Shikoku Electric: Raises FY27 profit outlook despite annual drop

For the year ending March 2027, Shikoku Electric lowered its consolidated revenue forecast but raised its projections for operating profit, ordinary profit and net profit attributable to owners of the parent. The previous forecast, revised forecast and prior-year results are as follows.

Compared with the previous forecast, operating profit is expected to rise 20.3%, while ordinary profit and net profit are each forecast to increase 25.0%. Revenue is projected to fall 2.2%. The revised forecasts for operating profit, ordinary profit and net profit are all below prior-year results, while revenue is expected to exceed the prior-year figure.

In contrast to the consolidated outlook, Shikoku Electric cut its standalone forecasts for revenue and all profit measures for the year ending March 2027. The figures, including prior-year results, are as follows.

The revised forecast represents declines from the previous outlook of 2.7% for revenue, 28.9% for operating profit, 18.6% for ordinary profit and 17.4% for net profit. Revenue is expected to exceed the prior-year result, but all profit measures are forecast to fall short. The divergence between higher consolidated profit forecasts and lower standalone projections is a defining feature of the revision.

Shikoku Electric expects earnings to improve after its transmission and distribution subsidiary revises wheeling charges to reflect factors including higher prices and interest rates. The main assumptions for full-year electricity sales, fuel prices and foreign exchange are as follows.

• Retail electricity sales: Set at 21.7 billion kWh, down 0.4 billion kWh from the previous forecast of 22.1 billion kWh.
• Wholesale electricity sales: Set at 15.6 billion kWh, down 1.2 billion kWh from the previous forecast of 16.8 billion kWh. Total electricity sales are forecast at 37.3 billion kWh, down 1.6 billion kWh from the previous outlook.
• Coal CIF price: Assumed at $160 per tonne, down from $170 previously.
• Crude oil CIF price: Assumed at $105 per barrel, up from $95 previously.
• Exchange rate: Assumed at ¥158 to the dollar, revised from ¥160 in the direction of a stronger yen.

The company lowered its electricity sales assumptions but factored in improved earnings from the wheeling-charge revision, among other items. In this forecast revision, changes to charges in the transmission and distribution business, rather than an increase in sales volume, are expected to lift consolidated profit.

Shikoku Electric raised its consolidated forecast for earnings per share to ¥184 from ¥147. The figure is still below the prior-year result of ¥247.27, making the year-on-year change important alongside the higher profit forecast.

The company expects consolidated revenue to exceed the prior-year result, while operating profit, ordinary profit and net profit are forecast to fall short. Investors will watch how improved earnings from revised wheeling charges feed through to consolidated results alongside lower electricity sales assumptions and the downgrade to standalone forecasts.