Nippon Gas (8174) Q2 2025 earnings summary

Executive summary

• 1H results missed plan due to lower gas sales from high temperatures and higher customer acquisition costs, but full-year operating income and net income guidance remain unchanged, targeting record net income and 20% ROE for FYE 03/25.

• Net sales for the six months ended September 30, 2024, rose 0.6% YoY to ¥86,049 million, but operating income fell 49.5% to ¥2,307 million and profit attributable to owners of parent dropped 51.0% to ¥1,609 million.

• Aggressive expansion in LP Gas and electricity customer base led to temporary profit decline but is expected to drive long-term growth.

• Three-year plan aims for continued profit growth, driven by customer expansion in LP Gas and Electricity, and expansion of the Energy Sola business.

Financial highlights

• 1H gross profit was ¥30,809 million, down 0.6% YoY; LP Gas profit growth offset city gas slide lag decline.

• 1H operating income was ¥2,307 million, down from ¥32B planned and ¥46B YoY; net income was ¥1,609 million, below plan.

• SG&A expenses increased YoY, mainly from higher customer acquisition costs and IT investments.

• Basic earnings per share for the period was ¥14.49, down from ¥28.86 a year earlier.

• Total assets decreased by ¥16,800 million to ¥142,388 million, and net assets fell by ¥7,400 million to ¥65,265 million compared to March 31, 2024.

Outlook and guidance

• Full-year forecast for FY ending March 31, 2025, remains unchanged: net sales ¥200,000 million (+2.9% YoY), operating income ¥20,000 million (+14.7%), profit attributable to owners of parent ¥14,000 million (+29.3%), and EPS ¥126.71.

• Dividend forecast for FY2025 is ¥92.50 per share, up from ¥75.00 in FY2024.

• 2H expects higher gas and electricity sales from colder weather and improved margins, with SG&A reduction from regulatory changes.

• FY25 LP Gas residential margin forecast raised to ¥228/kg (from ¥225/kg) due to strong yen and price adjustments.