OSAKA GAS CO., LTD.

Business Details

This segment covers the manufacturing, supply, and sale of city gas, sale of gas appliances, gas piping construction, sale of LNG/LPG, LNG transportation, sale of industrial gas, power generation, and electricity sales. Group companies share functional roles in operating the business: Osaka Gas Network Co., Ltd. handles the general gas pipeline business, Osaka Gas Marketing Co., Ltd. handles gas and electricity sales to residential customers, and Daigas Energy Co., Ltd. handles gas and electricity sales and energy services to commercial customers. This is the largest segment, accounting for approximately 80.8% of consolidated net sales.

Recent Overview

Despite gains from the raw material cost adjustment timing effect, operating income declined year on year due to increased power plant costs

In the Domestic Energy segment for FY2026 (ending March 2026), net sales decreased by ¥94,499 million year on year to ¥1,643,406 million, due to lower gas and LNG selling unit prices trending under the raw material cost adjustment system. Operating income decreased by ¥6,133 million year on year to ¥68,749 million, as the increase-in-profit effect from the timing lag in raw material price changes was offset by higher costs, including depreciation, associated with the start of operations of Unit 1 of the Himeji Natural Gas Power Plant. The number of gas supply contracts increased 0.9% year on year to 5,161 thousand, while gas sales volume declined for both residential and commercial customers, totaling 6,560 million m³ (down 1.4% year on year). Electricity sales volume increased 1.5% year on year to 17,238 million kWh, driven mainly by retail sales.

Key Products

Growth Drivers

• Continued expansion of electricity sales volume (17,238 million kWh for the period, up 1.5% year on year) and increase in low-voltage supply contracts (1,946 thousand, up 1.3% year on year), boosting the electricity business's profit contribution
• Strengthened power generation competitiveness through the start of operations of Units 1 and 2 of the Himeji Natural Gas Thermal Power Plant (combined capacity of approximately 1.25 million kW; Unit 1 began operations during the period)
• Continued expansion of the customer base through increased gas supply contracts (5,161 thousand, up 0.9% year on year)
• Timing lag effect under the raw material cost adjustment system: a temporary profit-boosting factor during periods of raw material price fluctuation
• Expanded appeal of environmental value and stronger customer acquisition through growing penetration of renewable energy sources

Risks

• Timing lag risk under the raw material cost adjustment system: in periods of rising raw material prices, a time lag occurs before this is reflected in selling prices, temporarily reducing profit
• Structural decline in residential gas demand: residential gas sales volume continued its downward trend, down 0.9% year on year, due to elevated temperature and water temperature levels and the spread of energy-efficient appliances
• Intensifying competition due to full liberalization of electricity and gas retail markets: fierce market competition continues, exerting ongoing pressure to increase customer acquisition costs and push down selling unit prices
• Increased depreciation and fixed costs associated with the start of operations of Units 1 and 2 of the Himeji Natural Gas Power Plant: for FY2027 (ending March 2027), a decline in profit from electricity market trading and increased costs at the power plant are expected to pressure ordinary income
• Uncertainty in the LNG procurement environment: risks associated with unstable supply-demand balances of energy resources and sharp price fluctuations are increasing
• Impairment risk: an impairment loss of ¥23,396 million was recorded on a consolidated basis for the fiscal year under review, and there is a possibility of continued impact on domestic energy assets