9543.T

Updated Corporate Identity and Strategic Direction

• In 2025, the company launched a new group corporate philosophy: "We pursue a prosperous and sustainable future through the combined strength of our energy-focused group", and a new brand slogan: "Waku Omoi, Wakaseru Mirai." 2025 focused on internal penetration, and 2026 will move to an embedding phase to align employee behavior with the new vision.
• The 2026-2028 mid-term period is defined as the phase for business domain expansion and open co-creation to lay the groundwork for regional co-creation after 2030. The company leverages two core strengths: (1) a full value chain for natural gas, LPG, power, and renewable energy, and (2) a stable customer base and strong regional trust, enabling it to execute 10 billion to 20 billion yen in investments, receive unsolicited M&A inquiries from local companies facing business succession issues, and maintain a hiring advantage over other regional firms.

Organizational Restructuring

• In January 2026, the company implemented a large-scale group reorganization, establishing 4 intermediate holding companies (Shizuoka Gas Energy, Shizuoka Gas & Power, Shizuoka Gas Housing Holdings, Shizuoka Gas Engineering Holdings) to address prior issues of fragmented ownership, poor internal synergy/communication, and governance/monitoring risks. The group now operates as 44 companies (35 consolidated subsidiaries, 8 equity-method affiliates, and Shizuoka Gas parent) as of February 13, 2026, with improved structure to drive category-wide optimization and expansion.

Core Business Segment Strategies

• City Gas & LPG Business: City gas active customer counts face pressure from regional population decline and new retail competitor entry; the company aims to maintain flat counts via pipeline expansion into high-potential areas. For LPG, regulatory changes have calmed switching competition between operators, and industry focus has shifted to M&A consolidation; the company will continue pursuing M&A to grow customer counts and sales volume.
• Power & Renewable Energy Business: The company will continue expanding household demand and will newly target small commercial customers leveraging its existing channel base. It is progressing with construction on a previously approved in-house power plant expansion, scheduled to start operations in 2027. Renewable energy development will slow near-term due to higher interest rates and poor project economics (especially for biomass power plants with plant performance issues), but the company is actively building networks and gathering knowledge for perovskite solar cells, which it can deploy to its existing customer base advantage if the technology achieves wide adoption. The company is progressing with construction of a previously approved extra-high voltage grid storage battery, and will actively pursue development of high-voltage grid storage batteries, which remain an underpenetrated market with attractive project economics.
• Lifestyle Services & Engineering Services: In the housing segment, the company has completed a full lineup of services (real estate rental, land development, new home construction, renovation, vacant home/resale used housing) via a series of acquisitions: Kosei Housing (2022), Sweets Investment (2024), Good Living (2025), and Kyodo Kaihatsu (February 2026). The company will continue pursuing M&A to cover uncovered geographic areas, and accelerate post-merger integration and internal synergy creation. The company will also optimize its global natural gas value chain by leveraging 1.2 million tons of domestic LNG demand following 2025 North American shale gas development investment, and will pursue expansion into high-growth regions: upstream development and liquefaction participation globally, and gas distribution and renewable energy development in new regional markets domestically.

Human Capital and Organizational Development

• The company prioritizes two core goals: developing employees with a proactive challenge mindset, and building a talent portfolio aligned with business transformation, led by the CEO who has emphasized "no company growth without employee growth" since taking office in 2024.
• Key initiatives include: (1) Active career hiring, expanded from almost exclusively new graduate hiring to meet talent needs for business expansion; (2) Active job rotation across departments, divisions, and group companies, replacing the prior rigid system where employees often stayed in the same role for over 10 years; (3) Advancement of women in leadership: in January 2026, two female managers were appointed as presidents of two consolidated subsidiaries, with future consideration for promotion to Shizuoka Gas executive officers based on performance and growth.
• The company is building a diverse, bottom-up organizational culture with flat relationships between leadership and staff, supported by 1-on-1 meetings and town halls to enable open discussion. Employee engagement scores, which were previously below the survey provider average, now exceed average, and voluntary turnover of young employees motivated by lack of growth opportunities has dropped to nearly zero. The company will continue these efforts to reduce young worker turnover.

Regional Contribution

• Regional contribution is structured around three pillars: regional development, environment/safety/security, and culture/sports. Approximately 80% of the group's 2,000 employees voluntarily participate in individual regional contribution activities (including fire brigade participation, neighborhood association management, and high school sports team coaching), a very high rate compared to other local companies and government agencies. The company will continue fostering a culture of individual and corporate regional contribution.

• The company is accelerating its 2030 Group Vision targets, moving up the goal of 13 billion yen consolidated recurring profit and 8% ROE by two years to achieve it by 2028.
• City gas sales volume is projected to decline through 2027 to 152.4 million cubic meters due to wholesale volume reduction from contract renegotiations, then increase to 155.7 million cubic meters in 2028 driven by wholesale volume increases from new contracts and large customer development.
• Net sales are projected to grow from 201.2 billion yen (2025) to 201.1 billion yen (2026), 214 billion yen (2027), and 236.2 billion yen (2028).
• Adjusted recurring profit is projected at 11 billion yen (2026), 12.6 billion yen (2027), 13.6 billion yen (2028). Pre-adjustment recurring profit (including adjustment items) is projected at 10.4 billion yen (2026), 12.1 billion yen (2027), 13.3 billion yen (2028).
• Pre-adjustment net income is projected at 9.1 billion yen (2026), 9.3 billion yen (2027), 10.7 billion yen (2028).
• Pre-adjustment ROE is targeted to reach 8% in 2028; ROIC is projected to increase from 7.1% (2025 actual) to 5.0% (2026), 5.6% (2027), and 5.5% (2028).
• Dividend policy: The company approved a 2 yen increase in full-year 2025 dividend to 43 yen per share (driven by above-expectation accounting profit, even though the outperformance was largely from one-time factors), with a DOE of 2.6% and payout ratio of 32.2%, flat year-over-year. A 1 yen increase to 44 yen per share is planned for 2026, in line with the company's progressive dividend policy, target 30% payout ratio, and commitment to return expected profit growth to shareholders.
• Total investment planned for 2026-2028 is 107 billion yen, with 88% allocated to growth investment (94 billion yen total) and 12% allocated to resilience and other investment (12 billion yen total).
• Total cash allocation for 2026-2028 includes 107 billion yen for investment, 4 billion yen for debt repayment, and approximately 12 billion yen for shareholder returns. Funding will come from 64 billion yen in operating cash flow, 52 billion yen in new debt, and 7 billion yen from sales of policy-held shares.

Segment-level financial performance is not broken out with separate absolute figures or revenue contribution percentages in the provided transcript. Aggregate consolidated 2025 full-year results are as follows:

• City gas sales volume: 1.595 billion cubic meters, an increase of 12 million cubic meters year-over-year
• Consolidated net sales: 201.2 billion yen, a decrease of 1 billion yen year-over-year
• Adjusted recurring profit: 11.8 billion yen, an increase of 2.2 billion yen (22.9%) year-over-year
• Pre-adjustment consolidated recurring profit (accounting basis): 14.7 billion yen, an increase of 1.6 billion yen year-over-year after adding 2.8 billion yen in adjustment items for slide time lag and foreign exchange gains/losses on anonymous partnership investment
• Pre-adjustment net income: 10 billion yen, an increase of 1.2 billion yen year-over-year
• Pre-adjustment ROE: 8.1%, an increase of 0.3 percentage points year-over-year; pre-adjustment ROIC: 7.1%, a decrease of 0.2 percentage points year-over-year

Year-over-year recurring profit change breakdown (vs 2024):

• Raw material price/other: +4.1 billion yen, driven by a sharp improvement in CIF spread as LNG market supply tightened in 2025 after loose conditions in 2024
• City gas sales volume: +0.2 billion yen
• Affiliated companies/other: +0.2 billion yen, with gains from North American shale gas development and the Good Living acquisition offset by large impairment charges at some equity-method affiliates
• SG&A/manufacturing costs/other: -0.2 billion yen, due to increased due diligence costs for future investments
• Foreign exchange gains/losses (excluding anonymous partnership investment): -0.6 billion yen, from one-time exchange losses on North American shale gas investment
• Power business: -1.6 billion yen, driven by lower profits in the supply-demand adjustment market following regulatory changes after the 2024 first-mover advantage period

• City gas active customer counts face ongoing downside pressure from long-term regional population decline and customer switching to new retail entrants following full retail liberalization.
• Renewable energy development currently faces poor project economics driven by rising interest rates and technical performance issues, particularly for biomass power projects, which has forced a slowdown in near-term development activity.
• The company was unable to obtain hedge accounting approval from its audit firm for long-term foreign exchange forward contracts used to hedge dollar-denominated raw material procurement for its biomass power plant anonymous partnership investment, even though other co-investors received approval from their auditors. This creates non-operating volatility in reported accounting profit, which the company has addressed by adding this item to official adjustment items at the request of investors to avoid misleading users of financial statements.
• 2025 recurring profit outperformance relative to the company's underlying 10.5 billion yen run-rate profit was driven by one-time factors: a tight LNG market that improved CIF spreads, and delayed expense recognition, which are not expected to repeat at the same scale in future periods.

No question and answer section is included in the provided transcript.