The Kansai Electric Power Aktie

It is now the scheduled time. We will begin the Kansai Electric Power Company Fiscal 2025 Financial Report and Fiscal 2026 Management Plan Investor Briefing. Please allow me to introduce our participants. Mr. Mori, CEO.

This is Mori. Thank you very much.

Mr. Tanaka, Executive Vice President.

My name is Tanaka. Thank you very much.

Mr. Kikuoka, Executive Officer, Office of Accounting and Finance.

Hello. Thank you.

First, CEO, Mori, will give his presentation first.

So I'm going to start my presentation. This is Mori. Thank you very much for joining us today for our company briefing. Yesterday, we announced our results for fiscal year 2025. We posted consolidated revenue of JPY 4,056.6 billion and recurring profit of JPY 518.5 billion. This represents a decrease in both revenue and profit from FY '24. For FY '25, the dividend remains unchanged from the revised forecast announced at the second quarter. We will pay an annual dividend of JPY 75 per share.

Looking ahead to fiscal year 2026, we expect a recurring profit of JPY 290 billion. This represents a decrease of JPY 228.5 billion. The main factors for profit declines are foreign exchange movement, fuel price fluctuations, lower nuclear capacity factor and higher costs. These include inflation-driven expenses and increased maintenance and construction costs. Although earnings conditions remain challenging, we will continue steady investment. This includes maintenance investment for safe and stable supply and disciplined growth investment for the future. For FY 2026, we plan to -- an annual dividend of JPY 80 per share. This is an increase of JPY 5 from FY '25. Last October, we presented the status of our new management plan. Since then, we have engaged in dialogue with shareholders and investors, incorporating the feedback we received with further discussions. Yesterday, we announced Kansai Electric Power Group Management Plan 2026.

Looking towards 2040, our group aims to prioritize safety above all, lead Japan's energy sector and go beyond Kansai Electric Power to provide a vital platform for a sustainable society. The environment surrounding us is changing rapidly. Geopolitical risks, inflation, rising interest rates and the population decline are progressing simultaneously. At the same time, DX and AI are transforming industries. Power demand is also likely to increase over the medium to long term. In such an era, a vital platform for sustainable society is essential to support the Japan's growth in people's daily lives. At the core of it is energy.

While decarbonization remains a major trend, we believe that energy security, stable and secure supply is now more critical than ever. While achieving S+3E simultaneously is a fundamental prerequisite. elevating its delivery to meet the demand will support Japan's sustainable growth. In addition to energy and transmission distribution, we will expand into ICT, real estate and new businesses to provide a vital platform for sustainable society. Beyond the Kansai and Electric Power, we will deliver new value to customers and society in a timely manner. As one group, we will advance the strengthened KX Kanden Transformation towards 2040 and realize our vision for 2040. We will implement disciplined investments totaling JPY 15 trillion on a cumulative basis by 2040. Across the group, we aim to secure a ROIC WACC spread of 100 to 150 basis points. We will also take immediate action to strengthen balance sheet management, human capital and supply chains.

The next 3 years are period to accelerate growth towards our vision. Continuous investment is essential for businesses that provide a vital platform for sustainable society. While building new facilities takes time, 2040 is not a distant future. Although earnings conditions remain challenging from where we are, we will, with a long-term perspective, steadily move forward with investments for safe and stable supply as well as disciplined growth investment. For that, we will generate over JPY 380 billion in cash through asset recycling, including the divestment of our shareholdings. This will enable us to balance investments to shareholder returns.

From FY '26, we will revise our shareholder return policy. We will target a consolidated payout ratio of 25% to 35% and to maintain or increase dividends. More than JPY 270 billion is to be returned over the next 3 years. We aim to achieve key targets, including ROE of over 8% on a 3-year average. Together with our diverse stakeholders, we will create new value, share empathy and growth and achieve sustainable enhancement of corporate value. That concludes my presentation.

Next, Mr. Kikuoka, General Manager of Accounting, will explain the details of the financial results. Please refer to the materials in front of you or the projector.

This is Kikuoka. I will provide supplementary explanations regarding fiscal 2025 fiscal results. Please go to Page 4. We have generally achieved the financial targets for fiscal 2025 set out in our midterm management plan. Page 5. The projected figures for fiscal 2026 based on earnings forecast for each of the financial goals outlined in the Management Plan 2026 are shown in the table below.

Please go to Page 8. Track record of growth investments for fiscal 2025 totaled approximately JPY 185 billion. Although the actual results fell short of projected JPY 300 billion, this was the result of thoroughly reviewing each project and making investment decisions with the aim of achieving the expected returns.

Please go to Page 14. These are major factors for fiscal 2025. Retail electricity sales volume amounted to 116.3 billion kilowatt hour, an increase of 800 million kilowatt hours. Electricity sales volume to other companies decreased by 4.6 billion kilowatt hour. Nuclear capacity factor decreased by 4.4% to 84.1%. Two lines below is Japan CIF crude oil price, which decreased by $11.0 per barrel to $71.4 per barrel. Exchange rate was JPY 151 to $1, appreciation of JPY 2.

Please go to Page 15. Ordinary profit by segment increased year-on-year on all segments, except the Energy segment. I will explain only about the Energy segment on the next page. Please go to Page 16. Profit decreased by JPY 33.9 billion year-on-year to JPY 377.3 billion for Energy segment. This is due to negative impact resulting from a decline in nuclear capacity factor and increases in other expenses and maintenance costs despite the positive impact of increased profits from lower fuel prices.

Please go to Page 2022 -- Page 22. This shows the financial forecast. Major factors on fuel prices incorporate the situation in the Middle East. Page 23. We expect consolidated ordinary profit for fiscal 2026 to be JPY 290 billion, a decrease of JPY 228.5 billion. The main factors affecting this are decrease in nuclear capacity factor due to prolonged large-scale maintenance works. increase in fuel costs due to the Middle East situation. The third is due to factors such as inflation and an increase in maintenance work. We anticipate an increase in corporate maintenance costs in Energy and T&D segments. While the situation in the Middle East remains unpredictable, if fuel prices rise more than anticipated, our fiscal year 2026 results will be further impacted by time lag-related losses. We will, therefore, closely monitor the situation and update our outlook as necessary. This concludes my part.

Thank you. Next, Executive Vice President, Tanaka, will explain the management business -- management plan 2026. Please take a look at the Kansai Electric Power Group Management Plan 2026 or the trajectory in the front.

So I am Tanaka. I will provide additional details on the management plan 2026. Page 24. This page shows the cumulative capital allocation from fiscal '26 to '28. 2040. So this is placed as a Merck mile. This is not the endpoint. So this is a vision we have towards 2040. And there's no time to wait when it comes to investment for advanced KX Kanden Transformation toward 2040. We'd like to grow together with the Japanese industry. We are serious. And therefore, please allow us to accelerate investments so that we can grow alongside Japanese industry.

To that end, of course, we will pursue upside in the operating cash flow. But on top of that, we plan to generate cash through asset replacement and steadily execute a total of JPY 2.5 trillion of investments over 3 years, JPY 1.5 trillion for maintenance investments to ensure safe and stable supply and JPY 1.0 trillion for growth investments. Naturally, we have no intention to make investments with that spread. We want to secure appropriate level of spread. And therefore, we would like to make disciplined investment that carefully assess profitability and business risks. we need to make investment to be able to secure this level of spread. And as for shareholder returns in the coming 3 years, we would like to provide shareholder returns of at least JPY 270 billion over the next 3 years, and we'll strive to maintain or increase dividends.

Please go to Page 25. This is about asset recycling initiatives. So we cannot be optimistic. And therefore, we will do asset recycling and generate cash. And this is how we want to go about in our real estate business, I talked about this in the IR Day last December. We would like to increase the proportion of assets subject to asset recycling and aim to recycle more than JPY 550 billion in assets over the next 3 years. And we are thinking overseas JPY 50 billion and others, and we do believe that we will be able to achieve that. So holds JPY 300 billion. And on the 27th on Monday, we announced the notice of tendering shares and the tender offer for own shares by Kinden Corporation. This was a homework for us that we had held, and we have been talking about this constantly, and we have made this announcement for the shares we own, we will look at the market situation in the coming 3 years. We plan to divest at least JPY 380 billion, including Kinden shares this time.

Please go to Page 26. This shows the illustrative impact of growth investments. I believe you can see the differences in the characteristics of each business, particularly the time it takes for profits to materialize. And in domestic energy sector, where projects have long durations, it takes 20 years or so to recover. And there's real estate and ICT below where you can recover in a short period of time. So by combining them, we would like to achieve growth. Furthermore, for domestic energy sector whose duration is long, we would like to choose the appropriate financing instead of just focusing on corporate financing, we will be engaged in joint development and capital recycling to accelerate profit generation and improve capital efficiency. And this was a short presentation, but this is all for me. That concludes our explanation.

We will now take questions. First, we will take questions from participants in the room and then from those joining via Zoom. When asking a question please first state your company name and your name. Now we would like to take questions from participants at the venue. Can you raise your hand?

I am Shinya of Mizuho Securities. I have 2 or 3 questions, please one by one. So on Page 5 of the financial results presentation, you are showing your guidance for this fiscal year and your management plan KPI. The President has been saying the next -- the 3-year is going to be a challenging period. You have been repeating that. So you have been given us some level of warning. But in terms of recurring ordinary income, the numbers look more challenged than what I had expected. So for the net profit and ROE of 8% and more, by looking at, I think that you are expecting to book some of the profit from the sales of assets to achieve a net profit. But in terms of ordinary profit, the target seems to be rather challenging. So after the adjustment of time lag, your profit is going to be lower on a 3-year average.

So I would like to ask what your -- the assumption is and background is. And towards the later part of the management plan, outside of the non-energy -- sorry, nonenergy businesses, for real estate and ICT, you are showing some aggressive ambitious target for profit for international real estate and communication, you are showing us an ambitious profit target. But it seems as if you are taking a rather cautious approach for your energy business, your power generation and the sales in T&D. By looking at the ROIC target, I don't think your target is that bad. But for the next 3 years, mainly in your energy business, it seems -- I get the impression you are expecting rather challenging business environment. And I think you do have some assumptions for the capacity -- nuclear capacity factor, too, but can you share what your thoughts are?

Thank you for the question. Yes, as you mentioned, I have been saying we will be facing some more challenges in our businesses. And this time, if we are going to put that in our language, this comes to the guidance we are showing you now. If I look at the details of various factors, we could not really we -- naturally, we came to this kind of conclusion. Of course, I personally wanted to show higher profit target. But as we are seeing the decline in nuclear capacity factor, and we are seeing the increase in the energy cost now and with the higher inflation, maintenance kind of works we are implementing now the cost for them are having more negative impact to our profit than we had initially expected.

So including those factors, we are now showing you the outlook. However, we will be taking necessary measures to achieve growth in the future. So even though we will try to make our business structure more lean, we will be focusing more on balance sheet, and we will be focusing on generating more cash. So we will do our best to make improvement as much as possible. And as time goes by, by looking at how -- what kind of progress we will see, if there are revisions or changes needed, we will adjust our plans. But as of now, with certain assumptions, we are showing you the outlook.

So I can add some more information about some of the numbers. Can you look at Page 23. So this is a comparison against the 2025. As shown here, from 2026 over the next 3 years, as we will have the 7 nuclear reactors, we will try to improve nuclear capacity factor to improve our profitability. We will implement the work for next 3 years. So it will be -- we will have a concentration of the maintenance work. And for the foreign exchange adjustment, prices, it is still uncertain what will happen to the Middle East situation. But until the fuel cost stabilizes, JPY 66 billion for FY '26, we will need to assume that kind of impact. But once it stabilizes, most of that will be seen in time lag. So we should be able to collect that in FY '27.

And other than that, as Mori-san mentioned, there will be an increase in other cost items and the maintenance-related cost. As you can imagine, we are seeing impact from inflation. But as for our nuclear business, the maintenance work will be a rather long period. So we -- as we implement the thorough maintenance work, we are going to enhance our maintenance. So there will be an increase in the volume of maintenance work. And for our thermal plants. So for coal and LNG, thermal plants, in order to avoid long-term shutdown, operational shutdown, we are also going to enhance our maintenance work, too. So as of these cost increases, of course, there will be some impact from inflation, but we are going to make sure that there will be enough maintenance work done over the next 3 years.

And for our T&D business, including our expenses, there will be some impact from higher inflation, but there will be a replacement of a tower. When we were achieving the high economic growth, there was a concentration of construction. So there will be a certain level of CapEx included there. So we will just make a steady progress to implement these plans that those are all included in our CapEx plans.

And my second question is as you are going to face some difficulty over the next 3 years. So that means when do you -- when do you think will be the time where you can pursue to improve your profit or grow your profit? So I think you will be preparing yourself to improve your profitability later on, and there will be a JPY 2.5 trillion of investment, including replacement and growth investment altogether. So including the returns coming from those investments, you will be going back to your profitability and try to further improve your -- the improvement -- your profitability with the investment, when do you think that can happen?

So on Page 25, your -- the management plan, I think Tanaka-san had explained about this. So the profitability and the returns from the investment in each sector, I think you are giving us some hint of what kind of returns you are expecting. But beyond medium-term plan in 2028 or '29 to '30 with the higher capacity utilization, you are going to see an increase in the profit. And in the early 2030s, you will -- are you expecting to benefit from the returns from the investment? Is that the kind of time frame you have in mind? When do you -- or does Mori-san think when you can achieve the growth in your profit?

Thank you for the question. So for the next 3 years, in terms of the profit, the numbers will look quite challenging. So if we look at the numbers, they look -- remain sluggish. We call it a plateau situation internally. And we may say these numbers are not meeting your expectation. But beyond next 3 years, we will start to generate more return with the better turnover.

As for large-scale power generation investment that will take place further out in the future. But there will be some of the investment that can generate the more profit before that. So we will start to make investment for those over the next 3 years. As there are so many centred factors, next 3 years can be the only visibility we can show. But beyond the next 3 years, we are expecting to present some returns from these investments. From the past, everybody has been asking us what our normalized profit level is. So our intention is to bring our profit level back to a normalized level that should happen over the next 3 years.

And my third question is about the dividend and shareholder returns. I understand the profit situation is challenging. But as of your dividend, you may send us clear message and you are expecting to increase your dividend per share. So do I understand you're more catered toward increasing your dividend? You are saying you will either maintain or increase dividend, but what is your intention?

Yes, what you said is correct. So the profit we can -- profit outlook we can show is as it is. But in order to achieve our vision for the future and as we as we try to get understanding from our shareholders of what we are going to do to achieve that. So now we are going to increase our dividend per share to JPY 80. We think it's appropriate to increase our dividend per share to JPY 80. There are different perspectives. But as of our dividend policy, we have been presenting our policies. And if we think about our policy, we would like to show JPY 80 per share to be a start line.

Next, Yamazaki-san, please.

My name is Yamazaki from Nomura Securities. And I have 2 questions I would like to ask you. First, that investment timing, this time, you are planning to make JPY 1 trillion of investment for growth. Is this evenly distributed? Or is it -- is there going to be more weight on the latter years? Is it going to increase year after year? And also, the asset replacement initiative. And you will be taking initiatives here to generate more cash. And what is the timing you're assuming? Asset replacement, asset recycle, you will be doing that in the beginning and then generate cash and then make investments later. That's what I assume. But how should I think about the timing? So this is my first question.

So I would like to give a response. As for the timing or the schedule of investment, the forecast of investment, already for thermal power replacement, this is a large-scale investment that is required. And we have already started taking initiatives here. We are doing this already in Aramco. And after that, there will be another replacement. And so large-scale growth investment will start one by one. And nuclear power as of now, we need to change the steamer. We are doing a major investment, and this is a maintenance investment that we need. And this is the current needs.

Going forward, the investment in power source, we have multiple ones coming up, and that's what we are assuming. Therefore, in that sense, it's very big in the beginning, too, but it will increase and that trend will continue. And as for asset recycle, so it's not a question of which comes first. But at each timing, we will do what we can. So we will capture the best timing to do the asset recycle. So there is a Kinden case as well this time. And including this, we will take the opportunity. And it's not that we have the order in place already in our mind, but we will take the opportunity as they arise.

And as for the investment amount, it's significant amount. Thinking about gas turbine alone, it's like for multiple hundreds of billions of yen. So with difference in a few months, it could go into the next fiscal year or so. And that has happened in the past as well. So it's not something that we can control in a stable manner. There's inflation as well. So we are thinking 3 to 4 years' time span. Otherwise, it's very difficult. It's difficult for us to say specifically which year we will be making investment.

As for overseas energy business, there's bidding, and it's a few tens of billions of yen. So we have no intention to not be able to secure a spread. So of course, there has been cases where we had to give up in participating and that may happen in the future as well. So I think it's very difficult for us to be able to control cash every year for taking that policy shareholding. If we are negotiated or discussed with the counterpart or even if we are not, we will -- our shareholders that own within the 3 years. So this is where we have better control. The debt financing, it's a significant amount as shown in that chart. And that may be erasing everything. So this is my answer, but did this answer your question? So in terms of the level for the coming 3 years, growth investment, maintenance investment. So there's not much fluctuation between the 3 different years. We are assuming similar level of investments for the coming 3 years, roughly.

And my second question is -- so Shinya-san just asked the question and expenses and maintenance costs are increasing. So putting aside maintenance, there's impact coming from inflation. I think it's the same for every company. And against such a backdrop, passing on the price, what are the measures you are going to take in some of the companies, they are doing it in a different form, but they're reviewing the electricity fee, and they are trying to cover that inflation with that. So if the profitability is difficult, is challenging in the coming 3 years, maybe you need to take such actions.

And what is your thought on the inflation? And also, this is an issue that has existed from before, but Iranian situation. And because of that, the regulatory price seeming as a result, every few years, some issue like this happens. So what are your thoughts? Maybe you need to make improvements or revise prices. So what is your thought on this topic?

So impact of inflation. First of all, we need to analyze the impact of inflation. We have a rough image, but we need to understand much more in detail to be able to decide what we can do. So we'd like to continue to reduce costs with whatever we can and also the services we are offering in many ways, including value add by delivering value to customers, we will be the one to be chosen by customers. And I think it's difficult -- important for us to create such a cycle. And so we do believe that we will be able to increase profits as a result and price hike.

So this is a regulated price. And understand that this is being deliberated in the National Committee. So of course, demand is very important. But putting that aside, this temporary measure by when this should be -- price hike should be implemented. This should be -- continue to be deliberated with the liberalization, the system is established and this price is remaining still. So at some point in time, discussion should be held thoroughly. And the policy should be decided by the government, I think, at some point in time.

Next, please.

Nishikawa of Daiwa Securities, asking 2 questions. So my question is extension of what Yamazaki-san mentioned. So I understand there's a regulated charges and you are not able to increase the price for low voltage, but for high voltage and the auto high voltage, the Kyushu Electric Power is already increasing it. And because you have the high mix of the nuclear power, and that's the situation with the Kyushu nuclear power and you're also facing inflation. So including the standard the menu, I do understand you are planning to increase the prices for the high voltage or the ultra-high voltage the charges to improve your margin. I should not be using the word price increases, but rebalancing the charges for the high voltage and ultra-high voltage. What kind of measures are you expecting to implement? And what kind of improvement can I expect?

I talked about the Kyushu Electric Power, but when we look at the total electric power and true electric power, they are also talking about the shrinkage of a slight time lag on top of the high voltage in the ultra-high voltage. And because we are talking about slight time lag, we cannot ignore it because it should have certain impact to your accounting numbers. So the time lag to pass through the fuel surcharges adjustment. So are you thinking of revising that?

So for liberated the prices, each KEPCO companies are developing the schemes so that they can address the changes of the business environment. I understand that. But how we are going to set liberated price. we do need to have a good way to think about those prices. We cannot really specify what directions we will head to. But I think it's important as we will monitor what the other KEPCO companies do, we will compare our -- where we stand, and we will try to determine what kind of choices we should take. And please allow me, I cannot say when and what we will do.

And my another question is the ROE of 8% that we are showing for your management plan. Can you tell me why you set that price and how committed you are and you are now saying 8% of ROE or more for 3-year average. Why did you determine 8% should be the 3-year average? What kind of discussion did you have? And you are saying the 3-year average of 8% or more. So are you saying after 3 years, the average should be 8%? Or are you aiming to achieve more than 8% every year? Or on a cumulative basis, if you are not able to achieve 8% ROE because of your profit level, by looking at your shareholder return policy, I don't think you will have other options to improve your ROE. So should I understand that you are going to implement some other capital measures or policies and that you are committed to achieve 8% ROE as a 3-year average?

For our target, if you are asking if we -- this is a committed target. As we are facing various uncertainties, so many uncertain factors, I cannot say we are committed to achieve this target. What we are saying is this is an aimed target. We will take on our challenges to get there. We wanted to present our intention with this target. Including our capital policies, we will try to improve our profit first to achieve our ROE target. That will be the basic principle. But we will always consider taking some kind of the measures in our capital policy to improve our ROE. So when we think about the next 3 years, we don't -- I said that we only have intention to accelerate our investment, and we will sell our Kinden shares and strategic shareholdings. Even with that, we need to accelerate our investment.

And on top of that, we don't think there will be a case that we will lose our debt capacity. So we are not going to think about changing our -- the equity side. But if we don't have any opportunities to make investment, and then we will think about what we need to do because we need to be aware of our share price, too. But the fact that we prepared this plan this time, with the investment we will implement, we are going to achieve growth in the future. So by lifting our profit, we aim to achieve ROE of 8%. And you're asking me why 8%? I thought 8% will be the minimum level that everybody or investors and shareholders can be satisfied. This is the kind of investment discussions we have.

Any other questions? Kamichika-san, please.

My name is Kamichika from SMBC Nikko. I have 2 questions. First, about the profit for -- during the 3 years. I'd like to deep dive into this. Profit-wise, you mentioned it's in a plateau. But on the other hand, you would like to aim for higher. And you also mentioned that. What kind of upside can we expect from the capital market? So could you elaborate on this? So from before, rebalancing is an option maybe? And other than that, what kind of potential upside could there be? This is my first question. And on top of that, and related to this, ROE, 8% in order to achieve this and also net profit, JPY 270 billion in average. So looking at equity capital, equity ratio, maybe your ROE is not enough, is not the level you can achieve, I think. So could you explain this?

First of all, basically, we want to improve our profitability. This is something we have been doing, and this will become more important going forward. First, what we can do right away is to reduce cost and improve efficiency of our business operation. So we'd like to be able to generate higher profits. As was mentioned earlier, the passing on the cost increase to the price, this is not something we are thinking of. Rather than that, we would like to make efforts ourselves to improve profitability. And the specifics, could you add anything?

So after calculation, maybe it's not sufficient. So I understand what you're saying. We understand that. But still, we'd like to aim for ROE 8%. And we'd like to accumulate profits to be able to achieve ROE of 8%. And Nishikawa-san's question earlier or it's related to what President Mori has mentioned. In the coming 3 years, we don't have the intention to stay in a plateau and just wait -- sit and wait. So T&D, ICT, real estate, energy, all the businesses for the investors as well as debt investors as well. We'd like to make the businesses investable. That's what we are keeping in mind. And based on that concept, we'd like to take action. So this is the prerequisite for growth, I think. This is abstract answer, and it's very difficult for me to say anything concrete. But we'd like to make our business investable and this is our intention.

I have one more question. This is about the forecast for next year, Page 23 of financial results. So minus JPY 16 billion decrease in electricity sales. Could you explain about this? So it's negative. So maybe competition is severe. But in the previous page, so total electricity sales is expected to increase. So what is the breakdown of negative JPY 16 billion? How should I understand the image of the breakdown?

So I would like to talk about the numbers. As Kamichika-san mentioned, Page 22, please take a look at Page 22. Retail is minus 2 and impact of temperature, fiscal 2025 comparing to that, it's minus 1.4 billion kilowatt hour decline and increase due to customer acquisition, it's positive -- increased by JPY 1.5 billion and also inspection time lag, negative JPY 200 million, and that is the result. So that is the intention. And also sales to other companies, it's plus JPY 108. It's a significant increase. And we have discussed about this internally, but it's difficult to explain the details because of competition. But JPX transaction value is expected to increase going forward and that is where the increase is coming from. But in terms of profit and loss, Page 23, retail decline in hour, that is generating impact.

Are there any other questions?

I am from Morgan Stanley, Ogino Reiji. So I have the 3 questions. So for 2040, just like what the energy agency plan that shows, I don't think it's trustworthy because you cannot really foresee what will happen by 2040. I understand it's the same situation for you. I didn't expect this medium management plan to be such a long duration period. So we -- what we need is to see what your vision is for 2030 rather. You are now saying you're in the plateau situation.

If we assume the plateau situation will continue for 3 years beyond the plateau, after you normalized the profit level going down. And without your growth investment, you can expect your profit to go back. But then you can -- if you say your profit will be in the plateau situation for 3 years. So by 2030, I understand there will be several years where you will need to implement some investment works for the nuclear power plant. And then if you are showing us what your assumption will be for 2030 and if you can present your expected ROE for 2030, I will have a better understanding of what I am about to ask. So you're saying next several years, you're going to face challenges as you are in the plateau. And you said 15 years later, you are going to improve your profit. I don't think that is trustworthy or that's meaningful.

So if we have a vision for 2030, we will be sharing that today. But after going through various internal discussions, and we also discussed what we are going to achieve, and then we are presenting what we have concluded. And so as we look at what we will do in the future, we decided to show what our vision for 2040 will be. And if you are not satisfied with that, we can only share what our outlook is for the next 3 years.

I don't think that's sufficient. So because you are now in the plateau situation, and we don't really know what will happen after that we are not sure if you're okay. So if you're going to see the recovery after you get out of the plateau, you are not saying at what level of the increase you are going to see, and you are saying that is the right way of presenting your outlook. I'm not saying that this is right. No, if you -- can you show the number by the time you announce your first half results, your -- this should be your task to do your analysis, okay. So as a company, you should be despising information. So you should be sharing what your -- the results of the analysis is for investors. It's not really a task of the sell-side analyst.

So as Ogino-san said, what you are saying and what other investors and shareholders are saying really they are meaningful to us, we do listen to what everybody is saying.

So what I am asking is, please show us as a reference what your outlook for 2030 is and what you are going to do to get there over the next 3 years? That is my first request. And my -- the second part of the question is your outlook for the next 3 years. So in your management plan, you said you're going to use your cash for investment and the shareholdings and the Kinden share. Even without your growth investment, these are things you should be doing. That should be the message of the equity market. But I get the impression you are going to do this because you are going to implement the growth investment. Even without the growth investment, the equity market thinks you should do that because there could be an issue of a parent subsidiary, the listing companies -- listed companies, okay.

So for the next 3 years, can you share what your assumption is for next 3 years? Especially ours for the next 3 years, what is your assumption? And in case of a 3-year medium-term plan, if you assume crude oil price to be $70 or if you can share the assumption for foreign exchanges, if you are going to share the outlook for next 3 years, not the average, but I will be -- I will appreciate if you can show us in breakdown. So on average, if average is going to be JPY 780. And this time, the recurring profit will be at JPY 20. And this year, it's going to be JPY 340 and the average will be JPY 270. It seems like you will see your -- the ordinary profit to decline over time. Because you are in the plateau situation, this is the kind of image you're going to show. That's okay.

But for the next 3 years, against this platform plateau situation, as you will implement certain growth investment, under normal situation, you will see your recurring ordinary income to decline, but you will be making an effort to achieve a certain growth. Apart from the rebalancing, I would like to hear what you're going to do to improve your ordinary income level for the next 3 years. So I would like to receive here your assumptions and the sensitivity for 3 years and for next -- for this fiscal year.

And my third question, I don't really want to get into details. But for energy business, for power generation and retail, I would like to see the breakdown what the situation is for each businesses, either on the power generation side or on the retail side, what kind of challenges you are identifying and what kind of measures you are taking to improve that? I want to see that. I understand core business of energy is important for you. So for power generation and retail, I would like to see more the quantitative data for that. Okay.

So for assumption, we can share some assumptions. So from Secretariat, we can communicate what the assumption is. So we understand under the Iranian situation over the next 3 years, on the note says we are not including the Iranian situation or the situation in the Middle East. So without that, we are assuming some of the assumptions.

Is that the kind of document that you can share on the website?

No, we can only share it on Q&A.

I don't really want you to share this information to all the non-Japanese investors from me. So can you share that information on the website?

No. We are able to share the information. If necessary, we can provide the information through separate and individual communication.

And for power generation and the retail business breakdown.

We understand we should be aware of that perspective too. Internally, we are taking those approach, implementing our businesses. And for our results for FY '25 and our forecast for '26, internally, we are doing analysis of what kind of progresses we are making. And how much we can disclose is something we need to discuss, but we do have our internal analysis already.

Are there any other questions? Okay. The third row, person sitting in the middle, in the third row.

My name is [Tanata] and 2 questions. First, your capital equity ratio. In fiscal 2026, you are forecasting 37% equity ratio. And related to that, the midterm plan, when I look at the numbers, net profit forecast and assuming the debt, I believe the capital equity ratio is expected to increase. So from mid-30%, there might be some deviation and difference. And how are you going to control your equity? So you have described about doing buyback as well. Are you going to take a more aggressive measures?

First of all, for this question, for equity ratio, we have a relatively high equity ratio. And this is to prepare for future investments. Whether it will be maintained at a high level, we don't. That might not be the case. And naturally, buyback, it's not that we are eliminating the possibility of buyback. This is something we are thinking of as one of the options. But as I have been -- we have been mentioning from before, we have significant amount of investment for growth and maintenance. So we will use both equity and debt to make investments. That is our stance.

My second question is related to Page 24 of the midterm plan, this capital allocation chart, operating cash flow and asset recycle, this is cash in and cash out is shareholder returns. And based on that, so passing on the cost increase and profitability increase is upside. So upside from the cash out is the shareholder returns. And is that the right way to look at things or each.

So higher or it might be blurry at the bottom. And growth investment, maintenance. Investment, we are assuming JPY 1.5 trillion, JPY 1 trillion. And as the bar graph is made blurry. It's not that there's already a lineup of growth investments and that we have things decided already. Each, there might be some changes, some might increase or decrease for each one of them. So it's not necessarily the case that our operating cash flow increase will lead to increase in shareholder returns. So we have discussed about sharing the details of everything. So JPY 270 billion or more of shareholder returns, it is described in the second page. And we want to make efforts to increase shareholder returns. And operating cash flow, when it increases, would it be reflected straight away into shareholder returns, but I would think I want to reduce debt. because the free cash flow is very bad. So we need to strike a balance.

Do we have any other questions from participants at the venue? We are going to take questions from participants on Zoom.

So a couple of questions. So the first, on Slide 22 of the annual results. So I just wondered how have you managed to reduce your earnings sensitivity to changes in the oil price? And do those assumptions still hold even in such a volatile market as today. So I think it's JPY 0.2 billion earnings impact per dollar. Is that still valid even with oil at $100 per barrel?

So Kikuoka will be answering to your question. So the impact from this as when we see the fuel cost to increase with the time lag, there will be a fuel adjustment. And there will be -- we do the calculation based on the 2 factors. So as we are showing that we believe this can be the sensitivity we can achieve.

Therefore. At this moment, if I can add some information, even though we have seen a deterioration of the situation in Middle East in early March. So in the month of February and March, if we take the average of the future price, we use that as the annual assumption. So to answer your question, going forward, if the situation continues to deteriorate or the deteriorated situation prolongs, negative impact of JPY 0.2 billion can be adjusted or changed going forward. And did I answer to your question?

Yes. Just following on that. Are you very much more hedged than you were before?

Yes, I would like to answer to your question. So how much we hedge. We do not have an answer to give you the details. But because we have the fuel adjustment of the system, so for the fuel required for power generation, we are not making a major change in our policy to change our hedging.

And some of them related to mid-term to that of 2026? So just looking at the 2026 from the period was reasonable? What was the policies behind the allocation to investment and this is more one-off or more and more investments?

So for each of the businesses, the amount of investment allocation, policy of allocation. We don't really start our process by thinking about the allocation, but we will try to identify the investment opportunity, which will allow us to achieve the growth. So over the next 3 years, we came to the conclusion this will be the amount of investment for each region. It's not like we prioritize at a certain business segment, but in order to maximize our profit, we determine what the growth investment opportunities will be.

And if I can add some more, when we determine the allocation, that is a critical part of our management. So over the last several years, before we prepared this plan, we have been focusing on our discussion. Mori-san said profit is, of course, what we need to achieve. But we also need to consider what the spread will be at the total group level, what the level of spread we can achieve at the ROIC level or ROE level as we have gone through the various discussions of what the spread we can achieve by using project financing or co-development project scheme. Basically, we are showing the ROIC number as the ROIC we will achieve by just engaging in our business on our own. But obviously, we can like sell our asset to REIT or they will take the various actions, and we will make necessary adjustment to achieve our target. So Mori is answering to your question.

I said that the profit, and so that's important. But as Tanaka has mentioned, we need to evaluate our returns from various measures. So on Page 45 of the appendix. So the policy of the allocation, Tanaka-san always said we will just thoroughly and aggressively as discussed. We did have a very detailed discussions. So we will not simply look at the ROIC and WACC, but we will look at the expected growth and the business-related the risks and how much time will require to generate return. By looking at the various aspects, we will also determine what the investment should be prioritized. And we will need to continue to brush up these plans. We understand that's important.

One final question. So just in relation to those midterm targets to what extent do they do it with new nuclear and your transactions with new investments or is that the additional environmental for 2026?

Yes, your understanding is correct. It is included.

Congratulations to Tanaka-san on your promotion.

Do we have any other questions? So there seems to be no more questions from anybody on Zoom or in the venue. And therefore, with this, we would like to close the briefing for today. Thank you very much.