Key Point of President's Regular Press Conference
Key Point of President's Regular Press Conference
Senior Managing Vice President Mizutani’s Message at the News Conference Announcing Financial Results for Q3 2021
January 28, 2022
Chubu Electric Power Co.,Inc.
- I will be discussing the following matters today:
- Financial results for the third quarter of fiscal 2021
Financial Results for the Third Quarter of FY2021
- The third quarter of FY2021 ended with Chubu Electric Power posting operating revenues of 1,826.8 billion yen.
Application of the Accounting Standard for Revenue Recognition and other factors pushed revenue down by 285.6 billion yen year-on-year.
Although the accounting standard application offset expenses and revenue associated with the Feed-in Tariff Scheme for Renewable Energy and operating revenues declined significantly, there was no effect on income. Excluding the accounting standard application effect, revenue rose by 187.2 billion yen thanks to conversion of ES-CON JAPAN into a consolidated subsidiary in April 2021 in combination with other factors. - Ordinary income recorded a loss of 5.1 billion yen. This is the first loss the company has experienced since the third quarter of 2013.
The most prominent factor leading to this loss was the effect of a 171 billion yen reduction in income that resulted as fuel prices rose, turning the time-lag gain into a time-lag loss, despite the increase in income that JERA achieved in its LNG and coal trading business.
In addition, Chubu Electric Power Miraiz saw competition negatively impact revenue and power procurement costs increase as wholesale electric power exchange prices surged. The power transmission and distribution company, Chubu Electric Power Grid, faced increasing costs associated with regulating power demand and supply. These and other factors led to a substantial 196.6 billion yen reduction in ordinary income year-on-year. - Consolidated ordinary income excluding the time lag was 100 billion yen, a decrease on the order of 25 billion yen year-on-year.
FY2021 Business Outlook
- Next, I would like to discuss our FY2021 business forecast. We have revised our October 28 forecast to take into account recent business performance.
- Due to the increase in fuel cost adjustment charges and other circumstances, consolidated revenue is expected to be 2,600 billion yen, which is an increase of 100 billion yen over the previous announcement.
- Although JERA is expected to increase income in the LNG and coal trading business, the time lag loss will likely expand as fuel prices surge and Chubu Electric Power Miraiz will face higher power procurement costs due to the dramatic rise in wholesale electric power exchange prices. Chubu Electric Power Grid will also expect an increase in costs associated with regulating power demand and supply. On account of these and other factors, we forecast a consolidated ordinary loss of 50 billion yen, or 95 billion yen below our previously announced figure.
- The time-lag loss due to soaring fuel prices has had a significant impact on the order of 100 billion yen. Even for income excluding the time-lag disparity, we estimate a decrease of 70 billion yen below our previously announced figure of 50 billion yen. We are taking this severe cash flow situation very seriously.
- To address the deteriorating cash flow in the current fiscal year, we will take appropriate measures so that Chubu Electric Power Miriaz will optimize its procurement portfolio, and Chubu Electric Power Grid will improve its system and operations regulating power supply and demand. In addition, the entire Chubu Electric Power Group will strive to improve profitability as JERA expands its global operations and each company squarely recognizes the realities of their respective markets and customers’ needs to pursue initiatives spurring growth.
- This ends my presentation.