Chubu Electric Power Company,incorporated · TSE:9502

Chubu Electric Power Company,incorporated — Q2 FY2018 Earnings Presentation

56 slides from Chubu Electric Power Company,incorporated's earnings presentation, Oct 26, 2018

1. Slide 1: Investors Meeting 2nd Quarter FY2018

   Investors Meeting 2nd Quarter FY2018 October, 2018

2. Slide 2: INDEX

   INDEX 01 Outline of Financial Results for Six-Months ended September 30, 2018 Summary of Financial Results ･･･････････････01 Electrical Energy Sold ･･･････････････04 Electrical Power Supplied and Principal Figures ･･･････････････05 (Reference) Impact of Accrued Income Incurred by Fuel Cost Adjustmen

3. Slide 3: Outline of Financial Results for Six-Months ended September 30, 2018

   01 Outline of Financial Results for Six-Months ended September 30, 2018 Note: The company’s fiscal year (FY) is from April 1 to March 31 of the following year. FY2018 represents the fiscal year begun on April 1, 2018, and ending on March 31, 2019. 2nd Quarter(2Q) represents six months period ended S

4. Slide 4: Summary of Financial Results <1>

   01 Summary of Financial Results <1> <Points of Financial Results>  Consolidated operating revenues : 1,487.4 billion yen Operating revenues increased by 94.1 billion yen compared with 2017/2Q, mainly due to an increase in surcharge and grant based on Act on Special Measures Concerning Procurement o

5. Slide 5: Summary of Financial Results <2>

   02 Summary of Financial Results <2> [Factors contributing to change in consolidated operating revenues] An increase in (Billion yen) surcharge and grant Others under act on purchase of renewable energy 32.6 An increase in fuel sourced electricity cost adjustment A decrease in charge 24.7 electrical

6. Slide 6: Summary of Financial Results <3>

   03 Summary of Financial Results <3> [Factors contributing to change in consolidated ordinary income] (Billion yen) ・Improvement of the efficiency related to the fuel cost +17.0 Others An increase in ・Improvement of the efficiency hydroelectric Time lag in the basement cost +3.0 7.8 power generated 1

7. Slide 7: Electrical Energy Sold

   04 Electrical Energy Sold <Electrical Energy Sold> (Nonconsolidated) ⁃ Dropped by 0.5TWh to 59.4TWh, compared with 2017/2Q, mainly due to an effect of switches made to other operators, in spite of an increase in air conditioning demand by higher temperature in this summer compared with the previous

8. Slide 8: Electric Power Supplied and Principal Figures

   05 Electric Power Supplied and Principal Figures <Electric Power Supplied> （Nonconsolidated）  Hydro : The flow rate was higher than 2017/2Q ; thus hydroelectric power output increased by 1.1 TWh.  Wholesale： Increased by 1.6 TWh, mainly due to an increase in wholesale volume.  Purchased power : I

9. Slide 9: Impact of Accrued Income Incurred by Fuel Cost Adjustment System (Result)

   06 (Reference) Impact of Accrued Income Incurred by Fuel Cost Adjustment System (Result) ＜ FY2017/2Q ＞ ＜ FY2018/2Q ＞ Standard fuel price 差損 Loss Loss 差損 △130億円 -13.0 billion -38.0 billion △380億円 Fuel procurement price (basis of fuel cost) Average Fuel price (basis of fuel cost adjustment charge) 201

10. Slide 10: Dividends

    07 Dividends <The Policy on Shareholder Return>  The company will work to maintain stable dividends after taking account of financial condition and other factors, while continuously investing in building and operating facilities that are essential for a safe and stable supply of electricity. <Divid

11. Slide 11: Summary of Forecast for FY2018 <1>

    08 Summary of Forecast for FY2018 <1> <Forecast> Forecasts of financial results have been revised from the previous announcement made in July 31, 2018.  Consolidated operating revenues: 3,000.0 billion yen (forecast) Consolidated operating revenues will increase by 20.0 billion yen mainly due to an

12. Slide 12: Summary of Forecast for FY2018 <2>

    09 Summary of Forecast for FY2018 <2> (TWh,%) [Principal figures] Current July 31 Change (Electrical energy sold) (A) (B) (A-B) (A-B)/B Low voltage 36.4 35.7 0.7 2.0 High voltage ・Extra-high voltage 82.1 81.6 0.5 0.6 Total 118.5 117.3 1.2 1.0 [Reference] Electrical energy sold including group 124.2

13. Slide 13: Impact of Accrued Income by Fuel Cost Adjustment System in FY2018 (Forecast)

    (Reference) 10 Impact of Accrued Income Incurred by Fuel Cost Adjustment System in FY2018 (Forecast) ○ July 31 (Loss of 50.0 billion yen) ○Current(Loss of 60.0billion yen) Standard fuel price Standard fuel price ＜FY2018＞ ＜FY2018＞ Loss Loss -50.0 billion -60.0 billion Fuel procurement Fuel procuremen

14. Slide 14: Management Situation

    02 Management Situation Copyright © CHUBU Electric Power Co.,Inc. All Right Reserved.

15. Slide 15: Initiatives to Address Management Challenges and Toward Realization of Our Vision

    Initiatives to Address Management Challenges and 11 Toward Realization of Our “Vision” Changing social structure Changing business systems Intensifying competition among business Shrinking energy market “Initiatives to Address Management Challenges” (four priority measures) operators Diversifying cu

16. Slide 16: Transition to a Business Model with Unbundling of Each Sector

    12 Transition to a Business Model with Unbundling of Each Sector  With the changes in the system, including full liberalization of the electricity retail market and the legal unbundling of the power transmission/distribution division, that made power generation, power transmission/distribution, and

17. Slide 17: Improving Safety Further at Hamaoka Nuclear Power Plant

    Improving Safety Further at Hamaoka Nuclear Power Plant Safety improvement measures for Hamaoka Nuclear Power Plant (prevent 13 accidents and prepare for their occurrence)  Under a strong determination to “not allow another accident like that at the Fukushima Daiichi Nuclear Power Plant,” the Hamao

18. Slide 18: Aiming for a power plant that is safer and more trusted

    Improving Safety Further at Hamaoka Nuclear Power Plant 14 Aiming for a power plant that is safer and more trusted  In order for the business operator itself to squarely reconsider the safety of nuclear power and make efforts to continuously improve safety in the wake of the Fukushima Daiichi accid

19. Slide 19: Stable Power Supply for a New Age: Upgrading the Power Network

    Stable Power Supply for a New Age Responding to the introduction/expansion of renewable energy 15 (upgrading the power network)  In response to output fluctuations in renewable energy (distributed energy resources), we will improve the accuracy of output prediction and conduct optimal operation of

20. Slide 20: Improve management efficiency to strengthen business base <1>

    Strengthening Our Business Base for Growth and Achieving Sustainable Growth 16 Improve management efficiency to strengthen business base <1>  Aiming to strengthen our business base through improved management efficiency, we will continually work at reducing repair costs and will streamline equipmen

21. Slide 21: Improve management efficiency to strengthen business base <2>

    Strengthening Our Business Base for Growth and Achieving Sustainable Growth 17 Improve management efficiency to strengthen business base <2> [Specific initiative example: improving thermal efficiency of LNG combined cycle generation plants] We are working on cutting fuel costs by improving the effic

22. Slide 22: Improve management efficiency to strengthen business base <3>

    Strengthening Our Business Base for Growth and Achieving Sustainable Growth 18 Improve management efficiency to strengthen business base <3> [Specific initiative example: improving thermal efficiency of LNG combined cycle generation plants] Based on past hazard results and process of failure develop

23. Slide 23: Accelerate growth after completion of value chain in JERA

    Strengthening Our Business Base for Growth and Achieving Sustainable Growth 19 Accelerate growth after completion of value chain in JERA  We will complete a whole value chain from upstream investments and fuel procurement through power generation to power and gas wholesale sales by integrating our

24. Slide 24: Provide energy services that continue to be chosen by customers

    Strengthening Our Business Base for Growth and Achieving Sustainable Growth 20 Provide energy services that continue to be chosen by customers  In order to continue to be chosen by customers in a liberalized retailing market, we will deliver new services that meet customers needs using IoT, etc., n

25. Slide 25: Establish new growth fields (provide new forms of community)

    Strengthening Our Business Base for Growth and Achieving Sustainable Growth 21 Establish new growth fields (provide new forms of community)  The Chubu Electric Power Group has contributed to regional development through the energy business. In order to help resolve social issues faced by communitie

26. Slide 26: Carrying out ESG management (E)

    Establishing a Business Structure/Management Base that can Respond Instantly to Environmental Changes 22 Carrying out ESG management (E)  We carry out business activities with awareness of ESG (environment, society, and governance), in order to fulfil our corporate social responsibility (CSR), incr

27. Slide 27: Carrying out ESG management (S・G)

    Establishing a Business Structure/Management Base that can Respond Instantly to Environmental Changes 23 Carrying out ESG management (S・G) （Social） （Governance） So that employees will work with vitality, we will promote Aiming for sustainable growth, we will strive to further work-life balance, base

28. Slide 28: Reference Data (1): Financial Results

    03 Reference Data(1): Financial Results Copyright © CHUBU Electric Power Co.,Inc. All Right Reserved.

29. Slide 29: Consolidated Statements of Income

    24 Consolidated Statements of Income (Billion yen,%) 2018/2Q 2017/2Q Change (A) (B) (A-B) (A-B)/B Operating revenues 1,487.4 1,393.3 94.1 6.8 Non-operating revenues 13.9 8.1 5.8 71.5 Ordinary revenues 1,501.4 1,401.4 99.9 7.1 Operating expenses 1,392.6 1,296.3 96.3 7.4 Non-operating expenses 14.5 17

30. Slide 30: Nonconsolidated Statements of Income <1>: Operating Revenues

    25 Nonconsolidated Statements of Income <1>: Operating Revenues (Billion yen,%) 2018/2Q 2017/2Q Change [Major factors for change] (A) (B) (A-B) (A-B)/B Electricity sales revenues 1,074.8 1,052.9 21.8 2.1 ⁃ An increase in fuel cost adjustment charge +47.3 ⁃ A decrease in electrical energy Sold power

31. Slide 31: Nonconsolidated Statements of Income <2>: Operating Expenses

    26 Nonconsolidated Statements of Income <2>: Operating Expenses (Billion yen,%) 2018/2Q 2017/2Q Change (A) (B) (A-B) (A-B)/B [Major factors for change] Salaries and employee benefits 94.7 91.4 3.3 3.6 ⁃ Differences in power generated : -18.3 Fuel 366.9 339.3 27.5 8.1 ・ Improvement of thermal efficie

32. Slide 32: Nonconsolidated Statements of Income <3>: Net Income

    27 Nonconsolidated Statements of Income <3>: Net Income (Billion yen,%) 2018/2Q 2017/2Q Change (A) (B) (A-B) (A-B)/B Operating income 85.8 88.5 (2.6) (3.0) Non-operating revenues 9.6 6.6 3.0 46.2 Non-operating expenses 12.9 16.9 (3.9) (23.3) Ordinary revenues 1,364.3 1,286.6 77.6 6.0 Ordinary expens

33. Slide 33: Consolidated and Nonconsolidated Financial Standing

    28 Consolidated and Nonconsolidated Financial Standing (Billion yen) Sep 30, 2018 Mar 31, 2018 Change (A) (B) (A-B) Consolidated 5,567.8 5,529.4 38.4 Assets Nonconsolidated 5,012.8 5,001.2 11.5 Consolidated 3,709.9 3,737.4 (27.5) Liabilities Nonconsolidated 3,516.8 3,556.1 (39.2) Consolidated 1,857.

34. Slide 34: Consolidated Statements of Cash Flows

    29 Consolidated Statements of Cash Flows (Billion yen) 2018/2Q 2017/2Q Change (A) (B) (A-B) Cash flows from operating activities (a) 101.1 142.8 (41.7) Cash flows from investing activities (b) (211.1) (173.0) (38.0) Cash flows from financing activities (c) (14.0) (37.0) 23.0 Net decrease in cash and

35. Slide 35: Impact of the Feed-in-Tariff Scheme for Renewable Energy

    30 Impact of the Feed-in-Tariff Scheme for Renewable Energy <Result of 2018/2Q (change from the previous year in parenthesis)> Renewable energy Electricity generator Electric customers utility Purchased cost (Purchased power Surcharge under act on purchase of from other suppliers) renewable energy s

36. Slide 36: Ordinary Income(Loss) and Net Income(Loss)

    31 Ordinary Income(Loss) and Net Income(Loss) [Ordinary Income(Loss)] [Net Income(Loss)] (billion yen) (billion yen) 300.0 300.0 Non-Consolidated Consolidated Non-consolidated Consolidated 250.0 250.0 75.0 billion yen (Consolidated) 60.0 billion yen 200.0 100.0 billion yen 200.0 (Non-Consolidated) (

37. Slide 37: Cash Flow (Consolidated)

    32 Cash Flow (Consolidated) （billion yen） 800.0 Cash Flows from Operating Activities Cash Flows from Investing Activities FCF 600.0 562.4 539.1 449.7 476.8 424.1 400.0 335.0 296.7 270.0 254.4 227.6 203.7 194.0 200.0 176.8 113.6 79.6 0.0 (25.1) (70.2) (62.8) (102.9) (200.0) (170.0) (242.3) (247.0) (2

38. Slide 38: Fund Raising and Outstanding Interest-bearing Debt

    33 Fund Raising and Outstanding Interest-bearing Debt  We raised total approx. 1,500.0 billion yen in long-term funding for 3 years since the shutdown of Hamaoka Nuclear Power Station.  We forecast to raise approx. 70.0 billion yen in long-term funding in FY2018.  We forecast outstanding Interest

39. Slide 39: Financial Ratio, Credit Ratings

    34 Financial Ratio, Credit Ratings [Shareholders’ equity ratio] [Debt-Equity ratio] Approx. 33% (%) (Times) 35.0 as of Apr. 2019* Non-consolidated Consolidated (Consolidated) Non-Consolidated Consolidated Approx. 1.7 times at the end of FY2018 Approx. 31% 2.5 (Consolidated) as of Apr. 2019* (Non-Con

40. Slide 40: ROA and ROE

    35 ROA and ROE （%） [ROA] （%） [ROE] 6.0 16.0 Non-Consolidated Consolidated Non-Consolidated Consolidated 14.0 5.0 12.0 4.0 10.0 Approx. 2% (Non-Consolidated, Consolidated) Approx. 4% 3.0 8.0 (Non-Consolidated, Consolidated 6.0 2.0 4.0 1.0 2.0 0.0 0.0 (2.0) (1.0) (4.0) (2.0) (6.0) (3.0) (8.0) 2009 201

41. Slide 41: Segment Information

    36 Segment Information [Operating revenues] (Billion yen) 2018/2Q 2017/2Q Change (A) external customers (B) external customers (A-B) external customers Power Generation 539.9 25.1 518.4 16.0 21.4 9.0 Power Network 369.7 58.4 358.9 36.7 10.7 21.7 Customer Service & Sales 1,365.7 1,309.4 1,311.2 1,258

42. Slide 42: Sales Figures

    37 Sales Figures 2018/2Q Target The number of applications ; Chubu region 1.54 million ― New electric tariff menu Increase to 30.0 billion kWh/year Electrical energy sold outside of Chubu region 3.8 billion kWh (second half of 2020s) in the Tokyo Outside of metropolitan area Chubu region The number

43. Slide 43: Monthly Breakdown of Electrical Energy Sold

    38 Monthly Breakdown of Electrical Energy Sold (TWh) FY2018 Apr. May June July Aug. Sep. Total Low voltage ２.９ ２.５ ２.３ ２.７ ３.６ ３.３ １７.４ High voltage・ Extra-high ６.４ ６.３ ６.９ ７.６ ７.６ ７.３ ４２.０ voltage Total ９.３ ８.９ ９.１ １０.３ １１.２ １０.５ ５９.４ (TWh) FY2017 Apr. May June July Aug. Sep. Oct. Nov. Dec. Jan. Fe

44. Slide 44: Reference Data (2): Management Information

    03 Reference Data (2) : Management Information Copyright © CHUBU Electric Power Co.,Inc. All Right Reserved.

45. Slide 45: Stable Power Supply for a New Age: Reuse Storage Batteries for EVs

    Stable Power Supply for a New Age Responding to the introduction/expansion of renewable energy 39 (reuse storage batteries for EVs)  In cooperation with Toyota Motor Corporation, we will start new verification aimed at establishing a high- capacity storage battery system that reuses storage batteri

46. Slide 46: Initiatives of JERA <1>

    Strengthening Our Business Base for Growth and Achieving Sustainable Growth 40 Initiatives of JERA <1> [Domestic power generation business (New establishment and replacement)] Bring together the knowledge and technology of both companies to establish and replace thermal power stations, and thereby s

47. Slide 47: Initiatives of JERA <2>

    Strengthening Our Business Base for Growth and Achieving Sustainable Growth 41 Initiatives of JERA<2> [Fuel business (upstream, procurement, transportation, trading)] Optimum portfolio is create using the world’s largest procurement scale and trading, and fuel procurement that can flexibly respond t

48. Slide 48: Expand business in the Tokyo metropolitan area

    Strengthening Our Business Base for Growth and Achieving Sustainable Growth Provide energy services that continue to be chosen by customers (expand 42 business in the Tokyo metropolitan area)  We jointly established a new company with Osaka Gas to conduct sales of services related to electric power

49. Slide 49: Establish new growth fields (provide new forms of community)

    Strengthening Our Business Base for Growth and Achieving Sustainable Growth 43 Establish new growth fields (provide new forms of community) Services to improve the quality of life of Provide various “new forms of community” individuals by utilizing various data • For new community development in urb

50. Slide 50: Carrying out ESG management (E: Composition of Electric Power Output)

    Establishing a Business Structure/Management Base that can Respond Instantly to Environmental Changes 44 Carrying out ESG management (E : Composition of Electric Power Output)  Based on energy mix of Japan, aim for optimum composition of power sources by combining various types of power source, suc

51. Slide 51: Carrying out ESG management (E: Reduction of CO2 emissions)

    Establishing a Business Structure/Management Base that can Respond Instantly to Environmental Changes 45 Carrying out ESG management (E : Reduction of CO2 emissions)  Japanese government set up the target of reducing greenhouse gas emissions (26% reduced by FY2030) as Japan’s goal of the Paris Agre

52. Slide 52: Carrying out ESG management (E: Improvement of thermal efficiency)

    Establishing a Business Structure/Management Base that can Respond Instantly to Environmental Changes 46 Carrying out ESG management (E : Improvement of thermal efficiency) 50.0 (%) [Change of total thermal efficiency (LHV basis)] [Outline of development of Taketoyo Chubu 10 EPCos Total 48.94 Therma

53. Slide 53: Carrying out ESG management (E: Promotion of Renewable Energy)

    Establishing a Business Structure/Management Base that can Respond Instantly to Environmental Changes 47 Carrying out ESG management (E : Promotion of Renewable Energy) (As of the end of September, 2018) Development locations of hydroelectric power station (Reference) Conventional hydro Chubu Electr

54. Slide 54: Carrying out ESG management (E: connect & manage)

    Establishing a Business Structure/Management Base that can Respond Instantly to Environmental Changes 48 Carrying out ESG management (E : connect & manage)  Chubu Electric Power has begun an initiative (N-1 power control) to use capacity that is set aside for an emergency in case of failure, based

55. Slide 55: DISCLAIMER

    DISCLAIMER This presentation contains assumptions and forward-looking statements with respect to the financial conditions, and forecasts of the company, which are based on information currently available. These assumptions involve certain risks and uncertainties, and may cause actual results materia

56. Slide 56: Copyright © CHUBU Electric Power Co.,Inc. All Right Reserved.

    Copyright © CHUBU Electric Power Co.,Inc. All Right Reserved.

Chubu Electric Power Company — Q2 FY2018 Earnings Presentation on 6ix