Tokyo Gas warns fiscal 2026 profit to fall 40% on higher power procurement costs

By Yuka Obayashi and Katya Golubkova

TOKYO, April 28 (Reuters) - Tokyo Gas 9531.T, Japan's biggest city gas provider, on Tuesday forecast a 40% drop in net profit for the year to March 2027, citing higher electricity procurement costs in its power retail business amid the Middle East crisis.

Net profit is expected to fall to 137 billion yen ($859 million) from 226.9 billion yen the year before.

Chief Financial Officer Taku Minami said a tighter Asian liquefied natural gas market stemming from the Iran war was likely to push up power procurement costs.

Slower gas sales and the absence of a one-off gain from the dissolution of an Australian unit booked in the year ended March will also weigh on earnings, he said.

Tokyo Gas, one of Japan's largest LNG buyers, said it had no immediate fuel procurement concerns as it does not source the super-chilled fuel from the Middle East. About 90% of supply is secured under long-term contracts, mainly from Australia and Malaysia.

Low exposure to spot purchases should help limit the earnings impact of any further price rises, Minami added.

On a possible strike at Inpex's 1605.T Ichthys LNG project in Australia - from which Tokyo Gas buys 1.05 million metric tons a year - Minami said any supply impact would be limited.

"As we source supplies from a wide range of projects, we can fully absorb issues arising from a single project," he said.

For the year ended March 31, Tokyo Gas' net profit tripled to 226.9 billion yen, supported by stronger earnings from its U.S. shale gas business and a large one-off gain.

The company also announced a share buyback of up to 3.6% of outstanding shares worth 50 billion yen and raised its annual dividend to 110 yen per share from 80 yen a year earlier.

($1 = 159.5700 yen)