NICIGAS Q1 FY2027: Operating profit up 5%, raises first-half forecast

NICIGAS reported revenue of ¥49,910 million (up 8.8% year-on-year) for Q1 FY2027, operating profit of ¥3,836 million (up 5.0%) and ordinary profit of ¥3,819 million (up 4.2%), achieving both top- and bottom-line growth. Net income attributable to owners of the parent slipped 1.4% to ¥2,593 million, reflecting non-controlling interests and tax effects. Gross profit expanded 2.6% to ¥17,489 million, with SG&A effectively managed despite higher personnel and inflation costs.

The LP gas segment benefited from rising feedstock costs that widened commercial margins, while equipment/construction sales saw hybrid water heater volumes surge over 20% from a year earlier. Alongside the results, NICIGAS revised up its first-half (Apr–Sep) forecasts: operating profit is now seen at ¥4,100 million (previously ¥3,400 million), and net profit at ¥2,800 million (previously ¥2,300 million). Full-year guidance remains unchanged, with operating profit projected at ¥20,000 million (down 6.0% YoY) and net profit at ¥14,000 million (down 5.5% YoY).

From this quarter, NICIGAS introduced Platform Business as a separate reporting segment, reflecting its growing strategic importance. Previously included within LP gas, it is now disclosed independently.

LP Gas Business
Gross profit rose 6.8% to ¥11,886 million. Gas sales profit grew ¥706 million to ¥11,127 million, as higher raw material prices improved commercial gas margins. Residential gas volumes dipped 2.2% to 41.2 thousand tonnes, while commercial volumes added 1.6% to 26.2 thousand tonnes. Equipment and construction profit jumped 26.8% to ¥759 million, driven by strong sales of hybrid and energy-saving gas water heaters. The customer base reached 1,057 thousand, up 6 thousand from end-FY2026, aided by a new regional office in Chubu.

Electricity Business
Gross profit slumped 46.6% to ¥533 million, as soaring fuel costs compressed margins. The customer count grew by 5 thousand to 409 thousand, and the electricity-gas set ratio rose to 24.5%. NICIGAS launched a new low/medium-use plan, “Degawari Light,” aiming to accelerate customer gains, leveraging relatively competitive pricing versus market-linked peers.

City Gas Business
Gross profit edged down 2.6% to ¥4,492 million. Gas sales profit fell 4.9% to ¥4,154 million, but equipment/construction profit surged 37.6% to ¥337 million. The customer tally added 4 thousand to 613 thousand, sustaining net growth.

Platform Business
Gross profit jumped 41.7% to ¥576 million, including contributions from newly consolidated group companies. Shared use of networks for transportation and safety services is gaining traction, with rising inquiries from peers facing labor shortages and raw material inflation.

Total assets at end-June stood at ¥150,418 million, down ¥13,179 million (8.1%) from March 2026, mainly due to seasonal reductions in trade receivables (¥9 billion) and cash holdings (¥5.4 billion). Liabilities fell 10.9% to ¥85,615 million, with interest-bearing debt at ¥49,600 million (down ¥300 million). Net assets declined 4.0% to ¥64,802 million, largely reflecting a ¥5.5 billion dividend payment. The equity ratio was 42.7% and the D/E ratio 0.8x.

Operating cash flow was ¥2,304 million (up ¥165 million YoY), investing cash flow -¥1,583 million (down ¥236 million), yielding free cash flow of ¥720 million. Financing cash flow was -¥6,273 million, driven by ¥5.5 billion in dividends and debt repayments.

On shareholder returns, NICIGAS plans a ¥7 increase in the annual dividend to ¥110 per share (from ¥103). In May 2026, it cancelled 4,875,400 treasury shares and set up a ¥3 billion share buyback program (up to 1.5 million shares), aiming for an optimal capital structure with a ~40% equity ratio.

Key risks identified by NICIGAS include:

• Geopolitical tensions in the Middle East (Iran conflict, potential Hormuz Strait disruption) that could spike crude oil and LNG prices. Although a tentative US-Iran peace deal has calmed markets, energy procurement costs and a historically weak yen remain unpredictable.
• Structural headwinds in the energy retail sector: declining demand from an aging population, acute labor shortages, stranded infrastructure assets, and accelerating decarbonisation requirements.
• Fuel cost surges in the electricity business that compress margins, with profit swings possible depending on competitive dynamics with market-linked pricing plans.
• Integration risks from ongoing industry consolidation and M&A, where post-merger integration and goodwill impairment are key concerns.
• Intensifying extreme weather and natural disasters, underscoring the need to strengthen business continuity plans.

Full-year FY2027 consolidated forecasts are unchanged from the April 30, 2026 announcement: operating profit ¥20,000 million (down 6.0% YoY), ordinary profit ¥20,000 million (down 5.7%), and net income ¥14,000 million (down 5.5%). The company does not disclose a revenue forecast.

The first-half forecast has been raised as follows:

The revision reflects continued LP gas margin improvement, robust equipment and construction sales, and an increasing contribution from the Platform business. Through ongoing industry consolidation and its NICIGAS 3.0 strategy, the company aims to sustain medium-to-long-term profit growth.

Under its medium-term vision “NICIGAS 3.0,” NICIGAS is building an integrated energy adjustment capability. The core “smart remote controller” remotely manages household storage batteries and hybrid water heaters, creating demand-supply balancing resources. With major infrastructure investments largely complete, the company is accelerating the expansion of a platform that offers its efficient network to external operators.

Its mid-term plan (FY2027–FY2029) targets a 22% ROE while growing LP gas, electricity, city gas and platform operations, with final-year goals of ¥25.0 billion in operating profit and ¥17.5 billion in net income. Industry consolidation through M&A is a key strategy, aimed at expanding economic value added under disciplined capital allocation.