Key Point of President's Regular Press Conference

Key Point of President's Regular Press Conference

March 2018 Regular Press Conference : President Katsuno's Message

March 27, 2018
Chubu Electric Power Co.,Inc.

  • Today I will be discussing the following matters:
    • Revised forecasts of FY2017 earnings and dividend
    • FY2018 Measures for Management Issues and revision of Chubu Electric Power Group’s Management Vision
    • Record of power demand in the Chubu area this winter
    • Nishi-Nagoya Thermal Power Station

Revised forecasts of earnings and dividend

  • The first topic I’d like to talk about is the revised forecasts of our FY2017 earnings and dividend.
  • To reflect latest performance trends, we have decided to revise our FY2017 forecasts for year-end dividend and earnings, which were previously announced in January 2018.
  • Regarding revisions on our earnings forecast, we are expecting our consolidated sales to go up 20 billion JPY to 2.8 trillion JPY from the previously announced 2.78 trillion JPY.
  • This increase reflects how temperatures during this winter pushed up electricity sales.
  • Meanwhile, we are expecting our consolidated ordinary income to go up 15 billion JPY to 125 billion JPY from the previously announced 110 billion JPY.
  • This increase reflects how electricity sales went up and how a stronger yen narrowed down accrued losses incurred by the fuel cost adjustment system.
  • The income excluding that incurred by the fuel cost adjustment system is expected to mark 145 billion JPY.
  • There have been solid developments in our management streamlining results in relation to our management goal of gaining a consolidated ordinary income of at least 150 billion JPY by FY2018.
  • As for revisions on our year-end dividend forecast, our basic stance is to maintain stable dividends after taking account of financial conditions while continuously investing in building and operating equipment essential for a safe and stable supply of electricity.
  • The year-end dividend forecast for FY2017 has been revised to 20 JPY from the previous 15 yen per share. That’s based on considerations for our improved revenue and expenditure achieved by progress in management streamlining results, as well as future mid- to long-term financial conditions and business environments.
  • We will maintain group-wide efforts to improve our management efficiency and be committed to meeting expectations and trust of clients, shareholders, and society.

Measures for Management Issues and revision of Management Vision

  • The next topic I’d like to talk about is Measures for Management Issues and the revision of our Management Vision.
  • In addition to revising the Chubu Electric Power Group Management Vision that we announced in February 2016, efforts toward realizing new management visions have been compiled into our Measures for Management Issues.
  • Japan is experiencing a population decline and a slowdown in economic growth, which are consequently aggravating various social challenges. In relation to such challenges, the revised Management Vision presents the future course of and the Group's strong will toward further change so that the Group can reexamine what value to offer to clients and society, thereby catering to the trust and expectations of clients and society and to keep serving as a top-choice utility.
  • The environment around clients and the society is expected to rapidly change with such technological advances as the Internet of Things (IoT) or artificial intelligence (AI) and the popularization of electric vehicles, in addition to transitions in our business system including our power transmission and distribution sector’s spin-off.
  • Our Group thinks that in these changes are opportunities for growth.
  • Our revised Management Vision presents two major pillars in addition to further promoting the stable supply or efficient use of electricity by harnessing advanced technology.
  • The first pillar is to transition to a business model that separates power generation from retail services and to have each business unit make independent efforts, thereby developing into a stronger corporate group to increase earnings of energy businesses.
  • The second pillar is to establish the provision of “a new community platform” that resolves various social challenges as a new growth area and nurture that area to become a core earnings source.
  • Regarding the first pillar, we will transition to a business model that separates power generation from retail by integrating our thermal power generation business into JERA and spinning off our power transmission and distribution/sales sectors.
  • The essence of this business model, in which generation and retail sectors are independent, lies in power generation, power transmission and distribution, and sales business units facing business partners and clients in their respective activity areas, and delivering higher value to customers through autonomous improvement of service levels.
  • Going beyond conventional electricity supply areas to largely expand business, JERA will take advantage of the economy of scale and deliver more reasonable and stable energy.
  • In addition to flexibly procuring energy, the sales company will extensively cooperate with operators to offer reasonable energy and new services to a greater number of clients.
  • To fulfill our unchanging mission of providing high-quality electricity in a safe, reasonable, and stable manner, the power transmission and distribution company will rationally operate transmission/distribution equipment and adjust power supply and demand with advanced technology, accordingly shaping an efficient network.
  • Regarding the second pillar, we consider the concept of community not only as municipalities, senior citizens’ societies, school districts, or other gatherings of social life but also as a collective reference to bonds between people in general, including those between individuals.
  • Our Group’s strength lies in how we built bonds and a relationship of trust with local clients, as well as our solid technological and proposal skills we developed through energy businesses.
  • By combining our Group’s strengths with IoT, AI, and other latest technologies, we will offer new support services to the increasingly dissolving communities of today, in turn contributing to resolving various social issues of communities.
  • More specifically, we will provide a new community model where everybody can live without any worries. Examples include keeping an eye on one’s child heading to or returning from school on smartphones by identifying the child’s movement data, or linking domestic and medical data to enable people to check on the health of their parents who live far away.
  • I next would like to talk about our Group’s quantitative goal.
  • Chubu Electric Power Group will aim to become a corporate group boosting a consolidated ordinary income of at least 250 billion JPY in the late 2020s. That will be achieved by promoting efforts revolving around the two pillars I talked about, thereby developing a well-balanced business portfolio.
  • Our Measures for Management Issues indicate four priority measures aimed at realizing the Management Vision.
  • The four measures are:
    1. Further increasing safety of the Hamaoka Nuclear Power Station
    2. Ensuring stable energy supply for a new age
    3. Strengthening the business foundation for growth and growing sustainably
    4. Establishing a business mechanism/foundation to instantly respond to changes in environment
  • By promoting these measures, we hope to realize our management goal: achieving a consolidated ordinary income of at least 150 billion JPY by FY2018.
  • Moreover, we will reinforce our business foundation for growth by further increasing management efficiency and both developing and commercializing new development areas, thereby developing those areas into a core earnings source.
  • Regardless of how business environments may change, our Group’s corporate philosophy of providing energy essential for life and contributing to social development will remain unchanged.
  • To attain the Management Vision I presented today, Chubu Electric Power Group will promote the four priority measures and aim to grow sustainably as a leading total energy corporate group that provides clients with better-than-expected services ahead of competitors.

Record of power demand in the Chubu area this winter

  • The next topic I’d like to talk about is the record of power demand in the Chubu area this winter.
  • The maximum power from December 2017 to yesterday (March 26, 2018) was 23.54 million kW in terms of the maximum for a 3-day average. The maximum at a single point was 23.78 million kW, recorded on January 25.
  • The lowest temperature of this winter in Nagoya was -3.8℃, marked on January 25. Late January was when the 3-day average maximum power was marked and when the highest winter daily power consumption record was broken twice.
  • Apparently the amount of power consumption was primarily caused by extremely cold air that flowed in around this time, increasing the use of heaters.
  • We would like to show our gratitude for families, companies, local governments and the local community continuing to save power and energy and helping us stably supply electricity, despite this winter’s temperature fluctuating lower than normal between December 2017 and mid-February 2018.
  • Efforts to maintain and inspect facilities will continue so that we can continue to stably deliver electricity to our clients.

Nishi-Nagoya Thermal Power Station No. 7-2

  • Lastly, I’d like to touch on two matters relating to Nishi-Nagoya Thermal Power Station.
  • Nishi-Nagoya Thermal Power Station No. 7-2 is now entering its final commissioning stage. Plans are underway to start commercial operation this weekend.
  • After commencing commercial operation, the Station will achieve a gross output of 2.3764 kW and thermal efficiency of at least 62%, becoming a world-class, state-of-the-art LNG thermal power.
  • Construction work has been safe and successful thus far since starting in January 2014, thanks to the understanding of and cooperation from Tobishima Village, Chita City and other local communities as well as relevant parties. I wish to express my deep appreciation to them.
  • Nishi-Nagoya Thermal Power Station No. 7-1, which started operating commercially in September 2017, won recognition by Guinness World Records® for the unit’s power-generating system achieving the highest efficiency in the world.
  • We will keep pursuing the world’s highest technology levels in a group-wide manner and reduce both carbon dioxide emission and fuel consumption through efficient use of thermal power generation.This ends my presentation.

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