Key Point of President's Regular Press Conference

July 2020 Regular Press Conference : President Hayashi's Message

July 31, 2020
Chubu Electric Power Co.,Inc.

I will be discussing the following matters today:

Financial results for Q1 2020
Business forecast for FY2020
Initiative in the healthcare field with regard to a “community support infrastructure”

Since the outbreak of COVID-19, the Chubu Electric Power Group has worked on ensuring supply stability and maintaining the service level while giving top priority on the safety and health of our employees, their families, business partners and customers to prevent the further spread of the disease.
Even after the state of emergency was lifted, we have strived for smooth business administration, such as the assurance of supply stability, while having infection control measures in place, keeping in mind that “electricity is the key infrastructure of all infrastructures.”
In view of the recent spread of COVID-19, Chubu Electric Power will maintain a strong sense of crisis in making all-out efforts to ensure the thorough implementation of safety measures and maintain the administration of our business operations.

Financial results for Q1 2020

Now, I would like to talk about our financial results for Q1 2020 and our business forecast.
In the first quarter of FY2020, Chubu Electric Power recorded operating revenues totaling 682.3 billion yen, which represents a revenue decline of 72.1 billion yen or 9.6% year-on-year mainly due to COVID-19 driving electrical energy sales down and a decrease in the fuel cost adjustment charge.
Our ordinary income for the quarter was 48.1 billion yen, which represents a substantial income decline of 40% or 32.3 billion yen year-on-year. This includes a decrease of about 17 billion yen in time lag income, a downturn worth 10.4 billion yen due to JERA recording all the gain from divestiture of overseas power generation projects in the previous year, and a 10-billion yen drop as a result of COVID-19 driving electrical energy sales down.
Since it is difficult to pinpoint the impact of COVID-19, the drop in electricity demand, less the decline attributable to other factors such as temperatures and market competition, is assumed to be the impact of the novel coronavirus.
Consolidated ordinary income excluding the effect of time lag stands at 43 billion yen, a decrease of around 16 billion yen year-on-year.

Business forecast for FY2020

Now, let me talk about our business forecast for FY2020.
Since it is difficult to rationally anticipate the impact of COVID-19, we have kept our business forecast for FY2020 as “to be advised.”
This time, we have decided to release our business forecast based on some premises, using information available at this stage, including the analysis on business results for the first quarter, when COVID-19’s impact on electricity demand has become evident, findings from customer interviews on production trends, and the outlook of Japanese economy.
Actual electricity demand in the Chubu region dropped by 12.9% in May and 9.1% in the first quarter. The trend so far shows that the demand hit the bottom in May and has made a moderate recovery since June. A second wave of COVID-19 and coronavirus-induced changes in social structures have cast a shadow of uncertainty over future economic outlook. We believe the region’s electricity demand will drop around 6% from the previous fiscal year, as there is no prospect of its full recovery by the end of FY2020 even though the demand will continue to make a moderate recovery.
Based on the premises, our consolidated operating revenues are forecast to decrease by about 2.75 trillion yen from previous year, due to a decline in electric energy sales and a decrease in the fuel cost adjustment charge.
Consolidated ordinary income is forecast to be 125 billion yen, down 35% or 67 billion yen from previous year, due to a decline in electric energy sales despite an increase in time lag income caused by lowering fuel prices.
In more detail, we anticipate a 60-billion yen drop due to the impact of COVID-19, a downturn worth 10 billion yen as a countereffect of JERA’s gain from divestiture of overseas power generation projects, and a decrease of around 8 billion yen as a result of market competition, even though a time lag gain of approximately 11 billion yen is expected.
We forecast the income of around 75 billion yen, which does not include the time lag gain. This is a significant income decline of 50% or 78 billion yen from previous year, painting a very tough picture for our financial results for FY2020.
The Chubu Electric Power Group has strived to transform its business model to achieve “new value creation.” In light of changes in social structures, encompassing the impact of COVID-19, we will further accelerate our initiatives to maximize values we provide to customers and society, while continuing to make efforts to boost our business income.

Healthcare with regard to a “community support infrastructure”

One such example is our initiative in the healthcare field with regard to a “community support infrastructure.”
Under keywords of “digitization,” “customer-orientation” and “low-carbon,” Chubu Electric Power has taken on an initiative to create a “community support infrastructure,” which connects energy infrastructures with various social infrastructures and customer facilities to create a new value.
In the healthcare field, in particular, conventional issues such as population aging and uneven population distribution are combined with COVID-19 outbreak to spawn “new lifestyles” amidst anticipated emergence of various needs, such as online medical consultation and monitoring of patients in home-based care.
Since last fiscal year, Chubu Electric Power has explored various partnerships with medical institutions in the healthcare field.
More specifically, we have partnered with the Keio University Hospital since January this year to undertake joint research on the monitoring of patients in home-based care and the use of their data while being at home for medical purposes. The research is aimed at developing new services under a capital and business partnership with Medical Data Card, Inc., a company that provides medical and health services.
This research has culminated to last month’s launch of remote prenatal checkups by the Obstetrics Department of Keio University Hospital, using Chubu Electric Power’s data platform and Medical Data Card’s smartphone app.
In the Chubu region, we started joint research with Fujita Health University last month about community-based integrated care. Efforts are made to build a mechanism that allows people to receive detailed medical and long-term care services in their local communities, and develop new services that combine lifestyle-related data.
In addition to these partnerships with medical institutions, Chubu Electric Power has recently signed a basic agreement with Medical Data Card, Inc. to turn it into a consolidated subsidiary in a bid to accelerate the establishment of our healthcare business.
Medical Data Card is a venture business originating from a medical school. It is partnered with numerous hospitals and other medical institutions to offer services that allow patients to centrally manage their medical and health information including the results of medical tests.
By turning MDC into a consolidated subsidiary, Chubu Electric Power plans to establish a unified approach in the healthcare field, thereby accelerating the efforts to build a platform that enables smooth communication between patients and medical institutions, while also developing and offering other services including online medical consultations.
Despite a tough business outlook, caused by COVID-19 pandemic and other factors, we will identify changes in the business environment accurately to ensure sustainable growth into the future, and promote the creation of a “community support infrastructure” in our continued efforts for new value creation.
This ends my presentation.

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