Key Point of President's Regular Press Conference
Key Point of President's Regular Press Conference
July 2013 Regular Press Conference : President Mizuno’s Message
July 31, 2013
Chubu Electric Power Co.,Inc.
- Today I would like to speak about the following three points:
- Chubu Electric Power's first-quarter financial results for FY2013
- Efforts to increase operational efficiency
- Conclusion of LNG sales agreement with INPEX
Chubu Electric Power's first-quarter financial results for FY2013
- First of all, I would like to speak about our first-quarter financial results for FY2013.
- Consolidated net sales reached 623.3 billion yen, a reduction of 6.2 billion yen year on year, owing to such factors as reductions in sold power to other utilities and suppliers and subcontracted power distribution revenues caused by a reduction in support for other power companies in the electricity business.
- With regard to consolidated ordinary profits and losses, we experienced a reduction amounting to 36.6 billion yen against the same quarter for the previous fiscal year, for a loss of 46.3 billion yen, in our electricity business owing to the effects of reduced electric power sold and increases in the cost of fuel, etc.
- Next, turning to our non-consolidated results, net sales were 586 billion yen, a decrease of 7.4 billion yen year on year. We had an operating loss of 39.6 billion yen, a reduction of 36.1 billion yen year on year. Operating income decreased 36.1 billion yen year on year for a loss of 39.6 billion yen. Ordinary income decreased 36.4 billion yen year on year for a loss of 45.9 billion yen. Net income for the quarter experienced a loss of 28.2 billion yen, a reduction of 16.5 billion yen year on year.
- This will represent the second consecutive year that we have recorded operating, ordinary, and net losses in both our consolidated and non-consolidated results.
(The revised forecast for business results for FY2013)
- Next, our outlook for the full fiscal year.
- The emergency management efficiency policies being examined by the Office for Emergency Measures for Management Efficiency established in April have resulted in a reduction in the scale of losses through consolidated settlements and individual settlements being predicted, and the forecast for business results officially announced on April 26 has been revised upward.
- The revised forecast for business results has reduced the scale of losses by approximately 10 billion yen, with the forecast now standing at a loss of 75 billion yen for operating income, a loss of 110 billion yen for ordinary income, and a loss of 75 billion yen for net income.
- The losses forecast to be incurred for individual settlements stand at a loss of 90 billion yen for operational income, a loss of 120 billion yen for ordinary income, and a loss of 80 billion yen for net income, representing a reduction in overall losses of approximately 10 billion yen in the same manner as consolidated settlement.
- This will represent the third consecutive year that we have recorded operating, ordinary, and net losses in both our consolidated and non-consolidated results.
Efforts to increase operational efficiency
- I will commence by discussing the status of our efforts to increase operational efficiency.
- As I have indicated, we expect our financial statements to show a loss again in this fiscal year. This would be the third straight year of losses, and we recognize that this is an extremely difficult management situation.
- To respond to this state of crisis, in April we established the Office for Emergency Measures for Management Efficiency, with myself as Head. With the entire company working together, we are speeding up the realization of increased operational efficiency, and ensuring that measures are comprehensive.
- I'll now explain the measures for achieving management efficiency, for which we now have tentative plans for implementation.
- We have implemented various measures up until now for reducing the costs incurred in the procurement of materials/equipment and labor, which represent a large proportion of our expenditures as a company maintaining and managing large facilities, but we will once again attempt to reduce costs based on the results of the first stage of our efforts.
- In further detail, we will accelerate our efforts to reduce costs through even more inventive ideas, such as expanding the scope of competitiveness even further by searching for new suppliers and using a more effective method of ordering in accordance with each subject matter involving measures to cut costs for orders that are already competitive.
- It has been forecast that moving ahead with initiatives such as these will reduce by an additional approximately 30 billion yen the costs involved in the procurement of materials/equipment and labor that we are scheduled to order this fiscal year.
- There are many jobs that require significantly long delivery periods from ordering through to the completion of work, and the effects that improvements have had on business results for FY2013 equal approximately 5 billion yen.
- With regard to reductions in heat fuel costs, in addition to the effort we have put into procuring inexpensive fuel, we have also adopted initiatives to see just how efficiently we can use that fuel.
- In further detail, revising maintenance details and methods in order to reduce the number of days that high-efficiency thermal power plants need to be off-line owing to inspections and repairs and operating them under optimal conditions to create power plants with superior fuel consumption rates will result in reduced fuel costs.
- With regard to partial revisions to our social welfare system that were explained during the regular meeting in May and that began with the closure of our resort facilities (Ikoi-no-Ie), etc., we have gained the cooperation of the labor union and it has been decided that the revisions will be systematically implemented from now on.
- Also, activities initiated for all employees, such as cutting down on office supplies and traveling expenses, etc., re-examining work methods and formulating ways in which overtime work can be reduced, are proceeding as planned.
- This series of emergency management efficiency measures will be initiated individually as soon as implementation schedules are set, and some of the measures will result in reducing costs from the next fiscal year and subsequent years. Because of this, the effects of improvements initiated for FY2013 earnings will stand at approximately 10 billion yen, as already explained in Earnings Outlook for FY2013.
- All of these initiatives will enable us to put our full effort behind reducing costs by relentlessly cutting down on everything from procurement for large-scale facilities through to single pencils and individual pieces of paper, and will allow us to overcome the gravest situation we have faced since the company was first founded.
Conclusion of LNG sales agreement with INPEX
- And finally, I would like to speak about the LNG sales agreement we have concluded with INPEX Corporation.
- Today, Chubu Electric Power concluded an LNG sales agreement with INPEX Corporation.
- This agreement enables us to sell a certain amount of the LNG we purchase to the INPEX Naoetsu LNG terminal.
- Although we have concluded sales agreements for LNG by the shipload with companies in Japan and overseas up until now, this represents the first time that we will be able to sell a fixed volume of LNG over several years to the same purchaser.
- The LNG that we will sell will be supplied from LNG agreements that we possess, meaning that it is a portfolio agreement that does not specify the supply source.
- The sales period will last for four years, eight months from August of this year through to March of 2018, and the volume we will sell amounts to a total of approximately one million tons.
- The conclusion of this agreement means that Chubu Electric Power will be supplying the LNG required to perform the initial operations for the INPEX Naoetsu LNG terminal.
- In addition, the INPEX Naoetsu LNG terminal’s pipeline is partially connected to our Joetsu LNG terminal situated adjacent to it, in order to supply each other from the LNG in the tanks of each terminal. This agreement will help both companies establish a new relationship, and we look forward to the increased synergistic effects that will be realized through increased flexibility with regard to terminal management.
- The initiatives that Chubu Electric Power has implemented up until now with regard to LNG procurement are:
- The expansion of flexible measures regarding LNG agreements, such as relaxing the restrictions on destinations, etc.
- The creation of a network between LNG buyers.
- In addition to achieving stability, flexibility and economic efficiency in the procurement of fuel through these initiatives, we also intend to continue to strengthen the stable and inexpensive supply of electrical power.
- That concludes my remarks for today.