Tokyo Gas annual profit halves as coronavirus impact spreads

FILE PHOTO: A liquefied natural gas (LNG) tanker is tugged towards a thermal power station in Futtsu, east of Tokyo, Japan November 13, 2017. REUTERS/Issei Kato

TOKYO (Reuters) - Tokyo Gas Co Ltd 9531.T said on Tuesday its net profit nearly halved in the year ended in March because of falling gas sales and hefty one-off losses on its upstream assets overseas after oil prices collapsed.

Japan’s biggest supplier of city gas did not provide profit guidance for the current financial year, saying it was unclear to what extent the coronavirus pandemic will impact gas demand and its businesses.

“The impact is spreading within our business portfolio day by day, but it is difficult to assess an overall impact now,” Tokyo Gas Chief Financial Officer Koki Hayawaka told an earnings teleconference on Tuesday.

Net profit fell 49% to 43.4 billion yen ($405 million) for the year ended March 31, dragged down by a special loss of 46.7 billion yen, including impairment losses on its stake in shale gas projects in Texas, United States and in the Ichthys liquefied natural gas (LNG) project in Australia.

Hayakawa said there was a potential risk of an additional impairment loss depending on prices of oil and gas.

Oil prices dropped by 65% in the first quarter as demand plummeted because of movement restrictions on more than 3 billion people around the world to limit the spread of the coronavirus. A battle for market share between top oil producers Saudi Arabia and Russia further weakened the sector.

The company’s city gas sales declined 9% from a year earlier as it lost some retail customers to fierce competition in the liberalised energy market. Gas demand from its electric utility customers slid as they sought cheaper power from the wholesale market, cutting their run rate at power plants, Hayakawa said.

Despite the bleak financial results, Tokyo Gas has no plan to change its overseas investment plan, especially in infrastructure projects in Southeast Asia, Hayakawa said.

It also has no immediate plan to cut the procurement of liquefied natural gas (LNG) despite weaker demand due to pandemic, he said.

Reporting by Yuka Obayashi; editing by Christian Schmollinger and Barbara Lewis