Full-year operating profit forecast of ¥19,000 million maintained despite sharp first-quarter earnings decline

In FY2027-Q1, revenue fell 10.3% year on year to ¥144,849 million from ¥161,470 million, while operating profit fell 61.5% to ¥7,640 million from ¥19,840 million. Ordinary profit also fell 52.0% year on year to ¥10,573 million, and quarterly net income attributable to owners of the parent fell 43.3% to ¥9,424 million. The operating margin declined by approximately 7.0 percentage points, from approximately 12.3% in the previous year’s quarter to approximately 5.3%, meaning profit fell more sharply than revenue.

The company attributed the decline in profit to factors including the timing difference between raw material costs and revenue under the fuel cost adjustment mechanism turning from a favorable variance into an unfavorable variance. In addition, gas sales volume fell 2.4% year on year to 760 million m³, with temperatures and lower operating rates at customer facilities also weighing on volumes. However, as of Q1, the company had not disclosed a monetary bridge separating the effects of the timing difference loss itself, crude oil prices, foreign exchange and the timing of tariff pass-through.

The full-year forecasts are revenue of ¥670,000 million, operating profit of ¥19,000 million, ordinary profit of ¥25,000 million and net income attributable to owners of the parent of ¥23,000 million, with no revision to the forecasts as of the Q1 results. Q1 operating profit of ¥7,640 million represents approximately 40.2% of the full-year forecast, but cannot be compared with simple one-quarter progress after taking Q1 seasonality into account. To maintain the full-year forecast, operating profit of ¥11,360 million must be accumulated over the 3 quarters from Q2 onward.

In FY2026, the company generated operating profit of ¥31,784 million and ordinary profit of ¥37,879 million, supported by factors including an expanded favorable timing difference. Accordingly, the FY2027 operating profit forecast of ¥19,000 million represents a 40.2% year-on-year decline. In FY2027-H1, it will be necessary to reassess the achievability of the full-year forecast by checking not only cumulative operating profit but also whether the timing difference loss is narrowing, gas volumes are recovering and the electricity business deficit is not widening.