Japan's Chugoku Electric Power swings to loss in FY2026 Q1 as nuclear shutdown raises costs

Japan's Chugoku Electric Power Co. announced its consolidated financial results for the first quarter (April-June) of fiscal year 2026 on July 31. During the reporting period, the company's sales increased 4.4% year-on-year to 343.9 billion yen, up 14.3 billion yen from the same period last year, mainly driven by growth in electricity sales volume.

Profit performance, however, came under significant pressure. The company posted an operating loss of 5.3 billion yen, an ordinary loss of 3.2 billion yen, and a net loss of 3.7 billion yen for the first quarter, compared with a net profit of 26.8 billion yen in the same period last year, a year-on-year decrease of 30.5 billion yen. This marks the first time since the first quarter of fiscal year 2022 that the company has recorded simultaneous losses in operating profit, ordinary profit, and net profit over a four-year period.

The company stated that one of the main reasons for the losses was the “lagged losses” caused by rising fuel prices. Under the fuel cost adjustment system, fluctuations in fuel prices are typically reflected in electricity tariffs with a lag of several months. Due to the impact of the Middle East situation, fuel prices rose rapidly, and electricity tariff revenues failed to cover the actual increase in fuel costs in a timely manner, with the related impact in the first quarter amounting to approximately 22 billion yen.

The shutdown of Unit 2 at the Shimane Nuclear Power Station also pushed up costs. The unit has been offline since February 2026 due to periodic inspections, resulting in zero utilization of the nuclear power station during the first quarter. With reduced nuclear output, the company had to increase replacement thermal power generation, leading to higher fuel costs and further compressing profit margins.

In terms of electricity sales, demand in the company's core business continued to grow. Total electricity sales in the first quarter reached 13.94 billion kilowatt-hours, up 10.7% year-on-year, mainly driven by increased demand from corporate customers for high-voltage and extra-high-voltage electricity.

Despite the first-quarter loss, Chugoku Electric Power maintained its full-year earnings forecast for the fiscal year ending March 2027. The company expects full-year sales of 1.49 trillion yen, consolidated operating profit of 52 billion yen, ordinary profit of 40 billion yen, and net profit of 31 billion yen. The company stated that the first-quarter loss was broadly in line with expectations and expects Unit 2 of the Shimane Nuclear Power Station to resume commercial operation in September.