Tokyo Gas Co., Ltd. · TSE:9531
Tokyo Gas — Q2 FY2023 Earnings Presentation
35 slides from Tokyo Gas's earnings presentation, Oct 26, 2023
Slide 1: FY2023 2Q Financial Results
Lf FY2023 2Q Financial Results ended September, 2023 October 26, 2023 "E TOKYO GAS TSE:9531
Slide 2: Today's Key Messages
Today’s Key Messages 2 BH @ Consolidated FY2023 2Q sales fell while profits rose versus the same period last year. Factors include a drop in Energy Solution sales driven by lower sales volume for city gas and electricity, and an increase in electricity profits spurred by reduced procurement costs, a
Slide 3: FY2023 Consolidated Financial Results
o1 FY2023 Consolidated Financial Results ended September, 2023 "FTOKYO GAS
Slide 4: Sales decreased, but profits increased in 2Q FY2023
Sales decreased, but profits increased in 2Q FY2023 compared to the corresponding period of the previous fiscal year. Net sales decreased by ¥88.5 billion. This is mainly attributable to a decrease in sales due to lower sales volume for city gas and electricity in the Energy Solution segment. Operat
Slide 5: Net sales and segment profit by segment
This slide shows net sales by segment and segment profit, which is operating profit plus equity income/loss of subsidiaries, and changes thereof. 5
Slide 6: Segment profit changes: Energy Solution, Network, Overseas, Urban Development
The ¥49.7 billion increase in profit of the Energy Solution segment mainly reflects a rise in the gross margin of city gas due to a sliding time lag effect and a decrease in procurement costs due to the softening of the impact of JEPX prices in the electricity business. The Network segment saw a ¥3.
Slide 7: City gas sales volume
The city gas sales volume up to 2Q FY2023 decreased by 12.9% overall, mainly reflecting reduced demand from residential customers due to high temperatures in the summer and a fall in demand from power generation customers for industrial use, although there was a rise in air conditioning demand from
Slide 8: Electricity sales volume
Electricity sales volume up to 2Q FY2023 decreased by 26.1% overall. Retail electricity sales rose by 19.4% due to an increase in the number of customers and high temperatures in the summer, while the sales volume to wholesale fell by 47.4%. 8
Slide 9: FY2023 Full Year Forecast
02 FY2023 Full Year Forecast "FTOKYO GAS
Slide 10: Upgraded FY2023 sales and profit forecasts
For the FY2023 full year, we have upgraded both our sales and profit forecasts. The economic framework assumptions for October onward, which serve as a basis of our forecast, have been changed as follows: foreign exchange rate from ¥135/$ to ¥145/$ and crude oil price from $80/barrel to $90/barrel.
Slide 11: Forecast key indicators, assets and cash flows
This slide shows our forecasts for key indicators on a consolidated basis, including the status of assets and cash flows. 11
Slide 12: Capex, investments and financing projections FY2023
This slide details our projections for capital expenditure, investments, and financing in FY2023. 12
Slide 13: FY2023 Investments (Capex, Investments and financing)
FY2023 Investments (Capex, Investments and financing) Reference: Breakdown of the Medium-Term Management Plan for FY 2023-2025 ‘unit 100 mien yen) F¥2023 . Previous FY2020-22 F¥2023-25 Forecast Main Ttems Forecast Results Plan 4,758 6,500 Overseas, Renewable power, Urban Development, etc Growth inve
Slide 14: Forecast net sales and profit by segment
This slide shows our forecast for net sales and profit of each segment and changes from our previous forecast. Our forecast for consolidated segment profit has been upgraded by ¥4.1 billion from our previous forecast. 14
Slide 15: Segment forecast changes from previous forecast
We have downgraded our profit forecast for the Energy Solution segment by ¥2.7 billion. This mainly reflects a profit decline in the city gas business due to the sliding time lag effect in the second half following changes in our economic framework assumptions. Our forecast for the electricity busin
Slide 16: New forecast versus previous year actual
This slide shows comparisons between our new full-year forecast and our actual performance in the previous year. 16
Slide 17: FY2023 Forecast: Ordinary Profit Analysis
FY2023 Forecast: Ordinary Profit Analysis (unit : 100 million yen) e © Decrease in city gas gross margin -1,623 _»| Energy Change in volume, etc. -106 (incl. change due to temp effect +6), solution sliding time lag effect -1,517 -2,343 (Net sales) -3,172: Change in volume, etc. -464, sliding time (-
Slide 18: Gas sales volume forecast
Our forecast for gas sales volume has been downgraded by 0.5% from our previous forecast. This reflects our actual performance up to 2Q, such as a decrease in sales to residential customers due to high temperatures. 18
Slide 19: Electricity sales volume forecast
Our forecast for electricity sales volume has been downgraded by 1.9% from our previous forecast. This is mainly attributable to a drop in wholesale and other sales volumes despite incorporating an increase in retail sales volume due to a rise in the number of customers. 19
Slide 20: Profit changes by major element
This slide illustrates changes in profit for each major element of change from the previous year. 20
Slide 21: Reference materials overview
The following reference materials include a table on the sensitivity to the economic framework assumptions, the trend of crude oil prices and exchange rates, key topics during the period, and a list of major overseas investment projects. Details of our efforts to “Realizing management mindful of cap
Slide 22: Gas Gross Margin Sensitivity to Crude Oil Price and Exchange Rate
Impact of rising JCC (apan Crude Cocktail Prices) by $1/bbl (Unit: 100 million yen) Impact on earnings 3Q 4Q Full year 3Q -1 “12 -13 Period 4a : el a Fullyear = -13 -14 Impact of depreciation of the yen by ¥1/$ (Unit: 100 million yen) Impact on earnings 3Q 4Q Full year 3Q -8 +8 oO Period 4Q 2 si2 =i
Slide 23: Crude oil price - Exchange rate
Crude oil price - Exchange rate Crude oil price (Japan Crude Cocktail Prices) (s/bbl) 120.00 110.00 100.00 90.00 80.00 —_ 70.00 60.00 50.00 40.00 30.00 20.00 ef Ss > —e-FY2023 —e-FY2022 —e=FY2021 Exchange rate (#/s) 150.0 145.0 140.0 135.0 130.0 125.0 120.0 115.0 eee 110.0 105.0 100.0 . fF FS SF UF
Slide 24: Realizing management mindful of capital costs and stock prices
Realizing management m ul of al costs and st prices 24 BH (1) Analysis of current situation Our PBR has remained below 1.0 since FY2019 + Contributing factors: v Lower profit levels, plus lower ROE/ROA levels due to reasons such as investment-related increase in assets v Greater market liberalizatio
Slide 25: Realizing management mindful of capital costs and stock prices
Realizing management mindful of capital costs and stock prices (3) Progress in improvement efforts ® Efforts to improve efficiency & profitability mprovement of ROE @ Implementation of business portfolio management + Started to regularly review ROA versus WACC for each internal company and key busin
Slide 26: Mapping of key business segment changes from Oct. 2023 realignment
Mapping of key business segment changes resulting from Oct. 2023 organizational realignment + Certain functions of the business segments were repositioned as part of the realignment of the Tokyo Gas Group's organization in October 2023. These changes will be reflected in our financial report disclos
Slide 27: FY2023 Full Year Forecast: Sales and Operating Profit by Segment
(Ref.) FY2023 Full Year Forecast: Sales and Operating Profit/Loss by Business Segments 27 Hl (unit : 100 million yen) Net solees + Equity Tnconey/ co oF sutsidlar pidiaries) xS x5 forecasts FY2023. Char forecasts FY2023 Char nge nge (New Forecast (New Forecast Energy solution*s "24853. -24,553_ +300
Slide 28: Key Topics in FY2023 2Q
Key Topics in FY2023 2Q (Exc ed from Press Releases) 28 | change” Below are key initiatives of the 3 core strategies of the FY2023-2025 Medium- term Management Plan, which are based on our material issues. The strategies are: “Achieve both stable energy supply & decarbonization,” “Fully roll out Sol
Slide 29: Key Topics: Achieve both stable energy supply & decarbonization
Key Topics in FY2023 2Q (Excerpted from Press Releases) FY2023-2025 Medium-term Management Plan: Initiatives for the 3 core strategies |Carbon-negative concrete used at Motomachi Elementary School in Yokohama (Apr. 13) Hoint acquisition of solar power generation business in Okayama and & [@] | IHyog
Slide 30: Key Topics: Fully roll out Solutions business
Key Topics in FY2023 2Q (Excerpted from Press Releases) FY2023-2025 Medium-term Management Plan: Initiatives for the 3 core strateg Acquisition of real estate asset management company and entry into [=] je] B private REIT business (Apr. 3)*? Signing of comprehensive partnership agreement for sustain
Slide 31: Key Topics: Fully roll out Solutions business
Key Topics in FY2 023 2Q (Excerpted from Press Releases) 31m FY2023-2025 Medium-term Management Plan: Initiatives for the 3 core strategies Material issues Fully roll out Solutions business Signing of comprehensive partnership agreement for realizing a carbon| neutral city in Tochigi City (July 13)
Slide 32: Key Topics: Flexible corporate culture and share buybacks
Key Topics in F 3 2Q (Excerpted m Press Releases) 32 Bl FY2023-2025 Medium-term Management Plan: Initiatives for the 3 core strategies Material issues Notice of Shares Buyback (Progress Report) (July 4) - Realize a flexible corporate culture Notice of Shares Buyback (Progress Report) (Aug. 2) - resi
Slide 33: Establishment of Regional Co-creation Company
Key Topics in FY2023 2Q (Excerpted from Press Releases) Here is a look at one example of how we are advancing the three core strategies of our FY2023-2025 Medium-term Management Plan. This particular initiative contributes to our efforts to fully roll out the Solutions business. We established the R
Slide 34: Overseas Projects
Overseas Projects 34 Area No e North America e i) ° Southeast Atay 8 @ Philippines FGEN LNG Downstream Sues |, Operation and maintenance of the LNG 2020 Darwin Upstream ‘and sales of LNG 72003 Pluto Upstream Production, liquefaction and sales of LNG 2008 Oceania © Australia Gorgon ‘Upstream ‘and sal
Slide 35: Cautionary Statement regarding Forward-looking Statements
"F TOKYO GAS < Cautionary Statement regarding Forward-looking Statements > Statements made in this presentation with respect to Tokyo Gas’s present plans, forecasts, strategies and beliefs, and other statements herein that are not expressions of historical fact are forward-looking statements about t