To Our Stakeholders

To Our Stakeholders

TOP > Investor Relations > To Our Stakeholders
Print

To Our Stakeholders

To Our Stakeholders

To Our Stakeholders

Evolving into a comprehensive energy
service provider that helps build
a carbon-free world and supports innovative living

Sinanen Holdings Co., Ltd.
President and CEO
Masaki Yamazaki

Aspiring to Become a General Energy Service Group
That Contributes to Sustainability
in Anticipation of the Arrival of a Post-Carbon Society

Overview of Business Results and Outlook

February 9, 2024 Update

Overview of business results (FY2023 3Q)

Sinanen Holdings Group launched its 3rd Medium-Term Management Plan in the first quarter of the fiscal year under review toward the 100th anniversary of its founding in FY 2027. To achieve our vision of “Evolution into a comprehensive energy life creation group that contributes to achieving a decarbonized society,” we are accelerating shift to a stronger management foundation and advancing our growth strategy. In business development, we will improve profitability by “expanding earnings from existing businesses” and “creating new businesses that contribute to the realization of a decarbonized society”.
In the first nine months of the fiscal year under review, sales volume of petroleum products and electricity increased despite a decline in unit sales prices in line with the petroleum products market decline. As a result, net sales were 237,553 million yen (up 0.9% year on year).
Meanwhile, in terms of profit and loss, as detailed in the “Notice of revision to full-year financial results forecasts” published on November 13, 2023, the electricity business saw a deterioration of gross profit due to the fact we were forced to sell relative power sources procured in the previous fiscal year at a negative spread, which were affected by prices in the wholesale electricity market remaining low. As a result, operating loss was 2,202 million yen (compared to 465 million yen in the same period of the previous year) and ordinary loss was 1,562 million yen (compared to 230 million yen in the same period of the previous year). Loss attributable to owners of parent increased due to absence of gain on sale of non-current assets from the previous fiscal year. As a result, this was 2,164 million yen (compared to 776 million yen in the same period of the previous year).
In addition, we reviewed the future implementation system for the electricity business to minimize price fluctuation risks. While promoting the transition to a market-linked plan for the BtoB Business, in the BtoC Business we have been participating in balancing groups with other companies (a system in which several electricity retailing companies form a single group and enter a single consignment supply agreement with general electric power distributors) and outsourcing power procurement and supply and demand management to optimize the balance between supply and demand.

Segment status is as follows.

[Retail/Wholesale Energy & Related Business (BtoC Business)]
The sales volume was down as the mainstay area of LP gas and kerosene was impacted by average temperatures that were higher than usual, and as a result, sales were down.
In terms of profit and loss, the loss was reduced mainly due to the price revisions carried out in mainstay LP gas sales in the previous fiscal year despite the deterioration of gross profit in the electricity business.
In addition, as a new initiative to expand the number of customers as indicated in the 3rd Medium-Term Management Plan, we began sales of Melife carbon neutral LP gas, which emits virtually zero CO2 emissions, in the second quarter of the fiscal year under review.
As a result of the above, in the Retail/Wholesale Energy & Related Business (BtoC business) for the first nine months of the fiscal year under review, net sales were 48,682 million yen (down 9.1% year on year), and operating loss was 495 million yen (compared to operating loss of 839 million yen in the same period of the previous year).

[Energy Solution Business (BtoB Business)]
In terms of sales, while unit sales prices in the mainstay petroleum business declined due to the petroleum products market decline, sales increased due to such factors as the acquisition of new large customers for market-linked plans in the electricity business.
In terms of profit and loss, in addition to the significant impact of gross profit deterioration in the electricity business as mentioned above, gross profit from the petroleum business, which was strong in the previous fiscal year, returned to the same level as in a normal year, which resulted in a larger loss.
In addition, we are working on efforts to “shift our portfolio to comprehensive energy services including electricity and renewable energy,” as outlined in the 3rd Medium-Term Management Plan by such as starting to supply renewable energy through an off-site corporate PPA and the launch of trade in next-generation biodiesel fuel that contributes to reducing CO2 emissions.
As a result of the above, in the Energy Solutions Business (BtoB Business) for the first nine months of the fiscal year under review, net sales were 173,695 million yen (up 3.5% year on year), and operating loss was 2,335 million yen (compared to operating loss of 183 million yen in the same period of the previous year).

[Non-energy Business]
Overall for Non-energy Businesses, both sales and profits were up, mainly due to strong performance in the bicycle business.
The circumstances of each business are outlined below.
The bicycle business operator Sinanen Bike Co., Ltd. posted increases in both sales and profits thanks to the company strengthening its sales of private brand products and promoting developing new corporations by introducing containers, in addition to the contribution of price revisions implemented from the second half of the previous fiscal year.
Bicycle sharing business operator Sinanen Mobility Plus Co., Ltd. promoted development of bicycle sharing service DAICHARI locations and started field tests together with new municipalities such as Warabi City, Saitama Prefecture. As of December 31, 2023, the scale of the business has grown to more than 3,400 stations and more than 12,000 bicycles, and both sales and profits were up as a result. In addition, we have established a system to take charge of maintenance for other companies and are improving the overall operational quality of HELLO CYCLING. Furthermore, we are working on efforts towards “creating new income streams,” as outlined in the 3rd Medium-Term Management Plan by such as lending out 800 power-assisted bicycles at the “Rainbow Land” bicycle event held in Tokyo in November 2023.
Environmental and recycling business operator Sinanen Ecowork Co., Ltd. saw lower sales and profit due to a decrease in the volume of construction waste wood associated with sluggishness in new housing starts, variable expenses from such as transportation costs, and an increase in selling, general and administrative expenses associated with the development of new environment-related businesses.
Antimicrobial business operator Sinanen Zeomic Co., Ltd. experienced lower demand overseas stemming from the stagnation of China’s economy, while sales in Japan have performed well, leading to an overall increase in both sales and profits. In addition, we are pursuing new initiatives, such as signing an exclusive distributorship agreement for a natural antimicrobial agent from Finland.
Systems business operator Minos Co., Ltd. posted profits at the same level as in the same period of the previous fiscal year due to steady demand for its flagship LP gas backbone operation system. In addition, new developments are underway as needed for the customer information system (Power CIS), including the establishment of a market-linked function that adjusts prices and services in response to market fluctuations.
The four group companies engaged in the building maintenance and management business have been integrated as Sinanen Axia Co., Ltd. since October 2023, making a fresh start as a comprehensive building maintenance company. During the first nine months of the fiscal year under review, although there was an increase in sales due to the expansion of its area of building maintenance operations for multi-family housing and strong performance in the facility operation business, including funeral halls and hospitals, profits decreased due to an increase in selling, general and administrative expenses associated with the integration. In addition, the company is preparing to open a new office in the Saitama area for further expansion of areas of operations as indicated in the 3rd Medium-Term Management Plan. Furthermore, we are seeing results from efforts towards “ensuring stable profits” by such as starting to manage large properties.
As a result of the above, in Non-energy Businesses for the first nine months of the fiscal year under review, net sales were 15,005 million yen (up 8.4% year on year), and operating profit was 658 million yen (up 36.2% year on year).

Outlook

  FY 2022 Results FY 2023 Forecasts (Revision) YoY
(Amount) (Percentage)
Net sales
(Hundred millions of yen)
3,422 3,800 +378 +11.0%
Operating profit
(Hundred millions of yen)
8 -8 -16 -
Ordinary profit
(Hundred millions of yen)
12 -2 -14 -
Profit attributable to owners of parent
(Hundred millions of yen)
4 -7 -11 -

Net sales are expected to exceed the initial forecast owing to the increase in crude oil prices and propane contract prices, which affect the purchasing prices in our mainstay area of petroleum and LP gas.
On the other hand, in terms of profit and loss, gross profit mainly in the electricity business is expected to fall significantly below initial assumptions, and as mentioned above, we have decided to revise the full-year consolidated financial results forecasts.
Regarding this point, during the previous fiscal year, the Group had secured relative energy source in preparation for the risk of higher purchase prices in the current fiscal year, assuming that the wholesale electricity market price would exceed 30 yen/kwh. However, contrary to assumptions, monthly average prices in the wholesale electricity market (spot price in Tokyo) remained at slightly less than 12 yen per kwh in the first six months of the current fiscal year, making procurement power supply prices relatively high.
Under these circumstances, a surplus of procured power supplies was generated due to losing some customers and other factors, and we were forced to sell such surplus power supplies at a negative spread, which were affected by prices in the wholesale electricity market. In addition, the power surplus generated due to lower-than-expected demand during the summer months had to be sold at a negative spread, resulting in gross profit for the first six months of the current fiscal year that was significantly lower than our initial assumptions.
For the second half of the year, while the retail price revisions and expanded sales of market-linked plans that have been underway since the beginning of the year are progressing as expected, it is anticipated that they will not be sufficient to offset the decreased sales outlook due to loss of customers and demand reduction, and similar to the first half, sales are expected to fall below initial assumptions.
In addition, the Company considers returning profit to shareholders the most important management policy. Our basic policy is to provide stable dividends with a consolidated payout ratio of 30% or more.
Although the financial results forecasts have been revised downward, in accordance with the basic policy of maintaining stable dividends, no revisions have been made to the year-end dividend forecast for the fiscal year ending March 31, 2024.