FY2027 fiscal year ending March is expected to see lower profit, with profit progress and the validity of maintaining the outlook to be assessed in FY2027-H1.

Operating revenue in the first quarter of FY2027 fiscal year ending March was ¥199.019 billion, up 7.0% year on year. However, operating profit was ¥26.595 billion, ordinary profit was ¥29.151 billion and net profit attributable to owners of the parent was ¥22.198 billion, representing year-on-year declines of 26.7%, 18.8% and 20.7%, respectively. Profit contracted despite the larger revenue base, indicating that a simple recovery in electricity sales volume is not sufficient to maintain the profit level.

The decline in margins is also clear. First-quarter operating margin was approximately 13.4%, calculated by dividing operating profit of ¥26.595 billion by operating revenue of ¥199.019 billion. This was approximately 6.1 percentage points below the approximately 19.5% calculated from operating revenue of ¥186.079 billion and operating profit of ¥36.272 billion in the year-earlier quarter. Operating profit was ¥87.459 billion in FY2026 and ¥101.034 billion in FY2025, compared with a full-year FY2027 forecast of ¥40.0 billion. The company’s plan therefore anticipates a significant reduction in profit over the two-year period.

First-quarter progress against the full-year forecasts was approximately 26.2% for operating revenue, at ¥199.019 billion against ¥760.0 billion, 66.5% for operating profit, at ¥26.595 billion against ¥40.0 billion, 83.3% for ordinary profit, at ¥29.151 billion against ¥35.0 billion, and 88.8% for net profit, at ¥22.198 billion against ¥25.0 billion. However, electric utilities are highly seasonal, so full-year performance cannot be assessed based solely on first-quarter profit progress. At the next interim results announcement, it will be important to see what proportion of the full-year forecasts is represented by cumulative first-half operating and ordinary profit, and whether the company maintains or changes its assumptions and forecasts.

The first-quarter earnings summary identified the fuel-cost adjustment time-lag differential and the shutdown of Unit 2 at the Nanao-Ohta Thermal Power Station as reasons for the decline in profit, but did not specify the individual monetary impact of either factor. Cash flow from operating activities, investing activities and financing activities was also not disclosed for the first quarter. Accordingly, FY2027-H1 should be assessed not only on year-on-year profit changes, but also on a monetary bridge covering the time-lag differential, shutdown-related costs, purchased electricity costs and equipment-related expenses, together with any revision to the full-year forecasts.