this stage, but given that current results exceeded forecasts, next fiscal year is expected to revert to investment-prioritized capital allocation with conservative guidance.
Annual dividend was maintained at 70 yen (interim 35 yen, year-end 35 yen), unchanged from prior year. Payout Ratio was 40.7% (total dividends 26B yen / Net Income attributable to owners of the parent 64B yen, based on company disclosure). Share buybacks of 20B yen were executed, and combined with dividends 26B yen total returns were about 46B yen, resulting in a Total Return Ratio of approximately 64.6% ((dividends 26B yen + share buybacks 20B yen = 46B yen) / Net Income attributable to owners of the parent 71B yen). Operating Cash Flow of 253B yen provides 9.8x coverage for dividends, indicating sufficient coverage, but Free Cash Flow is -85B yen, so shareholder returns were funded from Operating CF while investment funding was supplemented by external financing. Next fiscal year forecast dividend is 35 yen (assuming annualized 70 yen, this is a half-year amount), representing a payout ratio of approximately 15.7% against forecast EPS 222.27 yen, a conservative level. Total dividends plus buybacks were executed within Operating CF capacity, so sustainability is maintained, but prolonged FCF deficits could constrain discretion to maintain dividends.
Liquidity / Refinancing Risk: With Current Ratio 93.9% and cash 234.8B yen versus short-term borrowings 460.1B yen, cash/short-term liabilities ratio 0.51x shows a clear maturity mismatch. If refinancing of short-term liabilities becomes difficult, liquidity could be strained. Investment securities of 721B yen could function as a liquidity buffer but include market and liquidity risk.
Leverage / Interest Rate Risk: Interest-bearing debt of 1,802B yen, Debt/Equity 2.78x, and Debt/EBITDA 6.4x indicate sustained high leverage. In a rising interest rate environment, interest burden will increase. Although interest coverage is currently 5.9x on an EBIT basis, concurrent declines in operating income and rising interest could reduce interest-bearing capacity and increase covenant breach risk.
Segment Concentration / Margin Downside Risk: The portfolio is concentrated with the Gas Business representing 54.4% of Revenue and 63.5% of Operating Income, making the company sensitive to fuel price and demand fluctuations. Continued margin deterioration in Real Estate (7.0%, down -3.1pt from 10.1%) and low margins in LPG (effectively 0.0%) could dilute company-wide margins.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 4.8% | 19.9% (6.5%–38.3%) | -15.2pt |
| Net Income Margin | 0.2% | 5.6% (3.8%–22.2%) | -5.4pt |
Both operating and net margins are well below industry medians, placing the company in the lower segment within the utilities sector in terms of profitability.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 2.9% | -0.5% (-0.9%–13.1%) | +3.4pt |
Revenue growth outperformed the industry median by +3.4pt, indicating relatively favorable growth within the sector.
※ Source: Company compilation
Balancing profitability improvement and active investment: Operating margin 4.8% (+0.7pt) and gross margin 31.0% (+0.7pt) show a strengthened earnings profile, aided by the Power & Other Energy Business turning profitable. Capex/depreciation is about 2.1x, reflecting active growth and renewal investments that may expand the mid-term rate base and improve earnings power. However, Debt/EBITDA 6.4x, Current Ratio 93.9%, and cash/short-term liabilities 0.51x are at cautionary levels for liquidity and leverage; thus, investment recovery progress and cash flow management are critical priorities.
Cash generation and sustainability of shareholder returns: Operating Cash Flow is 3.5x Net Income, OCF/EBITDA 0.90x, and accrual ratio -3.9%, indicating high-quality cash generation. Payout Ratio 40.7% and Total Return Ratio approximately 64.6% (including share buybacks) show proactive returns, but FCF is -85B yen, meaning returns are funded from Operating CF with investment funded externally. Next fiscal year guidance is conservative (Operating Income -20%), and a return to investment-priority capital allocation could occur; sustainability of dividends depends on continued Operating CF generation and normalization of FCF.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial disclosure data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions are your responsibility; please consult a professional advisor if necessary.