Tokyo Gas Co., Ltd. · TSE:9531
Tokyo Gas — FY2023 3Q Earnings Presentation
40 slides from Tokyo Gas's earnings presentation, Feb 2, 2024
Slide 1: FY2023 3Q Financial Results
Lf FY2023 3Q Financial Results ended December, 2023 February 2, 2024 "E TOKYO GAS TSE:9531
Slide 2: Today's Key Messages
Today’s Key Messages 2 H @ Consolidated FY2023 3Q saw a YoY fall in both sales and profits driven by a drop in Energy Solution sales stemming from a decrease in unit price due to resource costs adjustment, and by a decline in Energy Solution profits resulting partly from a change in city gas unit pr
Slide 3: Consolidated Financial Results
O01 FY2023 Consolidated Financial Results ended December, 2023 Note: The segment information disclosed for FY2023 3Q and FY2022 3Q reflects new segment classifications that went into effect from FY2023 3Qas a result ofa restructuring of our system for providing services to local governments. "FTOKYO
Slide 4: Third quarter results showed decreases in both sales and profit
Our results for the third quarter showed decreases in both sales and profit. Net sales fell by 3,975 hundred million yen, mainly due to a drop in the unit price of city gas resulting from resource cost adjustments in the Energy Solution segment. Operating expenses declined by 3,247 hundred million y
Slide 5: Net sales by segment and segment profit
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 by segment
The 442 hundred million yen profit decline in the Energy Solution segment is primarily attributable to a decrease in gross profit due to the sliding time lag effect in city gas and other factors. The 143 hundred million yen increase in the electric power business is due mainly to a decrease in procu
Slide 7: Gas sales volume
Gas sales volume through the third quarter was down 12.4% overall due to lower demand from residential customers because of high temperatures and other factors as well as lower demand from industrial customers that use gas exclusively for power generation, despite an increase in commercial gas sales
Slide 8: Electricity sales volume
Electricity sales volume through the third quarter declined 27.6% overall. In the retail sector, electricity sales increased 15.2% due in part to greater demand resulting from a higher number of contracts. In the wholesale and other sectors, electricity sales fell by 48.0%. 8
Slide 9: FY2023 Full Year Forecast
02 FY2023 Full Year Forecast Note: The segmentinformation disclosed for FY2023 Forecastand FY2022 reflects new segment classifications that went into effect from FY2023 3Qas a result ofa restructuring of our system for providing services to local governments "FTOKYO GAS
Slide 10: Full-year forecast: lower sales, higher profit
We have forecasted decreases in sales, but increases in profit for the full fiscal year 2023. The economic frame from January forward on which the forecast is based has been amended to 145 yen per dollar, the same as in the previous forecast, while the price of crude oil has been changed from 90 dol
Slide 11: Forecast for key consolidated indicators
This slide shows our forecasts for key indicators on a consolidated basis, including the status of assets and cash flows. 11
Slide 12: Capital expenditure, investments and financing projections
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 million yen) FY2023, ; Previous FY2020-22 FY2023-25 Forecast Main Ttems Forecast Results Plan 4,758 6,500 Overseas, Renewable power, Urban Development, etc. Break
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 276 hundred million yen from our previous forecast. 14
Slide 15: Segment profit forecast changes
The Energy Solution segment is projected to see a 233 hundred million yen rise in ordinary profit. This is mainly due to the fact that the sliding time lag effect that occurred in the third quarter as well as the sliding time lag effect in the fourth quarter due in part to changes in the economic fr
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 (pales so reition yer) © Decrease in city gas gross margin -1,444 E Change in volume, etc. -176 (incl. change due to temp effect -40), rit! gman sliding time lag effect -1,268 ors (ie sales) 4 z ae Change in volume, etc. -707, sliding time (-57.3%) "Rescurca
Slide 18: Gas sales volume forecast
Gas sales volume is expected to be 3% lower than in the previous forecast. This reflects the actual results through the third quarter, mainly the decrease in residential use as a consequence of high temperatures. 18
Slide 19: Electricity sales volume forecast
Electricity sales volume looks to be 0.3% lower than in the previous forecast. We expect decreased sales volume in the retail business due partly to a decline in the number of new customers won reflecting the current level of customer acquisition. 19
Slide 20: Changes in profit by element from previous year
This slide illustrates changes in profit for each major element of change from the previous year. 20
Slide 21: Reference materials
The reference materials include the economic frame sensitivity table, crude oil prices and exchange rates, the key topics during the period, and information on major overseas investments. 21
Slide 22: Gas Gross Margin Sensitivity to Crude Oil Price and Exchange Rate
Gas Gross Margin Sensitivity to ie in Crude Oil Price and Exch Impact of rising JCC (Japan Crude Cocktail Prices) by $1/bbl (Unit: 100 million yen) Impact of depreciation of the yen by ¥1/$ (Unit: 200 million yen) Impact on earnings 4Q Period 4Q oe Copyright® TOKYO GAS Co., Ltd. All Rights Reserve:
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 ee _ 80.00 70.00 60.00 50.00 40.00 30.00 20.00 ef & SF SS —eFY2023 —eFY2022 me F¥2021 Exchange rate (#/s) 150.0 145.0 140.0 135.0 130.0 125.0 120.0 115.0 110.0 105.0 100.0 \ sa A Ff Se FS
Slide 24: Efforts to improve PBR
Now I would like to offer a progress report on efforts to improve our PBR under the heading “Realizing management mindful of capital costs and stock prices”. We are taking a two-pronged approach of improving both ROE and PER in order to improve our PBR. An overall picture of our efforts is shown her
Slide 25: Business portfolio management through ROA management
Let me give you an overview and status update of each of these efforts. Touching first on advancing our business portfolio management through ROA management, we will be presenting segment-specific ROA plans in our fiscal 2023 management plan and providing follow-up explanations of their status durin
Slide 26: Optimal capital structure and capital costs
To reduce capital costs, we consider the actions for realizing an optimal capital structure shown here and the shareholder returns shown on the next page to be important elements. As one of our first initiatives for realizing an optimal capital structure, we have calculated the capital required base
Slide 27: Shareholder returns
Now let me discuss some topics related to shareholder returns. As indicated in our timely disclosure of January 31 regarding the year-end dividend payout for the fiscal year ending March 31, 2024, we expect to increase the annual dividend by five yen from 65 yen to 70 yen. This decision was made bas
Slide 28: Dialogue with stakeholders and growth investment disclosure
We believe that enhancing our dialogue with stakeholders and improving our disclosure of information on how investments in growth areas produce results are crucial for improving our PER. Here are the major projects we have announced since the start of the current medium-term management plan, and we
Slide 29: Key growth investments: North American shale gas business
With regard to key growth investments, let me give you some additional details about our North American shale gas business and other major investments announced in the third quarter of this fiscal year. Our management vision – Compass 2030 – depicts our overseas business as having revenues of 500 hu
Slide 30: Key Topics in FY2023 3Q
Key Topics in FY2023 3Q (Exc ed from Press Releases) 30 BH 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 So
Slide 31: Key Topics in FY2023 3Q: stable energy supply & decarbonization
Key Topics in FY2023 3Q (Excerpted from Press Releases) FY2023-2025 Medium-term Management Plan: Initiatives for the 3 core strategies Achieve both stable energy supply & decarbonization |Carbon-negative concrete used at Motomachi Elementary School in Yokohama (Apr. 13) hoint acquisition of solar po
Slide 32: Key Topics in FY2023 3Q: stable energy supply & decarbonization
Key Topics in FY2023 3Q (Excerpted m Press Releases) 32 Hl FY2023-2025 Medium-term Management Plan: Initiatives for the 3 core strategies z 3 2 A i= g Achieve both stable energy supply & decarbonization ITES and Tokyo Gas Forge New Partnership to accelerate the \decarbonization of hard to abate sect
Slide 33: Key Topics in FY2023 3Q: Solutions business
Key Topics in FY2023 3Q (Excerpted from Press Releases) 33m FY2023-2025 Medium-term Management Plan: Initiatives for the 3 core strateg Fully roll out Solutions business Acquisition of real estate asset management company and entry into private REIT business (Apr. 3)*? Signing of comprehensive partn
Slide 34: Key Topics in FY2023 3Q: Solutions business
Key Topics in FY2023 3Q (Excerpted from Press Releases) 34m FY2023-2025 Medium-term Management Plan: Initiatives for the 3 core strategies Fully roll out Solutions business Signing of comprehensive partnership agreement for realizing a carbon| neutral city in Tochigi City (July 13) Launch of project
Slide 35: Key Topics in FY2023 3Q: Solutions business
Key Topics in FY2023 3Q (Excerpted from Press Releases) 35m FY2023-2025 Medium-term Management Plan: Initiatives for the 3 core strategies Fully roll out Solutions business introduction of renewable energy-derived J-Credit scheme at three (Calbee sites at Kiyohara Industrial Park (Oct. 19)"? [Tokyo
Slide 36: Key Topics in FY2023 3Q: Solutions business
Key Topic FY2023-2025 Medium-term Management Plan: Initiatives for the 3 core strategies Fully roll out Solutions business magi City (Dec. 11) Bigning of comprehensive partnership agreement for promoting carbon} neutrality and realizing highly disaster-resilient urban development in lon community re
Slide 37: Key Topics in FY2023 3Q: Material issues
Key Topics in FY2023 3Q (Excerpted m Press Releases) 37 Hl FY2023-2025 Medium-term Management Plan: Initiatives for the 3 core strategies Material issues Notification of Resolution to Acquire of Treasury Shares (Apr. 26) - jihon L'Oreal and Tokyo Gas Real Estate reach agreement on promoting building
Slide 38: IGNITURE Solutions business brand launch
Key Topics in FY2023 3Q (Excerpted from Press Releases) 38 Hl 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. inunchof Sohti
Slide 39: Overseas Projects
Overseas Projects 39 Area No e North America Bajio © Meico eats Ent GAS MALASIA Bhd. © _Malevsio Gas MALASIA ENERGY ADVANCE Scn.8hd. ® Downstream Gas Supply, Transfer 2020 e Dow Construction, ‘and ‘of the LNG 2020 Upstream Production, liquefaction and sales of LNG 72003 Upstream ‘and sales of LNG 20
Slide 40: 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