Improving the efficiency of the environmental resources development business and expanding the new power business

「As the stable operation of the Tomakomai Power Plant reduced plastic fuel inventories and contributed to higher earnings, operating income was ¥569 million, compared with an operating loss of ¥164 million in the same period of the previous year.」

「In the resource recycling segment, revenue from the power generation business increased 10.5% year on year as electricity sales to higher-priced retail customers increased. Revenue also increased in the waste liquid treatment business, up 1.3%, and the new electricity business, up 17.8%. Operating income was ¥1,726 million, down 38.4% year on year, due to higher repair costs from the statutory inspection in the power generation business, the extended period during which the plant was unable to operate at full capacity thereafter, and the provision for processing costs related to the increase in plastic fuel inventories resulting from the suspension of operations.」

「In the resource recycling segment, revenue from the landfill business decreased 14.0% year on year and revenue from the plastics business decreased 1.5% due mainly to temporary restrictions on accepting materials following its incorporation as a separate company. However, revenue from the waste liquid treatment business increased 11.9%, while revenue from the power generation business increased 7.0% and revenue from the new electricity business increased 19.8%, as total electricity sales increased following the development of new retail customers. As a result, revenue increased to ¥9,984 million, up 3.5% year on year. Operating income was ¥293 million, down 74.9% year on year, partly due to the extended period during which the Tomakomai Power Plant was unable to operate at full capacity after its statutory inspection and the provision for processing costs related to the increase in plastic fuel inventories resulting from the suspension of operations.」

「In the Environmental Resources Development business, plastic fuel revenue increased 6.7% year on year, waste-liquid treatment revenue 7.3% and landfill treatment revenue 13.1%. However, power plant revenue was affected by a substantial decline in electricity market prices at the Tomakomai Power Plant. Although the company shifted to electricity sales centered on retail, where unit prices are higher than wholesale prices, contracted electricity sales unit prices did not reach the level of the previous fiscal year.」

「The new power business judged it difficult to secure profitability because of higher electricity procurement costs and has been downsizing since the previous year. In the Environmental Resources Development segment, power plant revenue increased 70.1% from the previous fiscal year because the contracted electricity sales unit price at the Tomakomai Power Plant rose.」

「Revenue in the Environmental Resources Development segment increased 10.8% year on year as the contracted electricity sales unit price for the current fiscal year rose. However, revenue in the new power segment declined 54.6% year on year as the business was downsized to avoid the risks associated with higher electricity procurement costs.」

「Revenue in the Environmental Resources Development segment increased 11.9% year on year as the contracted electricity sales unit price for the current fiscal year rose. However, revenue in the new power segment declined 54.2% year on year as the business was downsized to avoid the risks associated with higher electricity procurement costs. In the Environmental Resources Development segment, lower waste acceptance volumes reduced plastic fuel revenue 3.2% year on year, waste-liquid treatment revenue 2.7% and landfill treatment revenue 0.3%. In contrast, higher contracted electricity sales unit prices at the Tomakomai Power Plant increased power plant revenue 66.3%. As a result, revenue was ¥9,198 million, up 11.9% year on year. Although repair costs related to the statutory inspection of the Tomakomai Power Plant were recorded, higher contracted electricity sales unit prices improved profitability, resulting in operating profit of ¥1,981 million, up 27.1% year on year.」

「The new power business judged it difficult to secure profitability because of higher electricity procurement costs and has been downsizing since the previous year. As a result, revenue was ¥583 million, down 54.8% year on year. Operating profit was ¥32 million, compared with an operating loss of ¥28 million in the same period of the previous year, as a review of the business structure improved profitability.」

「By the end of the cumulative third quarter of the current fiscal year, the company had completed the transfer of unprofitable electricity retail contracts to agency contracts with other companies. It also switched electricity procurement from the market to bilateral procurement, eliminating price fluctuation risk and enabling the new power business to record operating profit.」

「During the second quarter of the current fiscal year, from 1 July to 30 September 2022, the company made bilateral procurement its main source of electricity procurement, eliminating price fluctuation risk related to electricity procurement. As a result, revenue was ¥2,914 million, down 6.9% year on year. Operating profit was ¥133 million, up 417.3% year on year, as eliminating electricity procurement price fluctuation risk improved profitability, while surplus electricity procured through bilateral transactions was sold into the wholesale electricity market, where prices were surging.」

「During the cumulative first quarter of the current fiscal year, the company had largely completed the transfer of unprofitable electricity retail contracts to agency contracts with other companies. As a result of stopping new applications for electricity supply-and-demand contracts and moving some electricity retail contracts to agency contracts, revenue declined 68.2% from the fourth quarter of the previous fiscal year. However, because electricity unit prices and supply volumes were higher than in the same period of the previous year, revenue was ¥1,289 million, up 10.8% year on year.」

「To resolve this situation, the group changed its policy to enter into supply contracts within the scope of bilateral procurement. It has substantially reduced price fluctuation risk related to electricity procurement as of the end of the current fiscal year by stopping new applications for electricity supply-and-demand contracts, moving some electricity retail contracts to agency contracts, and allowing bilateral wholesale contracts that were not expected to be profitable to expire at the end of March 2022 without renewal.」

「Under the medium-term management plan for fiscal 2019 to fiscal 2021, the company positioned the new power business as a growth business that would become a core business and worked to expand earnings. Meanwhile, market prices for electricity procurement had surged for 2 consecutive periods, and market prices remained high for a longer period in the current fiscal year than in the previous fiscal year. In response, the company revised its full-year earnings forecast on 28 January 2022. As the business environment had changed substantially since the medium-term management plan was formulated, and in view of the company's current business scale, it will reduce the scale of the new power business and fundamentally review its business structure in order to reduce market risk.」

「In the Environmental Resources Development segment, higher waste acceptance volumes increased organic wastewater treatment revenue 9.6% year on year and landfill treatment revenue 10.8%. Although acceptance volumes increased, lower treatment unit prices reduced plastic fuel revenue 0.8% year on year. Power plant revenue also declined 10.2% year on year because the Sanix Energy Tomakomai Power Plant was shut down in April for its biennial statutory inspection. As a result, revenue was ¥8,194 million, down 1.2% year on year. Operating profit was ¥1,207 million, down 38.9% year on year, due to lower revenue and repair costs associated with the statutory inspection. In the Energy segment, retail electricity sales increased as the number of new power contracts grew. However, new power business revenue declined 24.8% year on year because, from the current period, the distribution flow was changed so that electricity was sold wholesale directly to external customers from the Tomakomai Power Plant without passing through the new power business, and because some transactions shifted to net revenue recognition following adoption of the Accounting Standard for Revenue Recognition and other standards. Operating loss was ¥124 million, compared with an operating loss of ¥33 million in the same period of the previous year, as higher electricity procurement unit prices from the power market and other sources increased costs.」

「In the Environmental Resources Development segment, higher waste acceptance volumes increased plastic fuel revenue 1.6% year on year, organic wastewater treatment revenue 8.2% and landfill treatment revenue 10.4%. In contrast, power plant revenue declined 22.2% year on year because the Sanix Energy Tomakomai Power Plant was shut down in April for its biennial statutory inspection. Operating profit was ¥174 million, down 81.5% year on year, due to lower revenue and repair costs associated with the statutory inspection. In the Energy segment, retail electricity sales increased as the number of new power contracts grew. Although costs increased with the addition of personnel to expand the third-party-owned solar power generation model, lower electricity procurement costs in the new power business resulted in operating profit of ¥35 million, compared with an operating loss of ¥80 million in the same period of the previous year.」

「In the Environmental Resources Development segment, plastic fuel revenue increased 2.2% from the previous fiscal year despite a decline in acceptance volumes caused by the stagnation of overall economic activity due to the spread of COVID-19, as the company prioritized improved quality and profitability of recycled fuel. In the Energy segment, revenue was ¥10,475 million, up 14.7% from the previous fiscal year, owing to higher retail volumes from an increase in new power contracts, higher wholesale volumes to retail electricity providers and the launch of a third-party-owned solar power generation model for detached homes through collaboration with other companies. Operating loss was ¥529 million, compared with an operating loss of ¥485 million in the previous fiscal year, because electricity procurement costs rose more than expected as wholesale electricity market prices surged due to winter weather and LNG shortages.」

「The Environmental Resources Development segment was affected by the stagnation of overall economic activity due to the spread of COVID-19. Although the volume of waste plastics accepted declined 7.1% year on year, screening of accepted materials and other measures increased plastic fuel revenue 5.5%, while higher power generation increased power plant revenue 5.5%. As a result, revenue was ¥12,647 million, up 2.9% year on year. Operating profit was ¥2,998 million, up 29.4% year on year, owing to improved profitability through screening of accepted materials and other measures, as well as relatively lower repair costs because the Tomakomai Power Plant underwent periodic repairs in the previous fiscal year. In the Energy segment, the number of retail electricity contracts increased 64.9%, driven by strong growth in low-voltage contracts. However, the company reduced electricity procurement through bilateral transactions to cut surplus power sold into the JEPX wholesale electricity market in order to improve profitability. As a result, lower wholesale volumes to JEPX reduced revenue to ¥6,790 million, down 4.4% year on year. Although personnel and other costs increased due to additional sales staff hired to promote a third-party-owned solar power generation model for detached homes, improved profitability in the new power business resulting from reduced electricity procurement through bilateral transactions led to operating profit of ¥28 million, up 180.0% year on year.」

「Although the volume of waste plastics accepted declined, screening of accepted materials increased plastic fuel revenue 9.4% year on year. In contrast, power plant revenue declined 4.5% year on year, organic wastewater treatment revenue fell 4.2% due to lower acceptance volumes, and landfill treatment revenue declined 18.3%. As a result, revenue was ¥8,296 million, up 3.1% year on year. Operating profit was ¥1,974 million, up 19.3% year on year, due to improved profitability through screening of accepted materials for waste plastics and other measures.」

「Although the volume of waste plastics accepted declined, screening of accepted materials increased plastic fuel revenue 8.8% year on year. In contrast, power plant revenue declined 9.7% year on year, organic wastewater treatment revenue fell 5.9% due to lower acceptance volumes, and landfill treatment revenue declined 24.9%. As a result, revenue was ¥4,131 million, up 0.9% year on year. Operating profit was ¥942 million, up 8.7% year on year, as profitability improved through screening of accepted materials for waste plastics and other measures. In the Energy business, high-voltage retail volumes declined as the number of contracts decreased, while wholesale volumes to the electricity market also declined due in part to the partial termination of bilateral procurement. Revenue was ¥1,963 million, down 16.2% year on year. Operating loss widened to ¥80 million from an operating loss of ¥41 million in the same period of the previous year, mainly due to the decline in revenue.」

「In the Environmental Resources Development segment, the volume of waste plastics accepted declined due to screening of accepted materials, but plastic fuel revenue increased 17.4% from the previous fiscal year as the company prioritized profitability and quality improvement. Power plant revenue increased 43.5% from the previous fiscal year because the Tomakomai Power Plant had been shut down for 6 months due to damage from the Hokkaido Eastern Iburi Earthquake during the third and fourth quarters of the previous fiscal year, from September 2018 to March 2019. In the Energy segment, revenue declined because retail sales fell due in part to a decrease in the number of high-voltage contracts and wholesale unit prices declined as wholesale market prices on the Japan Electric Power Exchange (JEPX) fell. Operating loss was ¥485 million, compared with operating profit of ¥412 million in the previous fiscal year, due to lower revenue and lower margins resulting in part from the higher proportion of wholesale sales.」

「Although the volume of waste plastics accepted declined, screening of accepted materials focused on profitability and quality increased plastic fuel revenue 16.0% year on year. At the Tomakomai Power Plant, power plant revenue increased 27.7% year on year because the third quarter of the previous fiscal year was affected by a shutdown following earthquake damage. As a result, revenue was ¥12,294 million, up 14.8% year on year. Operating profit was ¥2,317 million, up 208.4% year on year, owing to screening of accepted materials in waste plastics and organic wastewater treatment, as well as operation of the Tomakomai Power Plant. In the Energy business, retail sales revenue declined due in part to a decrease in the number of high-voltage contracts, while lower wholesale market prices also reduced revenue to ¥7,103 million, down 13.2% year on year. Operating profit was ¥10 million, down 96.9% year on year, due to lower revenue and a decline in margins caused in part by the higher proportion of wholesale sales.」

「Although the volume of waste plastics accepted declined, screening of accepted materials increased plastic fuel revenue 14.6% year on year. As a result, revenue was ¥8,045 million, up 10.6% year on year. Operating profit was ¥1,655 million, up 133.5% year on year, owing to screening of accepted materials in waste plastics and organic wastewater treatment, as well as cost reductions from more rigorous cost reviews. In the Energy business, lower retail electricity volumes due in part to a decline in the number of high-voltage contracts reduced revenue to ¥5,041 million, down 13.1% year on year. The resulting operating loss was ¥30 million, compared with operating profit of ¥253 million in the same period of the previous year, mainly due to the decline in revenue.」

「From the first quarter of the current fiscal year, the company changed its segment classification in connection with the organizational changes implemented on 1 April 2019. The new power business, which had been included in the Environmental Resources Development segment, and the Energy Business Development Department, newly established on 1 April 2019, are now classified as the Energy segment.」

「The company tightened screening of accepted materials to improve plastic fuel quality, while acceptance volumes remained firm, increasing plastic fuel revenue 14.0% year on year. Although the Tomakomai Power Plant shutdown reduced revenue, the expansion of transaction volume in the new power business increased electricity sales revenue 4.6% year on year. As a result, revenue was ¥23,612 million, up 8.5% from the previous fiscal year. Although the decline in profit attributable to the Tomakomai Power Plant was substantial, improved profitability in plastic fuel and better margins resulting from measures to stabilize electricity procurement costs in the new power business enabled the company to secure operating profit of ¥836 million, down 14.0% from the previous fiscal year.」

「The company tightened screening of accepted materials to prioritize plastic fuel quality, while acceptance volumes remained firm, increasing plastic fuel revenue 12.9% year on year. Although the shutdown of the Tomakomai Power Plant following the Hokkaido Eastern Iburi Earthquake reduced revenue, the expansion of transaction volume in the new power business increased electricity sales revenue 14.2% year on year. As a result, revenue was ¥17,913 million, up 12.6% year on year. Operating profit was ¥1,088 million, up 116.8% year on year. Although the power plant shutdown reduced profit, lower costs resulting from improved profitability through a focus on plastic fuel quality, higher revenue from the new power business and measures to stabilize electricity procurement costs contributed to the result.」

「The volume of waste plastics accepted for fuel production increased, lifting plastic fuel revenue 11.8% year on year. The new power business also expanded, increasing electricity sales revenue 30.0% year on year. As a result, revenue was ¥12,099 million, up 19.2% year on year. Operating profit was ¥962 million, compared with an operating loss of ¥57 million in the same period of the previous year. Higher acceptance prices for waste plastics, improved fuel quality and greater efficiency reduced costs for plastic fuel, while higher revenue from the new power business and more stable electricity procurement costs also contributed.」

「The volume of waste plastics accepted for fuel production increased, lifting plastic fuel revenue 11.9% year on year. The new power business also expanded, increasing electricity sales revenue 29.3% year on year. As a result, revenue was ¥5,826 million, up 17.5% year on year. Operating profit was ¥439 million, up 29.9% year on year, as higher acceptance prices for waste plastics, improved fuel quality and greater efficiency reduced costs for plastic fuel, while higher revenue from the new power business and more stable electricity procurement costs also contributed.」

「In the Environmental Resources Development business, the company will ensure rigorous quality control for plastic fuel, thereby supporting stable operation of the Tomakomai Power Plant, and will build a framework to use the electricity generated there as a baseload power source under a new framework for the new power business.」

「Plastic fuel revenue increased 5.7% year on year, mainly because acceptance prices for waste plastics improved. Electricity sales revenue increased 74.4% year on year, mainly because the number of electricity sales contract customers in the new power business increased. As a result, revenue was ¥15,914 million, up 28.9% year on year. Operating profit was ¥502 million, down 26.0% year on year, mainly because inspection-related and other costs increased due to the biennial statutory inspection of the Tomakomai Power Plant boiler.」

「Plastic fuel revenue increased 6.4% year on year and organic wastewater treatment revenue increased 3.7%. Electricity sales revenue increased 74.9% year on year, mainly because the number of electricity sales contract customers in the new power business increased. As a result, revenue was ¥10,149 million, up 29.0% year on year. Operating loss was ¥57 million, compared with operating profit of ¥577 million in the same period of the previous year. This was mainly due to lower electricity sales revenue and higher statutory inspection and repair costs at the Tomakomai Power Plant, where the biennial statutory inspection and annual periodic repairs were carried out during the cumulative second quarter of the current fiscal year.」

「Electricity sales revenue increased 89.3% year on year, mainly because the number of electricity contract customers had increased since the second quarter of the previous fiscal year. As a result, revenue was ¥4,957 million, up 33.5% year on year. Operating profit was ¥338 million, up 164.0% year on year, as profitability improved through higher acceptance prices for waste plastics under measures focused on efficiency and profitability, together with lower repair costs at the Tomakomai Power Plant.」

「Plastic fuel revenue remained broadly in line with the previous period despite a decline in the volume of waste plastics accepted under the policy of raising acceptance prices. Electricity sales revenue also increased as the number of sales contracts to high-voltage customers in the new power business grew.」

「Electricity sales revenue increased 63.2% year on year, owing to a significant increase in the number of sales contracts with high-voltage customers in the new power (PPS) business. As a result, revenue was ¥12,348 million, up 13.3% year on year.」

「Electricity sales revenue increased 72.9% year on year, owing to higher electricity sales revenue from the Tomakomai Power Plant and an increase in sales volumes to high-voltage customers in the new power (PPS) business.」

「Electricity sales revenue increased 41.6% year on year as the retail electricity supply area for high-voltage customers expanded and the number of new supply customers increased.」

「The Environmental Resources Development segment will improve efficiency and profitability by revising the acceptance prices for waste plastics and improving the quality of the waste plastics accepted. It also expects an increase in electricity sales revenue from the Tomakomai Power Plant and higher sales from the new power business.」