Revenue growth fails to reach profit; FY2027-Q1 margins compressed

First-quarter revenue was ¥785.3 billion, up ¥249.9 billion, or 46.7%, from ¥535.4 billion in the prior-year quarter. Operating profit, however, fell ¥4.3 billion to ¥60.0 billion from ¥64.4 billion, while ordinary profit fell 5.4% year on year to ¥54.4 billion and net profit attributable to owners of the parent fell 4.2% to ¥36.1 billion. The operating margin fell approximately 4.4 percentage points, from approximately 12.0% to approximately 7.7%.

By segment, the power generation and retail business generated revenue of ¥665.3 billion and ordinary profit of ¥62.3 billion. Revenue increased significantly due to growth in transactions outside the service area and self-contracted volumes associated with indirect auctions, but profit fell 21.9% year on year and was the main source of margin compression for the consolidated group. The transmission and distribution business generated revenue of ¥227.1 billion and an ordinary loss of ¥8.5 billion, while Other businesses generated revenue of ¥39.5 billion and ordinary profit of ¥1.7 billion. Segment revenue includes intersegment transactions, so segment totals should not be compared directly with consolidated revenue; margins after elimination of intersegment transactions should be assessed.

In the next FY2027-H1, it will be necessary to distinguish whether revenue growth came from sales volumes, self-contracted transactions or system-related transactions. Key tests will be whether ordinary profit in the power generation and retail business exceeds ¥62.3 billion, whether the transmission and distribution loss narrows from ¥8.5 billion, and whether the ¥1.7 billion profit increase in Other businesses continues. The first-quarter disclosure provided no full-year earnings forecast, outlook for the operating margin or full-year segment profit plans, so it will also be important to see whether H1 provides the first quantified view of margin recovery and the full-year outlook.