First-quarter revenue rose but operating losses widened, with greater earnings disparities between segments

Revenue in the first quarter of the fiscal year ending March 2027 was ¥1,481.197 billion, up 3.9% year on year. However, the operating result was a loss of ¥34.270 billion, compared with profit of ¥64.699 billion in the same period of the previous year. The operating margin declined by approximately 6.9 percentage points, from approximately 4.5% to approximately negative 2.3%. The failure of higher revenue to translate into improved profit is the first issue to verify at the next earnings announcement.

Ordinary income was ¥11.427 billion, down 88.7% year on year. As ordinary income remained positive despite the operating loss, the difference from operating income, including non-operating income and loss and equity-method investment income and loss, also needs to be examined. Quarterly net income attributable to owners of the parent was a loss of ¥9.793 billion, with a special loss of ¥15.696 billion in nuclear damage compensation costs weighing on the bottom line.

Segment profit totalled ¥302.745 billion for Holdings, ¥56.699 billion for Fuel & Power and ¥28.183 billion for Renewable Power, for a combined ¥387.627 billion. Power Grid recorded a loss of ¥31.218 billion and Energy Partner a loss of ¥50.932 billion, for combined losses of ¥82.150 billion in the two loss-making segments. Since there is a large gap between the simple total of segment profit and consolidated ordinary income of ¥11.427 billion, the breakdown of eliminations and adjustments, including holding company expenses, adjustments and system-related factors, will be important.

By segment, revenue was ¥1,052.149 billion for Energy Partner, ¥350.421 billion for Power Grid, ¥55.218 billion for Holdings, ¥22.615 billion for Renewable Power and ¥792 million for Fuel & Power. Energy Partner, the largest segment by revenue, recorded a loss, while Power Grid was also loss-making despite generating revenue. Next time, it will be necessary to examine sales volumes, procurement costs, supply-demand adjustment costs and the status of tariff pass-through by segment, and determine whether the losses are temporary or structural.

In the next FY2027-H1, we will track whether operating income returns to at least ¥0 and ordinary income exceeds ¥11.427 billion, as well as the extent to which the losses at Energy Partner and Power Grid narrow from ¥50.932 billion and ¥31.218 billion, respectively. Even if the profitable segments maintain their earnings, profit recovery during a period of rising revenue will remain limited if the two loss-making segments and consolidated adjustments persist.