January 2013 Regular Press Conference: President Mizuno's Message

• First, I’d like to talk about our financial results for the third quarter of FY2012.

(Consolidated)

• Please see Reference 1, “FY2012 Third-quarter Financial Results.”
• Consolidated net sales in the electricity business reached 1,960.1 billion yen, a gain of 215.1 billion yen year on year, owing to such factors as increased service charges due to an increase in fuel cost adjustments.
• With regard to consolidated ordinary income (loss), in our electricity business, while there was a reduction in nuclear power generation, factors including the reduction of the cut-off error of the fuel cost adjustment system and a decrease in personnel costs saw us increase our income by 37.9 billion yen against the same quarter for the previous fiscal year, for a loss of 3.9 billion yen.

(Non-consolidated)

• Next, I will address Chubu Electric Power’s non-consolidated financial results.
  Net sales were 1,853.3 billion yen, up 211.3 billion yen year on year.
  Operating income was 12.4 billion yen, an improvement of 43.4 billion yen year on year, with an ordinary loss of 8.7 billion yen, an improvement of 40.3 billion yen year on year.
  There was also a net quarterly loss of 3.7 billion yen, although this was an improvement of 70.2 billion yen year on year.
• Chubu Electric Power has now recorded an operating loss and net quarterly loss for two consecutive years, both in the consolidated and non-consolidated results.

(Earnings outlook for FY2012)

• Next, I would like to address our earnings outlook through the end of the fiscal year.
• Because operations have been suspended in all reactors at Hamaoka Nuclear Power Station, Chubu Electric Power anticipates high fuel costs. Therefore our consolidated earnings outlook forecasts an operating loss of 45 billion yen, ordinary loss of 80 billion yen and net loss of 60 billion yen. 
• The non-consolidated earnings outlook forecasts an operating loss of 60 billion yen, ordinary loss of 90 billion yen and net loss of 65 billion yen.  
• This will be the second consecutive year to record an operating loss, ordinary loss and net loss, both in the consolidated and non-consolidated results.
• We have not changed our full-year earnings outlook for FY2012 from the figures announced on October 31, 2012.

(Summary)

• The challenging revenues and expenditures and financial situation of the last fiscal year are expected to continue through FY2012 as operations are suspended at the Hamaoka Nuclear Power Station.
• Chubu Electric Power will continue to deal with the severe challenge by working as a Group on initiatives under way since the last fiscal year to boost management efficiency, and by taking thorough cost-cutting measures.

• Next, I would like to discuss our periodic hiring plan for FY2014.

(Basic stance on periodic hiring)

• First, let me explain Chubu Electric Power’s basic stance on periodic hiring.
• In the business of electricity and energy, the policies we set today look ahead 50 or even 100 years. We work on a very long time-scale covering several generations, and it also takes a long time to nurture our personnel. So it is important to continuously secure the personnel we need.
• In our industry we also maintain and manage very large facilities to provide a stable supply of electric power, and we require a staff of a certain size to deal with the scale of our facilities.
• Therefore, it is our basic stance to continuously hire at a certain scale.
• However, in the first half of the 2000s, Chubu Electric Power needed to respond to deregulation of the electric power industry. As part of our intense program of efficiency-building, we greatly reduced hiring.
• In the first half of the 1990s, we hired about 700 - 800 persons each year, after which we gradually reduced hiring. New hires bottomed out in FY2003 - FY2005, when we reduced hiring to about 100 persons each year.
• We had about 16,000 employees in 2007, down roughly 25% from the peak of about 21,000 in 1995, even though electricity sales rose during the same period.
• However, the sudden slowdown in hiring distorted the makeup of our workforce. We had very few mid-career and young employees to learn technology and know-how in each workplace. This created a serious challenge, making it difficult to foster successors to workplace expertise.
• In light of this history, we returned to our basic stance on periodic hiring in FY2008. Since then, we have continuously hired about 500 persons per year, a level that we believe is necessary to provide service to customers and to maintain and pass down our technical strength.

(Periodic hiring level in FY2013)

• Chubu Electric Power’s challenging business conditions are continuing. For example, since the suspension of operations at Hamaoka Nuclear Power Station, our costs for fuel for thermal power, a substitute form of energy, have risen.
• This spring we plan to hire 505 persons as new employees for FY2013. That is about 40 fewer than last year, when 546 persons joined as our April 2012 hires.

(Periodic hiring plan in FY2014)

• We believe that business conditions will become even more challenging as we draw closer to FY2014.
• We have further closely examined how many new members we will require as we work Group-wide to pursue further efficiency.
• We have therefore decided that our FY2014 periodic hiring plan will again reduce hiring for two successive years. The specific number we have set is 450, which is about 10% less than the number we plan to hire this year.

(Future outlook)

• We are not changing our basic stance on periodic hiring for FY2015 and beyond. However, in light of rapid changes in business conditions and revenues and expenditure challenges, we consider it necessary to closely study an even more vigorous pursuit of efficiency.

(The type of personnel we are looking for)

• Finally, I’d like to talk about the type of personnel we are looking for.
• I already mentioned that in the electricity business we work on a very long time-scale and it takes a long time to nurture personnel. We need personnel who understand and respect our public mission to provide a stable supply of electric power, which is also the heart of our business. We need people who can work steadily and conscientiously for that stable supply, and who we can trust to faithfully inherit our technology and spirit.
• On the other hand, a time of great change, such as we have never seen in our history of more than 60 years as a company, is upon us. It is important we do not get stuck in the old “power company” framework. We need personnel who have the spirit to transform old ideas, blaze new paths and create change.
• Our business conditions are difficult. However, we hope to attract a group of young people with a strong awareness of energy problems, sympathy for the public mission of electric utilities and the courage to take on challenges.
• This concludes my remarks for today.