Why is Tokyo Gas forecasting a 40% drop in net profit for fiscal 2026, and what are the main factors cited?

Tokyo Gas forecasts a 40% drop in net profit for the year to March 2027 — from 226.9 billion yen to 137 billion yen — primarily due to higher electricity procurement costs in its power retail business, driven by a tighter Asian liquefied natural gas (LNG) market stemming from the Iran war and the broader Middle East crisis. Additional factors include slower gas sales and the absence of a one-off gain from the dissolution of an Australian unit that boosted earnings in the prior year. The company explicitly attributes the profit decline to these combined operational and external macroeconomic pressures, with no mention of domestic demand weakness or regulatory changes as contributing causes.

How does Tokyo Gas mitigate LNG supply risk, especially given geopolitical tensions in the Middle East and potential disruptions like the Inpex Ichthys strike?

Tokyo Gas mitigates LNG supply risk through high contractual security and geographic diversification: about 90% of its LNG supply is secured under long-term contracts, mainly from Australia and Malaysia — not the Middle East — and it has no immediate fuel procurement concerns related to the region. CFO Taku Minami emphasized that low exposure to volatile spot purchases helps limit earnings impact from further price rises, and regarding the potential strike at Inpex’s Ichthys LNG project — from which Tokyo Gas imports 1.05 million metric tons annually — he stated supply impact would be limited because the company sources LNG from a wide range of projects and can fully absorb issues arising from any single project.

Tokyo Gas Warns Fiscal 2026 Profit to Fall 40% on Higher Power Procurement Costs

Apr 28, 2026

Tokyo Gas forecasts a 40% net profit drop to March 2027 due to rising electricity costs driven by Middle East tensions tightening the Asian LNG market. Long-term contracts limit immediate fuel procurement risks despite geopolitical concerns.

reuters

2026-04-28

Tokyo Gas Warns Fiscal 2026 Profit to Fall 40% on Higher Power Procurement Costs

2026-07-30

Prolonged Iran War Could Keep Spot LNG Prices High, Tokyo Gas Says

Tokyo Gas Warns Fiscal 2026 Profit to Fall 40% on Higher Power Procurement Costs

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