Tohoku Electric Power Incorporated : Financial Results for the First Quarter of Fiscal Year ending March 31, 2022 (FY2021) and Financial Forecasts for FY2021

TOHOKU ELECTRIC POWER CO., INC.

July 30, 2021

Financial Results for the First Quarter of Fiscal Year ending March 31, 2022 (FY2021) and

Financial Forecasts for FY2021

Tohoku Electric Power CO., Inc. released its financial results for the first quarter of FY2021 (April 1, 2021 through March 31, 2022) and Financial Forecasts for FY2021 today.

【Consolidated Financial Results】

Although retail electricity sales volume in the power generation and sales segment increased in reaction to last year's significant drop due to COVID-19, total electricity sales volume decreased to 18.6 TWh, a year-on-year decrease of 4.3%, due to a decrease in JEPX transaction.

In addition, operating revenue decreased to ¥400.5 billion, a year on year decrease of ¥118.6 billion or 22.9%, due to the impact of the adoption of "Accounting Standard for Revenue Recognition."

Regarding ordinary income, due to temporary factors such as an impact of the time lag of fuel cost adjustment system and the shutdown of thermal power stations damaged by the earthquake off the coast of Fukushima Prefecture, ordinary income decreased to ¥18.5 billion, a year-on-year decrease of ¥20.6 billion or 52.7%.

Net income attributable to owners of the parent decrease to ¥9.8 billion, a year-on-year decrease of ¥18.0 billion or 64.7%. Consolidate cash income* for this period was ¥82.5 billion.

• With the application of the "Accounting Standard for Revenue Recognition" from April 2021, the "Electricity Business Accounting Rules" has also been revised. Grant under act on purchase of renewable energy sourced electricity and surcharge for promoting renewable energy sourced electricity based on Feed-in Tariff Scheme for renewable energy, which were previously recorded as operating revenue, will no longer be recorded. The application of this standard has resulted in a decrease of ¥146.1 billion in operating revenue for FY2021/1Q, while expenses have also decreased by the same amount. Therefore, there is no impact on income.

*We set consolidated cash income as a financial target in the Tohoku Electric Power Group's medium- to long- term vision "Working alongside next". (Target for 320 billion yen in FY 2024)

Consolidated cash income = Operating income + Depreciation + Amortization of nuclear fuel + Share of profit of entities accounted for using equity method (Operating income doesn't include time lag between fuel cost and fuel cost adjustment charges.)

【Financial Results】

［Consolidated］								(Billions of yen)
				FY2021/1Q			FY2020/1Q		Change
				(A)			(B)		(A) - (B)	(A)/(B)
	Operating		400.5	519.2	-118.6	77.1%
	revenue
	Operating		22.8	41.7	-18.8	54.8%
	income
	Ordinary		18.5	39.1	-20.6	47.3%
	income
	Net income
	attributable to		9.8	27.9	-18.0	35.3%
	owners of parent

［Changing factor of consolidated ordinary income］

					(Billions of yen)
					Time lag between
					fuel cost and fuel
		-2.6			cost adjustment
	11.0	-6.3		charges
	Decrease in the	4.3	Decline of 20.6
Ordinary	Change in	volume of retail	Impact of supply	Others
electricity sales	-27.0
income	depreciation		and demand due
method		to the earthquake
39.1
		off the coast of
			Fukushima

Prefecture	Temporary factors	Ordinary
income

18.5

FY2020/1Q

Ordinary income excluding time lag impact 26.1

FY2021/1Q

Ordinary income excluding time lag impact 32.5

	［Segment Information］										(Billions of yen)
						Power
						Generation	Network		Construction		Others			Subtotal		Adjustment*		Total
						and Sales
				Operating		304.5	153.3	52.9	47.0		557.8		-157.2		400.5
	FY2021/1Q			revenue
	(A)			Ordinary		35.9	9.4		-2.6		4.1			46.9		-28.3		18.5
				income
				Operating		413.7	172.8	46.6	51.5		684.9		-165.6		519.2
	FY2020/1Q			revenue
	(B)			Ordinary		35.4	6.7		-2.3		5.1			45.0		-5.8		39.1
				income
				Operating		-109.2	-19.5	6.3		-4.5			-127.0		8.3		-118.6
	Change			revenue
	(A)-(B)			Ordinary		0.4	2.6		-0.2		-1.0			1.8		-22.5		-20.6
				income

*Elimination of transactions between segments. By adding the adjustment amount to the sum of the figures for each segment, the figures are consistent with the figures for each item in the consolidated financial statements.

［Power Generation and Sales Business］

Retail electricity sales volume decreased to 15.4 TWh, a year-on-year increase of 1.9%, due to an increase in operations for commercial and industrial use, although demand consumed at house decreased. Lighting (Residential) was 4.6 TWh, a year-on-year decrease of 8.3%. Power was 10.8 TWh, a year-on-year increase of 7.0%.

On the other hand, wholesale electricity volume decreased to 3.2 TWh, a year-on-year decrease of 26.3%, due to a decrease in JEPX transaction resulting from the shutdown of thermal power stations damaged by the earthquake off the coast of Fukushima Prefecture. As a result, total electricity sales decreased to 18.6 TWh, a year-on-year decrease of 4.3%.

In spite of a decrease in the amount of electricity sales and a temporary factor such as an impact of the time lag of fuel cost adjustment system and an increase in fuel costs due to the shutdown of thermal power stations damaged by the earthquake off the coast of Fukushima Prefecture, incomes increased due to new dividends from the Tohoku Electric Power Network Co., Inc. and a change in the depreciation method. As a result, operating revenue was ¥304.5 billion, a year-on-year decrease of 26.4% and ordinary income was ¥35.9 billion, a year-on- year increase of 1.4%.

In addition operating revenue decreased by ¥94.9 billion compared to this before the application of "Accounting Standard for Revenue Recognition."

［Network Business］

Electricity demand in our franchise area for this period increased to 17.9 TWh, a year-on-year increase of 3.4%, due to the upturn in operations for industrial use, although heating demand decreased due to high temperatures in early spring. As for expenses, depreciation expenses decreased due to a change in depreciation method. As a result, operating revenue was ¥153.3 billion, a year-on-year decrease of 19.5 billion or 11.3%, and ordinary income was ¥9.4 billion, a year-on-year increase of ¥2.6 billion or 39.5%.

In addition operating revenue decreased by ¥51.1 billion compared to this before the application of "Accounting Standard for Revenue Recognition."

［Construction Business］

Although operating revenue was increased to ¥52.9 billion, a year-on-year increase of ¥6.3 billion or 13.5%, due to an increase in construction for general consumers such as indoor wiring work, ordinary loss was increased to ¥2.6 billion, a year-on-year increase of ¥0.2 billion or 11.7%, due to an increase in subcontracting costs.

［Other Business］

Operating revenue was ¥47.0 billion, a year-on-year decrease of ¥4.5 billion or 8.8%, due to decreases in the information and communications business and the manufacturing business, despite an increase in the gas business. In addition, ordinary income was ¥4.1 billion, a year-on-year decrease of ¥1.0 billion or 19.9%.

< Major factors >

Items	FY2021/1Q	FY2020/1Q
Crude oil CIF price ($/bbl.)	66.9	32.4
Exchange rate (¥/$)	110	108
Nuclear power utilization rate (%)	-	-

【Electricity Sales】

													(GWh)
				FY2021/1Q			FY2020/1Q			Change			Change
				(A)			(B)			(A) -(B)			(A) /(B)
	Lighting		4,598	5,014	-416	91.7%
	(Residential)
	Power		10,824	10,114	710	107.0%
	Retail Electricity			15,422			15,128			294			101.9%
	Sales
	Wholesale		3,153	4,281	-1,128	73.7%
	Electricity Sales
	Total of Electricity			18,576			19,409			-833			95.7%
	Sales

【Consolidated Financial Forecast for FY2021】

The financial forecast was initially undetermined except for operating revenue due to the difficulty in estimating the timing of restoration of the thermal power stations damaged by the earthquake off the coast of Fukushima Prefecture. However, we would like to inform you of the income forecast as the outlook for restoration of the thermal power stations has been established.

The forecast for operating revenue for the year ending March 31, 2022 is expected to decrease to approximately ¥1,810.0 billion, a year-on-year decrease of 3.1%, due to a decrease in retail electricity sales volume and the impact of the application of "Accounting Standard for Revenue Recognition." Compared with the previous forecast, the forecast has been revised upward due to an increase in fuel cost adjustments.

Although depreciation expenses will decrease due to the change in depreciation method, the forecasts for ordinary income for the year ending March 31, 2022 is expected to decrease to approximately ¥35.0 billion, a year-on-year decrease of 48.2%, due to an impact of the time lag of fuel cost adjustment system and the shutdown of thermal power stations damaged by the earthquake off the coast of Fukushima Prefecture. Net income attributable to owners of parent is expected to decrease to approximately ¥23.0 billion, a year-on-year decrease of 21.7%.

				(Billions of yen)
				Net income
	Operating	Operating	Ordinary	attributable to
	revenue	income	income	owners of
				parent
FY2021	1,810.0	52.0	35.0	23.0
【Dividend Forecast for FY2021】
			(yen)
	Interim	Year-end	Annual
	(forecast)	(forecast)	(forecast)
Dividend	20	20	40