JERA's first-quarter profit jumps 36.8% as LNG cost pass-through narrows
Japan's top power generator posted a sharp quarterly profit rise, but the swing looks more like contract timing than a durable margin recovery.
JERA reported operating profit of ¥174.4 billion for the April-June quarter, results released Friday (2026-07-31) showed, up 36.8% from ¥127.5 billion in the same period a year earlier, with revenue rising 8.9% to ¥904.3 billion on higher electricity sales prices.3
The result shows Japan's largest thermal power generator narrowing the gap between what it pays for LNG and what it charges customers. The company's reference profit excluding the so-called time lag came in at ¥128.0 billion, nearly triple the ¥48.3 billion posted in the first quarter of last year.3
But the headline number flatters the underlying trend. JERA said the time-lag effect swung from a positive ¥44.2 billion to a negative ¥4.8 billion — a ¥49.0 billion reversal that shows how much of the quarterly gain came from contract mechanics rather than operational improvements.3
Profit excluding time lag rose ¥30.6 billion year on year to ¥123.1 billion, JERA said, a solid result but well below the 36.8% growth rate implied by the unadjusted figure. The company's fiscal year runs April to March, making this the first quarter of its 2026-27 financial year.3
For JERA, the fuel-cost pass-through mechanism remains the key lever. Revenue increased ¥73.5 billion, driven mainly by higher income unit prices for electrical energy sales, suggesting the company has been able to push through fuel costs to customers.3
The wider picture is mixed. Inpex's quarterly numbers, released in June, showed overseas crude oil sales prices down 10.7% to $67.39 per barrel and domestic natural gas prices down 10.8% to ¥72.28 per cubic metre, pointing to softer upstream realisation even as downstream generators benefit from regulated pricing frameworks.1
Tokyo Gas, by contrast, reported operating profit up 48.5% to ¥197.6 billion and net profit attributable to owners up 205.8% to ¥226.8 billion, helped by ¥48.7 billion in gains on sales of non-current assets and ¥68.0 billion from reversal of foreign currency translation adjustments. Those one-off items make the two companies' results difficult to compare on an operational basis.2
Currency adds another layer of pressure. Inpex data show the average USD/JPY rate for the April-June quarter came in at ¥157.00 per dollar, a depreciation of ¥4.60, or 3.0%, from the prior year period, which raises the yen cost of dollar-denominated LNG imports.1
The reference profit metric, which strips out the timing mismatch between fuel procurement and tariff adjustments, is the line traders will track from here. That figure posted a 164.9% jump in the first quarter, and whether it holds as summer demand peaks and spot LNG prices stay elevated is the question JERA's next guidance update will need to answer.3