After the September upward revision, FY2027-H1 will test the quality of the ¥61,000 million full-year forecast

Consolidated revenue in FY2027-Q1 was ¥214,481 million, up 5.9% year on year, while operating income was ¥24,449 million, ordinary income was ¥18,764 million and net income attributable to owners of the parent was ¥14,777 million, down 44.3%, 55.0% and 52.0%, respectively, from the same period a year earlier. On a Q1-only basis, progress against the forecast revised on 25 September was 20.9% for revenue, 40.1% for operating income and 44.8% for net income, meaning earnings are progressing ahead of revenue.

The revised FY2027 forecasts disclosed on 25 September are revenue of ¥1,025,000 million, operating income of ¥61,000 million and net income attributable to owners of the parent of ¥33,000 million. Compared with FY2026 actual operating income of ¥73,238 million and net income of ¥43,998 million, the revised plan still calls for operating income to decline 16.7% and net income to decline 25.0%. The upward revision should therefore be viewed as a narrowing of the decline, rather than a return to earnings growth.

At the next interim results announcement, we will use revenue of ¥512,500 million, operating income of ¥30,500 million and net income of ¥16,500 million as mechanical halfway points and assess progress toward the revised forecasts. These are not company targets adjusted for seasonality and therefore are not straightforward achievement benchmarks. However, if operating income falls below ¥30,500 million, the company would need to generate ¥36,551 million in the second half, increasing the burden required to meet the plan. Conversely, if earnings progress while revenue and electricity sales volume do not grow, it will be necessary to examine whether the improvement depends on pricing factors or timing differences.

The revised September forecasts available to us do not provide detailed amounts for the impact of the fuel cost adjustment system, repair expenses, labor costs and inflation, or interest expense. At the interim results announcement, it will be important to see whether the company adds a factor-by-factor breakdown for the interim period against the revised full-year plan, rather than simply extending Q1 actual results, and explains the earnings still required in the second half.