Japan's Kyushu Electric Issues JPY 200 Billion In Preferred Shares To Aid in Green Transformation

By: Asia Business Outlook Team | Saturday, 29 April 2023

Japan's Kyushu Electric Power Co will issue 200 billion yen ($1.5 billion) in preferred shares to help fund its green transition at a time when high fuel prices are weighing on the sector's profitability, the company said.

Japanese utilities were hit by high fuel costs last year as a post-pandemic energy crisis was exacerbated by Russia's invasion of Ukraine.

The government has also delayed raising electricity prices as it tries to rein in inflation, at time when companies are feeling pressure to work towards meeting a national carbon neutrality goal set for 2050.

Kyushu Electric's preferred shares will "secure early funding for carbon neutral initiatives and expansion of growth businesses while strengthening our financial base," Tatsuo Kumadaki, deputy general manager of its Tokyo branch, told a news conference.

Kyushu Electric said the Class B shares are to be bought by Mizuho bank, Development Bank of Japan and MUFG bank. The power firm will buy and cancel Class A preferred shares worth 100 billion yen held by the same investors.

It forecast net profit of 90 billion yen in the fiscal year ending March 31, 2024, after posting a 56.4 billion loss in 2022/23.

In all, eight Japanese utilities have this week posted a combined full-year loss of 643 billion yen ($4.7 billion).

They are Tohoku Electric Power Co, Chugoku Electric Power Co, Kyushu Electric, Okinawa Electric Power Co, Tokyo Electric Power Holdings, Hokuriku Electric Power Co, Hokkaido Electric Power Co Inc and Shikoku Electric Power Co Inc.

Many have had to dispense with tapping nuclear power following the 2011 Fukushima disaster, though Japan is now reviewing its use of that fuel in view of the global energy crisis.

Having nuclear power among its energy sources helped Kansai Electric Power Co - which feeds Japan's major industrial area of Osaka - to remain in net profit of 17.7 billion yen but that was still 79 per cent lower year-on-year.

One-off gains helped Chubu Electric Power Co to post a net profit of 38.2 billion yen.