Key Point of President's Regular Press Conference
Key Point of President's Regular Press Conference
September 2013 Regular Press Conference : President Mizuno’s Message
September 17, 2013
Chubu Electric Power Co.,Inc.
- First, I express my heartfelt sympathy to all those who suffered from typhoon No. 18, which caused serious damage on the Japanese archipelago.
- Also, in light of the great inconvenience caused to them, I sincerely apologize to our customers in the regions that experienced power outages as a consequence of the typhoon.
- Today, I would like to speak about the following three points.
- Efforts to increase operational efficiency
- Revisions of the full-year earnings forecast and dividend forecast for FY2013
- Commencement of an examination of an electricity rate increase
Efforts to increase operational efficiency
- First, I would like to speak about the status of our efforts to improve operational efficiency.
- Since shutting down all of the reactors at the Hamaoka Nuclear Power Station in May 2011, we have been striving to drastically improve our operational efficiency. Since April of this year, we have established the Office for Emergency Measures for Management Efficiency, with myself as the head of the office. With the entire company working together, we are making the utmost efforts towards increasing our operational efficiency to new levels.
- To begin, I will comment on reducing our fuel procurement costs. With regard to LNG procurement, since costs are substantially influenced by market conditions and the supply-demand situation, we are striving to carry out flexible spot procurement to further reduce expenses.
- Specifically, in order to enter into supply contracts for efficient spot procurement, we have concluded basic master agreements with multiple sellers. Furthermore, we have expanded the specifications for the LNG that can be accepted by our power stations.
- In addition, an example of another measure is our active use of the Kawagoe Thermal Power Station’s additional LNG tanks, which were put into operation in March of this year.
- In anticipation of the increase in our LNG tank capacity, from among multiple procurement candidates, we have carried out cheaper procurement of liquefied natural gas.
- Consequently, as a result of our procurement to date, since we have been able to achieve less expensive procurement than in existing agreements, we expect a reduction of approximately 5.0 billion yen in fuel costs.
- Next, I would like to comment on our cost reductions through group-wide efficiency improvements.
- Since shutting down all of the reactors at the Hamaoka Nuclear Power Station, we have strived to achieve group-wide efficiency improvements.
- As a result of collaboration between our relevant operating divisions and the group companies to improve productivity and restructure operations, we have currently achieved new cost reductions in areas such as our facility inspections.
- We expect that the resulting reduction in repair costs will be on par with the cost reduction in fuel procurement, totaling approximately 5.0 billion yen.
- Next, I will comment on the reduction of personnel costs. Since we regard nothing as off limits in our pursuit of cost reductions, we carried out a study that included personnel costs.
- To our employees who consistently work with the utmost energy to provide a stable supply of electricity, it deeply saddens me to say that on August 27 I made a proposal to the labor union to reduce personnel costs, including monthly salaries.
- Because this is a critical issue for the morale of our employees, in the future I will carefully pursue deliberations with the labor union by carrying out earnest discussions.
Revisions of the full-year earnings forecast and dividend forecast for FY2013
- Next, I would like to speak about the revision of the full-year earnings forecast for FY2013.
- We have made upward revisions to the earnings forecast values that were announced on July 31.
- With regard to the full-year earnings forecast, reflecting the operational efficiency improvements that I spoke about earlier, since the announcement in July we have forecast a total cost reduction of approximately 10.0 billion yen, comprising approximately 5.0 billion yen in fuel costs and 5.0 billion yen in repair costs.
- As a result, consolidated ordinary profit (loss) will see an ordinary loss of 100.0 billion yen, which means that we have reduced the loss by 10.0 billion yen from the value announced in July.
- Next, I would like to comment on the revision of the dividend forecast for FY2013.
- As I have explained, with the whole company working together, we have been pursuing measures to improve operational efficiency. Nonetheless, we expect the circumstances surrounding our earnings to remain very challenging.
- Furthermore, at the present time, we are unable to get a clear view of the timing of a resumption of operations at the Hamaoka Nuclear Power Station.
- Taking all of these circumstances into account, I regret to inform our shareholders that we are unable to meet their expectations. Although we have consistently paid interim and year-end dividends over many years, we are forced to omit these dividends this fiscal year.
- Meanwhile, please note that, in consideration of these challenging business conditions, we have decided to further reduce directors’ remuneration.
- To date, in regard to directors’ remuneration, we reduced annual salaries by approximately 15% beginning in July 2011. However, from this October, we will reduce the annual salaries of both the chairman and the president by 40%, thereby achieving a reduction of approximately 30% in the average remuneration of directors.
Commencement of an examination of an electricity rate increase
- As I said before, in regard to operational efficiency improvement, the entire company has worked together with me taking the lead.
- Nonetheless, with respect to the full-year earnings forecast for FY2013, including the revision announced today, although we have twice made upward revisions, we still forecast an ordinary loss of 100.0 billion yen in consolidated ordinary profit (loss).
- With respect to our earnings forecast for FY2014, we have begun deliberations on personnel cost reductions. Still, given that a resumption of operations at the Hamaoka Nuclear Power Station cannot be expected, we have no alternative but to judge that a return to profitability is difficult.
- In order to continue providing a safe and stable supply of electricity, which is our greatest mission, although it was a painful decision, I have instructed the executive office to start a detailed examination of an electricity rate increase.
- We apologize to our customers for any inconvenience, and sincerely request your understanding as we begin examining an electricity rate increase, which we will kindly ask you to bear.
- Again, in order to minimize the burden on our customers as much as possible, the entire company will work together, making the utmost efforts to improve our operational efficiency. Furthermore, we will place top priority on providing a safe and stable supply of electricity, which is our greatest mission.
- That concludes my remarks for today.