3150.T

• Organizational & Segment Restructuring

  • Starting from the 2026 March fiscal year, Grims merged the former B2B-focused Energy Cost Solution (ECS) and consumer-focused Smart House Project (SHP) segments into the single Energy Solution (ES) flow segment, alongside the existing stock-type Retail Electricity segment, to unify productivity management and improve flexible human resource allocation.
  • Obtained a second retail electricity license for GR Consulting (in addition to the existing license for Grims Power) to accelerate growth by increasing total permitted supply connections.

• Growth Strategy for Energy Solution Business

  • Focuses on low-voltage commercial solar for small and medium-sized enterprises (SMEs), positioned in a less competitive niche compared to large-scale megasolar projects targeting large corporations. Most installations are rooftop-mounted, with an average 2-month lead time from order to installation (far faster than the ~1-year lead time for large projects), leveraging the company's existing residential construction network.
  • Leverages a 60,000-existing customer base for cross-selling batteries and retail electricity contracts, and has formed partnerships with other SMEs that have existing customer bases but lack solar expertise to expand prospect reach, paying commissions for closed deals.
  • Implemented proprietary in-house image recognition AI to automate the process of identifying viable rooftop installation sites from maps, replacing manual work and greatly improving marketing efficiency.
  • The target market for the company's focus area is approximately 600,000 viable prospects, with only 4,500 installations completed to date, leaving 99.2% of the market untapped.

• Growth Strategy for Retail Electricity Business

  • Targets low load factor customers (average load factor <10%, vs. 30-40% industry average), which delivers higher selling prices per kWh, lower procurement volume, and lower exposure to price spikes, resulting in higher profitability than peer strategies.
  • Has a robust risk hedging framework: automatic fuel cost pass-through to customers when market prices exceed 13 yen/kWh, supplemented by forward contracts and relative power purchase agreements to hedge any unpass-through price exposure. The company has never experienced negative gross margin in the retail segment due to this framework.
  • Expanding contract volume at a planned pace of 10,000 net new contracts per year, up from 5,000 prior year, with current on-track to hit this target.

• Grid-Connected Storage Battery Business

  • Currently in the construction/acquisition phase for 6 storage sites, with 841 million yen in construction-in-progress expenses recorded on the balance sheet this half. Total planned investment for this phase is approximately 3 billion yen. The business is not expected to contribute to profit this fiscal year, with positive contributions starting gradually from the second half of the 2027 March fiscal year. It will target revenue from the supply-demand adjustment market and can also act as an in-house power resource for the retail business.

• Updated Corporate Identity

  • On the 20th anniversary of founding, Grims updated its corporate purpose, slogan and logo. The new purpose is to close the information gap for SMEs to help them adopt energy cost reduction solutions, improving their competitiveness and allowing them to reinvest cost savings into growth.

• Full year 2026 March fiscal year guidance is unchanged from initial projections: consolidated revenue of 35.8 billion yen, consolidated operating profit of 7.15 billion yen, representing 10% year-over-year operating profit growth. The half-year operating profit progress rate is 51%, which is in line with plan as the company budgets for equal profit across all four quarters, so the result is considered on track.
  • The full year dividend plan is 85 yen per share, marking 10 consecutive years of dividend increases. The payout ratio was raised from 30% to 40% starting last fiscal year, with the company expecting that growing absolute profit will deliver growing dividends over time.
  • ES segment full year operating profit is guided to 5.1 billion yen, up from 4.5 billion yen prior year.
  • Retail electricity full year operating profit is guided to 2.9 billion yen, with on-track progress toward the 10,000 net new contract target.
  • Grid-connected storage batteries are expected to start contributing positive profit from the second half of the 2027 March fiscal year, with full contribution across all 6 sites expected by the 2028 March fiscal year.

1. Energy Solution (ES) Segment: This is the merged segment of the former ECS and SHP businesses. Revenue increased 632 million yen year-over-year, with 984 million yen of this growth coming from commercial solar power system sales (up 22% year-over-year). Segment revenue came in 283 million yen above plan. Gross margin hit 54.1%, 2 percentage points below plan, driven by a higher-than-planned volume of battery bundled sales. The full-year segment profit plan is 5.1 billion yen (up from 4.5 billion yen prior year). It accounts for approximately 70% of total consolidated revenue, with commercial solar alone making up 70% of ES segment revenue. 2. Retail Electricity Segment: Revenue came in 246 million yen below plan, but gross profit was 68 million yen above plan and operating profit 28 million yen above plan. Gross profit increased 198 million yen year-over-year: 142 million yen from growing contract volume, 296 million yen negative impact from market price declines, offset by 345 million yen positive impact from lower capacity contribution charges (down from 530 million yen prior period to 293 million yen current period). It is a stock-type business that contributes stable recurring profit to Grims.

• Increasing regulatory restrictions on large-scale ground-mounted megasolar projects could hurt investor sentiment towards the broader solar sector, though Grims believes this is actually a tailwind for its rooftop-focused business model since it does not engage in land development for large projects.
  • Geopolitical tensions between China and Japan could disrupt the solar panel and battery supply chain. However, Grims has 15 years of experience navigating supply chain disruptions from COVID-19 and prior episodes, suppliers have already implemented extended currency hedging to mitigate yen depreciation impacts, and current price increases from Chinese policy changes have been limited, so the impact on profitability is expected to be contained. Higher domestic interest rates are a broader risk for all installment-based businesses including solar, but this is not unique to Grims' solar business.
  • Capacity contribution charges for the retail electricity segment are expected to increase from current 4,000 yen per kW to 6,000 yen per kW next fiscal year, continuing to increase gradually in subsequent years. While this will increase costs, the company has already hedged most of next fiscal year's power procurement at favorable prices, and the expected 0.5 yen per kWh increase can be absorbed by volume growth and improved procurement conditions, so no material margin compression is expected.
  • The grid-connected storage battery business depends on the evolving auction rules of the Japanese supply-demand adjustment market, so final profitability is uncertain and subject to regulatory changes.

Q: How do growing restrictions on megasolar impact Grims' commercial solar business, and could it hurt customer sentiment? / A: Grims expects megasolar regulations to tighten further on environmental grounds. However, the company’s commercial solar business is almost entirely rooftop or carport-mounted, with no large-scale land development that drives environmental restrictions. Management believes tighter megasolar regulations will actually be a tailwind for rooftop solar. The company has already begun selling flexible thin-film panels to expand into sites where traditional rooftop installation is not structurally feasible, and aligns with national policy to expand renewable energy adoption. /

Q: Capacity contribution charges are expected to rise in 2027 March fiscal year – can the company pass these increases to customers, and will this hurt growth or margins? / A: Management projects capacity contribution charges will rise from 4,000 yen/kW this year to 6,000 yen/kW next year, then gradually increase after that. Currently, the company already passes through more than half of the charge to customers and will review price adjustments between December and January to address next year’s increase. While costs will rise, the charge is designed to stabilize overall wholesale power prices, and next year’s forward and relative power contracts have already been secured at much better terms than this year’s. The 0.5 yen/kWh net cost increase can be absorbed by volume growth, so margins are expected to remain stable and growth remains on track. /

Q: When will grid-connected storage batteries start contributing profit, and how much can they add? / A: After construction is completed, 3 months of testing and 3 months of product registration for the supply-demand adjustment market are required, so it takes approximately 6 months from construction completion to full profitable operation. The latest projects will start operations by February 2027, and all 6 sites will contribute to profit by the 2028 March fiscal year. Management expects the total segment to add up to 1 billion yen in annual operating profit to the group, which is a meaningful addition to the current 2.9 billion yen planned retail electricity profit, and will provide stable recurring stock revenue. /

Q: What barriers prevent competitors from entering Grims' core commercial solar market? / A: The business itself does not have extremely high legal barriers to entry, but Grims has built a nationwide sales network, a trusted third-party installation and construction partnership network, and a full end-to-end one-stop solution capability from marketing to after-sales that is difficult for new entrants to replicate quickly. This integrated operational capability is the key effective barrier to competition that Grims has built over time.