Key Point of President's Regular Press Conference
Key Point of President's Regular Press Conference
March 2019 Regular Press Conference : President Katsuno's Message
March 26, 2019
Chubu Electric Power Co.,Inc.
- I will be discussing the following matters today:
- Management Challenges for FY2019
Tackling Management Challenges
- Today, Chubu Electric Power compiled the “Management Challenges for FY2019”: a list of specific action items to realize the Management Vision formulated in March 2018.
- Japan’s energy industry is reaching a historic turning point in the face of electricity system reform—competition that spans existing supply areas is intensifying in both gas and electricity as society presses for low carbonization and rapid digitalization.
- Even in this tough business environment, Chubu Electric Power will continue to pursue its unchanging mission outlined in the Management Vision and provide customers with new value and services. To that end, Chubu Electric Power will promote the following “Four Priority Initiatives”.
- Further increase safety at the Hamaoka Nuclear Power Station
- Stably supply electricity in a new era
- Strengthen the business foundation for growth and realize sustained growth
- Accelerate commercialization in growth areas
- Let me explain each initiative.
- The first initiative is “further increase safety at the Hamaoka Nuclear Power Station”.
- At the Hamaoka Nuclear Power Station, we will continue to implement structural safety improvement work and develop non-structural measures such as disaster prevention schemes and training. We aim to not only comply with the new regulatory standards but also autonomously increase safety. We will become a station perceived by the public as safe and reliable.
- To achieve these goals, we will first respond to the Nuclear Regulation Authority reviews with sincerity.
- The second initiative is “stably supply electricity in a new era”. The demand and supply structure of energy is changing significantly as renewable energy, especially solar energy, is being generated nearby the customers. We will secure quality in electricity and build facilities in a streamlined manner by installing next-generation electricity distribution equipment and enhancing system monitoring and operations using ICT.
- We will also work on increasing the resilience of the system, enhancing our capabilities to respond to large scale disasters.
- The third initiative, “strengthen the business foundation for growth and realize sustained growth” is about increasing profits and streamlining the retail, renewable energy, and overseas businesses as well as JERA.
- I will also be leading the Group with Environmental, Social and Governance (ESG) in mind, implementing environmentally conscious management and enforcing corporate governance.
- The fourth initiative “accelerating commercialization in growth areas” was newly established with the understanding that our efforts need to be accelerated to expeditiously create a “new community” as described in the Management Vision.
- Chubu Electric Power seeks to create a community support infrastructure that solves societal challenges by helping connect customers with society as well as connect with each other via our electricity and information network. We are developing and providing services that use digital technology such as IoT to create these connections.
- I believe that the world is shifting from a “thing”-centered IoT to a human-centered Internet of Human, “IoH” if you will. Innovation in services will be led by customers including services to create a comfortable indoor environment and prevent disaster and crime.
- We, as a utility that has built close relationships with all customers through our transmission and distribution network, believe we can provide services well integrated with the energy supply that is one step ahead of all others.
- We see these opportunities as growth areas and will be accelerating our commercialization efforts through collaboration with various companies under the Business Creation Headquarters to be established this April.
- We will also be establishing the Chubu Electric Community Support Fund to develop these new growth areas.
- This Fund is an internal fund that will flexibly invest in startups with advanced technology or revolutionary business models. I will grant the General Manager of the Headquarters the authority to invest on the scale of 5 billion yen over a span of five years to allow for swift decision making.
- Next, let me now explain our new management target.
- This year’s consolidated ordinary income excluding cut off errors is expected to be around 160 billion yen, meeting our current management target of “more than 150 billion yen in consolidated ordinary income”.
- Meanwhile, in our Management Vision, we have set as our ideal state as “achieving 250 billion yen in consolidated income by the second half of the 2020s”. As a milestone along the road to this vision, we have set a new management target of “reaching 170 billion yen in consolidated ordinary income in FY2021”.
- This is a challenging target to set in the face of our tough financial state given increased competition in retail. Nevertheless, we will work to achieve it by steadily implementing our four priority initiatives.
- Furthermore, we have decided to make strategic investments totaling more than 300 billion over a period of five years to ensure our growth is sustainable.
- To grow our businesses and increase enterprise value, we will be investing around 100 billion yen each in the following growth areas: deploying renewable energy, expanding overseas business, and commercialization of new growth areas.
- Next, I am going to talk about our year-end dividend forecasts.
- We have revised our year-end dividend forecast from 20 yen per share to 25 yen per share considering our financial state and our expectations in regards to meeting our management target.
- Providing strong shareholder returns is an important mission for our Group. We will pursue increases in profits while continuing to issue stable dividends—our target consolidated payout ratio is 30%.
- Chubu Electric Power will continue to promote the four priority initiatives to realize our Management Vision. We will steadily work to meet the trust and expectations of our customers, shareholders, and society.
Business integration into JERA
- Finally, I would like to address JERA.
- On April 1, we will be finally integrating the existing thermal power generation business into JERA.
- We hope that JERA will grow into a global enterprise in an international energy market that can provide energy such as electricity and gas at internationally competitive prices, and increase the Chubu Electric Power Group’s enterprise value.
- At the same time, JERA will continue to maintain facilities and operate in the Chubu area as a pillar of the supply capacity for Chubu Electric Power.
- Chubu Electric Power and JERA will continue to maintain strong ties and work to provide energy stably in the Chubu region, in normal times and in emergencies. We will strive to cooperate and manage our own businesses to gain the understanding and trust of the region.
- This ends my presentation.