Power segment revenue growth offset by capacity market charges

In FY2027-Q1, the power segment reported revenue of ¥44,786 million, up 18.8% year on year. Higher sales volumes, driven by the expansion of its customer base, were the main factor behind the increase. Segment profit, however, was ¥2,971 million, down 19.7% from ¥3,702 million in the prior-year quarter. Revenue growth did not translate directly into profit growth, resulting in revenue gains and profit declines occurring at the same time.

In FY2026-H1, power segment revenue was ¥84,850 million and operating profit was ¥6,668 million. The company attributed the profit increase partly to lower capacity market charges than in the prior year. In contrast, FY2027-Q1 saw higher capacity market charges, while power procurement costs weighed on profit. At the next interim results announcement, it will be necessary to determine how many millions of yen the capacity market charge increased and to what extent this was offset by higher gross profit from increased sales volumes.

The company continues to pursue a policy of reducing its reliance on procurement from wholesale electricity markets and limiting the impact of cost fluctuations by diversifying its power procurement sources. For FY2026, power segment revenue expanded to ¥167,929 million and segment profit to ¥11,537 million, reflecting multiple factors including procurement-source diversification, higher sales volumes and lower capacity market charges. Because the company has not quantitatively disclosed the mix by procurement source or the impact of capacity market charges and market procurement prices, additional explanation will be needed to determine in FY2027-H1 whether margin deterioration is temporary or structural.

In FY2027-H1, the focus will be not only on year-on-year revenue growth but also on whether segment profit exceeds the ¥6,668 million recorded in FY2026-H1. If profit falls below the prior-year level, it will be important to explain separately the effects of four factors: capacity market charges, wholesale electricity market prices, bilateral procurement and the pass-through to selling prices. If profit fails to grow despite continued sales volume growth, a cautious view will also be needed regarding the likelihood of achieving the full-year operating profit forecast of ¥8,500 million.