J-POWER Q2 FY2027: Operating profit jumps 52%, net income falls

J-POWER's first-half revenue increased 21.0% year on year and operating profit rose 52.4%, while net income attributable to owners of the parent fell 12.5%. Higher power sales prices helped lift operating profit, but ordinary profit declined 14.8% as equity-method investment profit outside operating income fell sharply.

Higher power sales prices supported revenue growth, while operating expenses, including fuel costs, also increased. The loss of equity-method investment profit from the prior-year sale of an interest in a U.S. thermal power business, along with foreign-exchange losses, weighed on ordinary profit. The results combine stronger core earnings with lower net income, making it important to distinguish operating performance from non-operating items.

The power generation business increased revenue 14.8% year on year and segment profit 93.7%. Higher power sales prices and lower repair costs supported earnings. Total electricity sales volume declined, but increased thermal power sales, helped by a higher utilization rate, offset lower hydropower output due to reduced water inflows.

Overseas business revenue rose 53.7%. Sales volume in Thailand increased, lifting total electricity sales volume for the overseas business by 41.4%, but segment profit declined because of the reversal of gains from the sale of an interest in a U.S. thermal power business. Performance should be assessed in light of both revenue growth and the impact of the prior year's one-time gain.

• Transmission and transformation: Revenue declined 0.1% year on year. Segment profit fell as expenses for the disposal of fixed assets and interest payments increased.
• Electricity-related businesses: Revenue increased 12.9%. A weaker yen offset a decline in coal sales volume, but profit fell 13.1% as operating profit at the subsidiary holding Australian coal mining interests declined.
• Other businesses: Revenue fell 22.3%, while segment profit increased 81.9%.

Segment profit rose in power generation and other businesses, while overseas and transmission and transformation posted sharp declines. Overseas sales volumes increased, but the reversal of the prior-year gain from the sale of an interest affected profit.

J-POWER continued investing during the first half, primarily in overseas power generation. The increase in assets reflects progress on construction of the Charrua solar power plant in the U.S., as well as investments in a hydropower business in Laos and two gas cogeneration projects in Thailand.

In Laos, J-POWER established the jointly controlled entity Pak Lay Power Co., Ltd. with Gulf Development Public Company Limited in April 2026, joining a run-of-river hydropower project that harnesses the Mekong River. The project incorporates design and operating measures to limit effects on the river environment and aims to support stable electricity supply in Southeast Asia, reduce environmental impact and contribute to carbon neutrality.

Higher cash outflows from investment activities reflect spending on such construction and overseas investments. A key focus will be how J-POWER funds and recoups its investments as it pursues overseas growth opportunities and renewable energy.

Profit from core operations increased, but fuel costs, foreign exchange and fluctuations in investment income from overseas businesses had a significant impact on results. J-POWER maintained its full-year forecast, while noting that actual performance could differ from its projections for various reasons.

• Higher fuel costs: Operating expenses rose 17.8% year on year. Continued changes in fuel prices or procurement terms could make it harder for higher power sales prices to translate into profit growth.
• Foreign-exchange movements: J-POWER recorded foreign-exchange losses during the first half, and the weaker yen also affected overseas assets and liabilities. Currency movements can affect earnings and the valuation of assets and liabilities.
• Hydropower inflows: The hydropower utilization rate declined to 90% from 92% a year earlier. Weather and water conditions can cause renewable electricity sales volumes to fluctuate.
• Volatility in overseas earnings: Overseas sales volumes increased, but segment profit declined because of the reversal of the prior-year gain from the sale of an interest in a U.S. thermal power business. Assessing the underlying profitability of each business requires accounting for whether one-time gains are present.
• Higher investment and debt: Interest-bearing debt increased from the end of the previous fiscal year as J-POWER advanced solar plant construction and overseas investments. The challenge is to ensure project progress and future earnings justify the funding burden.