HIROSHIMA GAS CO.,LTD.

Business Details

Manufactures, supplies, and sells city gas primarily in the supply areas of Hiroshima City, Hatsukaichi City, Higashihiroshima City, Kure City, Onomichi City, Mihara City, and Fukuyama City. LNG, the main raw material, is imported from overseas by LNG tanker. The segment also handles gas appliance sales, gas equipment installation work, and wholesale supply to other gas operators. As the core business accounting for approximately 78.0% of consolidated net sales, it supplies gas for residential, commercial/industrial, and wholesale supply and other uses.

Recent Overview

Net sales decreased 4.3% year on year due to lower sales volume and unit prices, but segment profit increased 74.7% due to cost reductions

Gas Business net sales for FY2026 (ending March 2026) were ¥68,877 million (down 4.3% year on year). City gas sales volume decreased 0.5% to 457 million m³, with residential (down 1.5%) and commercial/industrial (down 5.0%) both declining, while wholesale supply, etc. increased significantly by 20.4% to 83 million m³. A decline in the average selling price also pushed down net sales. On the other hand, segment profit increased 74.7% year on year to ¥961 million due to a decrease in various expenses, resulting in a significant improvement in profitability.

Key Products

Growth Drivers

• Continued increase in the number of customer connections (up 923 year on year to 419,257 through proactive sales activities)
• Substantial increase in wholesale supply, etc. (up 20.4% year on year to 83 million m³, driven by higher sales volume to existing customers of wholesale supply destinations)
• Expansion of electricity sales volume (up 10.0% year on year to 41 million kWh)
• Reduction in cost of sales and improved profitability due to lower raw material prices (JCC crude oil price declining from $82/bbl to $71/bbl)
• Diversification of LNG procurement sources and strengthening of a stable procurement base

Risks

• Continued decline in city gas sales volume (down 0.5% for the current consolidated fiscal year, with commercial/industrial down 5.0%)
• Risk of rising LNG raw material procurement costs due to exchange rate fluctuations and rising crude oil prices (assumptions for the next fiscal year's plan: JCC $80/bbl, ¥155/$)
• Geopolitical risk related to continued LNG imports from Russia (procurement is currently proceeding without disruption)
• Intensifying competition among operators due to full liberalization of the gas and electricity retail markets
• Long-term risk of declining city gas demand due to the trend toward decarbonization aimed at carbon neutrality by 2050
• Long-term risk of shrinking residential demand due to population decline associated with the falling birthrate and aging population

Business Details

The Hiroshima Gas Group's LPG Business primarily targets areas not supplied with city gas, with group companies selling LP gas, gas appliances, and providing piping construction. Its share of consolidated net sales is approximately 20.5% (FY2026, ending March 2026), making it the second-largest reportable segment after the Gas Business. During the current period, sales volume increased, but net sales and profit declined due to a decrease in average selling price, among other factors.

Recent Overview

Net sales and profit declined significantly despite increased sales volume, due to lower average selling prices

In the LPG Business for FY2026 (ending March 2026), although sales volume increased, net sales decreased 0.4% year on year to ¥18,101 million due to a decline in LP gas average selling price, among other factors. Segment profit fell sharply by 35.1% year on year to ¥270 million. The decline in crude oil price (JCC) from $82/bbl in the prior period to $71/bbl was a factor pushing down the average selling price.

Key Products

Growth Drivers

• Increase in sales volume (an increase was confirmed year on year in FY2026, ending March 2026)
• Strengthening of sales activities based on the management policy of deepening the city gas and LPG businesses
• Wide-area coverage and integrated provision of appliance sales and construction work through the group company system
• Strengthening of the revenue base through expanded investment in equity-method affiliates (¥1,992 million)

Risks

• Risk of declining LP gas average selling price (the main cause of the significant decline in profit during the current period)
• Risk of rising procurement costs due to fluctuations in international crude oil and LPG prices and exchange rate fluctuations
• Risk of customers switching to city gas as the city gas supply area expands
• Intensifying competition among operators due to full liberalization of energy retail
• Impact on raw material procurement from geopolitical risks such as the Russia-Ukraine situation

Business Details

A segment bundling peripheral businesses other than gas and LPG. It mainly consists of the Construction Business (engineering-related business such as open inspection of high-pressure gas equipment, construction work, and machinery/equipment installation work) and the Elderly Services Business (nursing care, etc.). From the current consolidated fiscal year, "Other," which had not previously been included in reportable segments, has increased in quantitative significance and has been newly classified as the reportable segment "Other Business." Its share of the Group's consolidated net sales is approximately 5.2%.

Recent Overview

Net sales increased 17.0% year on year due to higher construction work sales, but profit declined 3.0%

In the Other Business for FY2026 (ending March 2026, fiscal year 2025), net sales (including inter-segment, total) increased 17.0% year on year to ¥4,609 million due to an increase in construction work sales, among other factors. On the other hand, segment profit declined 3.0% year on year to ¥208 million due to an increase in expenses, among other factors, resulting in higher sales but lower profit. Net sales to external customers were ¥2,923 million, roughly flat compared to the prior period (¥2,920 million), with most of the sales increase attributable to an increase in inter-segment internal sales (¥1,685 million, up from ¥1,019 million in the prior period).

Key Products

Growth Drivers

• Increase in construction work orders (driving the 17.0% year-on-year increase in net sales for the current period)
• Demand for construction work within the Group (outsourced main/branch pipe construction and safety inspection work for the Gas Business, with inter-segment internal sales expanding from ¥1,019 million in the prior period to ¥1,685 million)
• Steady trend in demand for elderly services amid the progression of an aging society
• Increased quantitative significance following elevation to a reportable segment

Risks

• Risk that construction work, which is subject to large fluctuations in orders received, may see profit squeezed by rising costs even during phases of sales growth (segment profit declined 3.0% year on year during the current period despite higher sales)
• Risk of deteriorating profitability in the Elderly Services Business due to revisions to nursing care fees and rising costs of securing personnel
• Although the segment is small in scale (approximately 5.2% of the Group's consolidated net sales) and has a limited impact on overall Group performance, the volatility of its profit contribution is relatively large
• High dependence on inter-segment internal sales (internal sales of ¥1,685 million account for approximately 36.6% of the recorded total of ¥4,609 million), creating a risk that earnings are influenced by capital expenditure trends in the Gas Business