| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥537.9B | ¥560.8B | -4.1% |
| Operating Income / Operating Profit | ¥52.8B | ¥46.2B | +14.2% |
| Ordinary Income | ¥57.6B | ¥47.0B | +22.5% |
| Net Income / Net Profit | ¥38.8B | ¥33.4B | +16.2% |
| ROE | 2.7% | 2.4% | - |
FY2026 Q1 results: Revenue ¥537.9B (vs prior year -¥22.9B -4.1%), Operating Income ¥52.8B (vs prior year +¥6.6B +14.2%), Ordinary Income ¥57.6B (vs prior year +¥10.6B +22.5%), Quarterly Net Income attributable to owners of the parent ¥36.2B (vs prior year +¥6.2B +20.6%). Results show lower revenue but higher profits; fuel price declines and procurement optimization materially improved gross margins in the Gas and LPG businesses. Gross profit was ¥130.2B (gross margin 24.2%, +3.1pt YoY improvement), and operating margin improved to 9.8% (+1.6pt YoY), indicating higher profitability. Comprehensive income was ¥81.6B (YoY +95.0%), driven by substantial increases in valuation gains on securities (+¥18.0B) and deferred hedge gains/losses (+¥20.8B) reflecting higher financial asset valuation gains.
[Revenue] The Gas Business declined to ¥408.7B (YoY -8.7%), and the decline in the core business drove overall revenue down. While selling prices fell due to lower fuel prices and optimization of the procurement portfolio, LPG & Other Energy was ¥82.5B (YoY -7.9%) and Other businesses outside reportable segments expanded sharply to ¥75.3B (YoY +62.4%). The revenue share of Other businesses rose to 14.0% (prior year 6.9%), indicating greater portfolio diversification. External-customer revenue composition: Gas 74.5%, LPG & Other 15.3%, Other 10.2%.
[Profitability] Despite lower revenue, gross profit increased to ¥130.2B (gross margin 24.2%, +3.1pt YoY). Resolution of fuel cost timing lags and lower procurement costs contributed to spread expansion. Operating Income was ¥52.8B (operating margin 9.8%, +1.6pt YoY). By segment, Gas operating income was ¥51.9B (margin 12.7%, +0.6pt YoY), LPG & Other ¥8.5B (margin 10.3%, +3.6pt YoY), showing improved profitability in major segments. Other businesses outside reportable segments had revenue surge but operating income of ¥0.2B (margin 0.3%, -3.6pt YoY) and substantially worse profitability, likely due to company-wide cost allocation and initial costs for business expansion. Ordinary Income ¥57.6B reflects non-operating income of ¥5.5B (interest income ¥0.1B, equity-method profit/loss ¥0.5B, etc.) less non-operating expenses ¥0.7B (interest expense ¥0.5B, foreign exchange losses ¥0.1B, etc.), so non-operating items were roughly neutral. Income taxes ¥18.8B (effective tax rate 32.7%) and non-controlling interests ¥2.6B were deducted, yielding quarterly Net Income attributable to owners of the parent ¥36.2B (net margin 6.7%, +1.4pt YoY). In conclusion, the decline in revenue but improved profitability structure drove profit growth.
Gas Business: Revenue ¥408.7B (-8.7%), Operating Income ¥51.9B (+6.7%), operating margin 12.7%. Revenue decline was mainly due to lower selling prices from reduced fuel prices, but improved gross margin drove higher operating profit. LPG & Other Energy: Revenue ¥82.5B (-7.9%), Operating Income ¥8.5B (+37.4%), operating margin 10.3%; procurement cost improvements and optimized sales mix raised margins by +3.6pt YoY. Other businesses outside reportable segments: Revenue ¥75.3B (+62.4%), Operating Income ¥0.2B (-88.4%), operating margin 0.3%. Expansion in order-based construction, gas equipment sales, renovation, leasing, etc., led to sharp revenue growth but startup costs and company-wide cost allocation significantly compressed margins. Company-wide cost allocation was ¥-7.7B (prior year ¥-10.4B), a reduction that contributed to improving consolidated operating income through head office SG&A efficiency.
[Profitability] Operating margin 9.8% (prior year 7.6%), Net margin 7.2% (prior year 5.9%) — profitability improved at each level. ROE 2.7% (annualized) remains low due to a strong capital base (Equity Ratio 75.1%), but shows improvement YoY. [Cash Quality] Interest coverage 97.8x (Operating Income ¥52.8B ÷ interest expense ¥0.54B) indicates negligible interest burden. Non-operating income ¥5.5B (1.0% of sales) is small and recurring; majority of profit is generated by core operations. [Investment Efficiency] Total asset turnover 0.28x (annualized 1.12x), ROIC 2.7% (annualized) reflect capital-intensive business characteristics and low efficiency. Inventory turnover days 120 days, receivables turnover days 137 days, CCC 183 days indicate room to improve working capital efficiency. [Financial Soundness] Equity Ratio 75.1% (prior year 70.8%), current ratio 269.8%, quick ratio 253.7% — high stability. Interest-bearing debt ¥126.4B (corporate bonds ¥50.5B, long-term borrowings ¥111.6B, short-term borrowings ¥14.8B), Debt/Equity 0.09x, Debt/Capital 8.1% — conservative leverage. Cash and deposits ¥236.4B and investment securities ¥296.9B provide a large liquidity buffer.
Despite higher operating income, inventories rose to ¥38.0B (prior year ¥21.2B, +79.1%), with a sharp increase in fuel and merchandise inventories. Accounts receivable remained high at ¥202.1B (prior year ¥213.6B), while accounts payable fell significantly to ¥83.2B (prior year ¥182.9B, -54.5%), expanding working capital to a 183-day level. As a result, cash and deposits decreased to ¥236.4B (prior year ¥331.6B, -28.7%), and short-term borrowings increased to ¥14.8B (prior year ¥2.3B), apparently to bridge seasonal and fuel procurement timing needs. Tangible fixed assets were ¥619.7B (prior year ¥603.2B) reflecting ongoing CAPEX; intangible fixed assets were ¥248.7B (prior year ¥241.1B) slightly up. Investment securities were ¥296.9B (prior year ¥270.4B), and deferred tax liabilities increased to ¥62.8B (prior year ¥47.8B, +31.4%) alongside higher valuation differences. Of the ¥81.6B comprehensive income, valuation difference on available-for-sale securities +¥18.0B and deferred hedge gains/losses +¥20.8B reveal that the quality of net assets depends significantly on financial asset valuations.
Of Ordinary Income ¥57.6B, non-operating income ¥5.5B (1.0% of revenue) is small and comprises recurring items: interest income ¥0.1B, dividend income ¥0.1B, equity-method investment profit/loss ¥0.5B, foreign exchange gains ¥0.1B, etc. Non-operating expenses ¥0.7B (interest expense ¥0.5B, foreign exchange losses ¥0.1B) are within normal ranges; no evidence of temporary factors inflating profits. No extraordinary gains/losses were recorded. Pre-tax profit ¥57.6B less income taxes ¥18.8B yields Net Income ¥38.8B, primarily generated from core operations. On an accrual basis, rapid inventory accumulation and large reduction in accounts payable have delayed conversion of operating profit into operating cash, suggesting cash outflows from inventory build-up and accelerated payment cycles. The gap between comprehensive income ¥81.6B and net income ¥38.8B is mainly due to Other Comprehensive Income ¥43.0B (valuation difference on available-for-sale securities +¥18.0B, deferred hedge gains/losses +¥20.8B, foreign currency translation adjustments +¥4.6B, etc.), indicating that capital quality is exposed to market fluctuations.
Full Year / FY forecast: Revenue ¥2,011.3B (flat YoY), Operating Income ¥96.2B (YoY -31.6%), Ordinary Income ¥104.2B (YoY -29.4%). Q1 progress rates: Revenue 26.7% (around the typical 25%), Operating Income 54.9%, Ordinary Income 55.3%, Net Income 42.6% (parent-company-owners basis ¥36.2B ÷ full-year forecast ¥91.1B), indicating profit momentum running about 5pt ahead of plan. Full-year operating profit is planned lower due to gas tariff revisions, but Q1 outperformance occurred because of falling fuel prices and spread improvement. Assuming continued high growth and margin improvement in LPG & Other Energy, the probability of achieving the full-year plan in H2 is high. No revisions to earnings forecasts or dividend forecasts were made this quarter; the company maintains conservative guidance.
Full-year dividend forecast ¥22.00 per share (interim & year-end ¥11.00 each). Payout Ratio vs FY EPS forecast ¥120.89 is 18.2%, which is conservative. Planed dividend is ¥1.5 increase from prior year actual ¥20.5. Q1 EPS was ¥48.03 (prior year ¥39.88, +20.4%), representing 39.7% of the full-year forecast, indicating steady accumulation of profits. With cash and deposits ¥236.4B, investment securities ¥296.9B liquidity buffers, Equity Ratio 75.1%, and Debt/Equity 0.09x conservative leverage, dividend sustainability is high. Total dividends are estimated at approximately ¥1.65B (shares outstanding 75.4 million × ¥22), which is modest relative to Q1 Net Income ¥36.2B; full-year payout ratio around 18% leaves room for flexibility. No share buyback was indicated; shareholder returns are by dividends only.
Fuel Price and FX Risk: Of Revenue ¥537.9B, Gas ¥408.7B (76.0% share) and LPG ¥82.5B (15.3% share) indicate high concentration in energy businesses. Increases in LNG/LPG procurement prices and yen depreciation can compress gross margins. Q1 improved gross margin to 24.2% (prior year 21.1%) due to lower fuel costs, but reversals could rapidly erode profitability. Recognition of deferred hedge gains/losses ¥20.9B suggests timing lags in fuel/FX hedges, increasing profit volatility due to delayed tariff pass-through.
Working Capital Management Risk: Inventories ¥38.0B (+79.1%), accounts payable ¥83.2B (-54.5%) — inventory build-up and shortened payment cycles expanded CCC to 183 days. Receivables days 137 and lengthened collections, cash and deposits fell to ¥236.4B (-28.7%), and short-term borrowings rose to ¥14.8B. While seasonality and advanced fuel procurement timing appear causal, persistent deterioration in working capital efficiency could force trade-offs with growth investments.
Business Portfolio Concentration Risk: Gas operating income ¥51.9B accounts for 98% of consolidated operating income ¥52.8B, indicating extreme single-segment dependence. Other businesses grew revenue to ¥75.3B (+62.4%) but operating income only ¥0.2B (margin 0.3%), so diversification benefits are still limited. Intensified competition in gas retail or regulatory changes could directly impact the majority of earnings.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 9.8% | – | – |
| Net Margin | 7.2% | – | – |
Due to limited reference data, quantitative positioning within the industry is difficult, but Q1 operating margin 9.8% and net margin 7.2% show YoY improvement.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -4.1% | – | – |
Revenue decline of -4.1% reflects price adjustments from lower fuel prices rather than volume or customer-base contraction.
※Source: Company compilation
Notable margin improvement despite revenue decline: fuel cost adjustments and spread expansion raised operating margin to 9.8% (prior year 7.6%) and net margin to 7.2% (prior year 5.9%). LPG & Other Energy operating income grew +37.4%, showing high-growth and higher-margin conversion and improved portfolio quality. Q1 profit progress vs full-year plan (Operating 54.9%, Ordinary 55.3%) is about 5pt ahead of a standard pace, raising the probability of achieving conservative guidance.
Financial soundness is very high: Equity Ratio 75.1%, current ratio 269.8%, Debt/Equity 0.09x, Interest Coverage 97.8x indicate strong resilience to interest rate increases. Liquidity buffers of cash ¥236.4B and investment securities ¥296.9B enable balancing dividends (payout ~18%) and CAPEX. However, ROE 2.7% and ROIC 2.7% show low capital efficiency, and expansion of working capital (CCC 183 days) and delayed cash conversion are challenges. Improving inventory turnover, receivables collection, and optimizing invested capital are key to sustainable value creation.
This report is an earnings analysis document automatically generated by AI analyzing XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by our firm based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed before making investment decisions.