Revenue increased, but profit fell sharply from operating to ordinary income

First-quarter revenue was ¥825.8 billion, up ¥25.5 billion, or 3.2%, from ¥800.3 billion in the same period of the previous year. However, operating income turned from ¥67.9 billion in the prior-year quarter to an operating loss of ¥25.0 billion. The operating margin consequently fell by approximately 11.5 percentage points, from an estimated 8.5% to negative 3.0%. Ordinary income also declined by ¥77.6 billion, or 74.1%, from ¥104.8 billion to ¥27.1 billion, while net income attributable to owners of the parent fell by ¥50.1 billion, or 58.7%, from ¥85.3 billion to ¥35.2 billion.

The increase in revenue was not accompanied by an improvement in earnings. The revenue bridge in the presentation materials showed that higher sales prices increased electricity sales to other companies by ¥63.0 billion, while lower fuel-cost adjustments and other factors reduced revenue by ¥27.7 billion and ¥37.5 billion, respectively. In other words, the top line was maintained through pricing and transaction mix, but this was not enough to absorb deterioration in profitability, including volume and procurement costs.

The ¥77.6 billion year-on-year decline in ordinary income reflected a ¥38.0 billion deterioration in timing difference gains and losses, a ¥62.1 billion deterioration in ミライズ’s earnings excluding timing effects, a ¥16.2 billion deterioration in Power Grid’s earnings excluding timing effects, and an ¥0.8 billion deterioration from other factors. JERA’s earnings improvement excluding timing effects was limited to ¥39.5 billion and did not fully offset the decline in consolidated earnings. At the next results announcement, it will be necessary to distinguish whether the operating loss reflects temporary seasonal or timing factors, or whether ミライズ’s underlying procurement cost structure has deteriorated.