November 11, 2004
Statements made in this overview of operations regarding Kyushu Electric Power’s
strategies and forecasts and other statements that are not historical facts are forward-looking
statements based on management’s assumptions and beliefs in light of information currently
available, and should not be interpreted as promises or guarantees.
Owing to various uncertainties, actual results may differ materially from these statements.
Investors are hereby cautioned against making investment decisions solely on the basis of
forward-looking statements contained herein.
Business Update
- Established: 1951 One of the 9 electric power companies in Japan that
covers generation, transmission, and distribution of
electricity
- Business area: Kyushu (composed of 7 prefectures)
- Power plants: 197 plants/19,889 MW (total supply capability:
23,031 MW)
- Electricity sold: 77,268 GWh
- Contracted customers: 8.2 million
- Sales: (Non-consolidated) 1,318円.3 billion,
(Consolidated) 1,391円.6 billion
- Net income: (Non-consolidated) 70円.1 billion,
(Consolidated) 72円.7 billion
- Consolidation: 19 consolidated subsidiaries and 24
subsidiaries/associated companies by equity method
(* All the figures are of FY2003)
Comparison of electricity sold
Kyushu is located at the
opposite shore of South Korea.
Breakdown of consolidated sales
Breakdown of electricity sold1Profile of Kyushu Electric Power
Profile of Kyushu Electric Power
Construction1.3%Energy(Gas
sales etc.)1.0%IT/Telecom2.7%Other0.9%Electricity
94.1%
Consolidated Sales
1,391円.6 billion
Specific-scale
22.0%
Residential
34.0%
Other1.8%Commercial
20.6%
High-voltage6.4%Small-scale
15.1%
Total Electricity Sold
77,268 GWh
Other
17.3%
Tokyo
33.1%
Tohoku8.9%Kansai
16.8%
Kyushu9.3%Chubu
14.6%
Total Electricity Sold
(10 EPCOs incl. Okinawa)
834,305 GWh Achievement of financial targets in sight
Achievement of financial targets in sight2Steady progress toward achieving current financial targets
Steady progress toward achieving current financial targets
FY2004 Targets
Estimate (FY2002-2006)
FCF 69円.6 billion 180円.2 billion 162円.2 billion Approx. 168円 billion Average 120円 billion
Ordinary income 102円.2 billion 90円.7 billion 107円.9 billion Approx. 130円 billion Average 100円 billion
ROA 3.1% 2.8% 3.1% 2.9% Average 3%
Shareholders'
equity ratio
19.6% 20.3% 22.3% 24.0%
25% as of the end of
FY2006
Reduction of interest-
bearing debt ‐40円.1 billion ‐156円.5 billion ‐148円.8 billion Approx. ‐148円 billion
Total reduction ‐ ‐156円.5 billion ‐305円.3 billion Approx. ‐453円 billion Total ‐450円 billion
(Balance) (2,488円.7 billion) (2,332円.1 billion) (2,183.3 billion) (2,035円 billion)
ROE 8.4% 7.9% 8.5% 8.7% Average 8%
FY2003
FY2001 FY2002
Notes: Non-concolidated basis
ROA =
NOPAT
ROE =
Net income
Average total assets Average shareholders' equity Fundamental concepts
Fundamental concepts
- Management stance: With "customers" as starting point of corporate activities, improve quality of operations to
raise satisfaction level of customers, shareholders and investors, communities, and
employees, with the aim of increasing long-term corporate value
- Conceptual timeframe: Designate the next five years as a "Period to solidify Kyushu Electric Power Group’s
operating base with total energy business at the core, and aim for new growth"
- Slogan: "Solidify the base to pursue growth" Outline of specific measures to increase long
Outline of specific measures to increase long-
-term corporate value
term corporate value Official announcement planned for March, after details and finan
Official announcement planned for March, after details and financial targets have been set
cial targets have been set
Overview of new Midterm Management Plan (1
Overview of new Midterm Management Plan (1-
- Direction)
Direction)
(1) Raise efficiency to top class in industry
(2) Establish reliable operating base
(3) Activities for CSR
(4) Improve organizational capabilities
"Solidify base"
(Improve cost structure, raise asset efficiency, etc.)
(1) Develop businesses based on customers’ needs
(2) Raise level of employee motivation and skills
"Pursue growth"
(Increase sales of electricity and develop new
earnings sources)
Set consolidated financial targets and targets by
business area, with total energy business at the core
Clarify areas of business
Direction of Specific Measures
Objective3Overview of new Midterm Management Plan (2
Overview of new Midterm Management Plan (2-
- Targets)
Targets) Corporate targets
Corporate targets
- Pricing: Implement prices competitive in the market
- Quality: Enhance high reliability and swift response
- Service: Provide solutions that meet customers’ needs
- Corporate image: Establish brand based on "Reliability and Safety"4· Customer perspective
· Financial perspective
- Profitability & financial stability: Set both consolidated and non-consolidated
targets
- Efficiency: Achieve top class in industry
- Growth: Set targets for creation of new demand at electricity business
Set targets for growth in non-group sales Targets by business area
Targets by business area
· Set financial targets by business area Fundamental policy for allocation of free cash flow as per new M
Fundamental policy for allocation of free cash flow as per new Midterm Management Plan
idterm Management Plan
Our dividend policy
Our dividend policy
- Fundamental policy: With basic policy of maintaining a stable dividend, set dividend based on
comprehensive consideration of status regarding achievement of financial targets and medium- to
long-term business outlook
- Dividend levels for near term: We intend to review the dividend when current financial targets are
expected to be achieved, taking account of medium- to long-term business outlook
Overview of new Midterm Management Plan (3
Overview of new Midterm Management Plan (3-
- FCF allocation)
FCF allocation)
(1) Reduction of interest-bearing debt to achieve shareholders’ equity ratio of 30%
(2) Capital and financial investments consistent with growth strategy (pursue growth)
(3) Stable dividend5Maintaining price competitiveness with rate reduction in January
Maintaining price competitiveness with rate reduction in January6
Rates to be reduced from January 2005
Rates to be reduced from January 2005
Provide value to customers (Increase customer satisfaction to establish brand)
Price Quality Service
Corporate
Image Work to raise level of customer satisfaction by implementing pri
Work to raise level of customer satisfaction by implementing prices that are competitive
ces that are competitive
in the market
in the market Age of full
Age of full-
-fledged competition from April 2005
fledged competition from April 2005
- From April 2005: Expansion of the scope of deregulation
Establishment of a wholesale electricity exchange
Change in the network supply charge system
- From 2007: Consideration of full deregulation to begin
Necessity of strengthening price competitiveness
- The final decision regarding the specific level of the reductions will be based on a comprehensive consideration of
trends in electricity sales volumes and the degree of progress in improvement in operational efficiency
(Reference) Past Rate Reductions
Jan-96 Feb-98 Oct-00 Oct-02
Reduction 8.69% 6.06% 6.12% 5.21%
*October 2000 and October 2002 reductions were for regulated customers only
Main Activities
(1) Strengthen tie-ups with
home electronics and
housing-related companies
(2) Strengthen marketing
forces for condominium
builders with aim of
spreading use in multi-unit
housing
(3) Provide first-hand
opportunities for potential
customers by holding all-
electric housing fairs,
cooking lessons for IH
cooking heaters, etc.
(4) Consulting activities for
customers who own either
electric water heaters or IHonly(5) Strengthen after-sale
services with IH seminars for
customers
(6) Advertising campaign
using mass media including
TV and radio
- Fiscal 2004 target of 46,000 houses expected to create annual demand of approximately 90 million kWh
Growth in all-electric housing
Strategy for creating new demand (promoting all
Strategy for creating new demand (promoting all-
-electric housing)
electric housing)7- Target of 500,000 total houses by March 2011 (Total as of September 2004: 191,655 houses)
(In July 2004 the fiscal year target raised to 46,000 houses from 36,000)
Aggressively promote
Aggressively promote "
"allall--electric housing
electric housing"
" as centerpiece of strategy to create demand for electricity
as centerpiece of strategy to create demand for electricity2.85.29.318.19.712.36.415.7
2.8% 3.0%3.7%5.7%9.4%12.3%
15.4%-5.010.015.020.025.030.035.040.045.0
FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04E0.0%2.0%4.0%6.0%8.0%10.0%
12.0%
14.0%
16.0%
# of all-electric houses (new construction)
# of all-electric houses (refurbishment)
Penetration rate (new construction)
(1,000 houses)46.033.821.614.99.24.23.53.5
First-half result:
18,800 houses
IT/Telecommunications business activities
IT/Telecommunications business activities
- QTNet: FY2004 [Net income results: -900円 million in FY03; +100円 million in FY04 (first half)]
- IT/Telecom segment: FY2006((Reference) Overview of activities at four IT/Telecom companies
Reference) Overview of activities at four IT/Telecom companies Fundamental policy for activities
Fundamental policy for activities
- Information systems: Use alliances to strengthen ability to provide solutions for medium-sized companiesQBS- Construction: Strengthen solution development for information infrastructure for local governments
- Maintenance and operation: Respond to system failure, monitor operating functionality, aggressively pursue
business with governments, schools, etc.
NISHIMU
- Data center: Strengthen marketing to increase usage by local governments and corporations
- IT consulting: Aggressively pursue government, education, and medical-related businessQIC- FTTH: Aim to acquire 80,000 customer lines in near future by developing unified Group marketing activities,
developing various services that will lead to added value, etc. (Result as of September 2004: 40,000 lines)
- Fixed-line telephones: Concentrate on corporate customers segment where larger profit is expected
- Lease lines: Given shift to IP networks and VLAN, secure profitability with thorough cost reductions
QTNet
- Because high growth is forecast with arrival of ubiquitous society, make efforts to aggressively
utilize our know-how and telecommunications infrastructure including fiber-optic network and data
center
- Aim to secure earnings strength through selection and concentration, and flexible approach to
alliances, etc., based on market trends in each business and service area8
Outlook for single
Outlook for single-
-year profitability
year profitability
<
<For further information>
For further information>
Investor Relations Group
Investor Relations Group
Corporate Planning Office
Corporate Planning Office
KYUSHU ELECTRIC POWER CO., INC.
KYUSHU ELECTRIC POWER CO., INC.
Telephone:
Telephone: +81 92 726 1575
+81 92 726 1575
Facsimile:
Facsimile: +81 92 733 1435
+81 92 733 1435URL:URL: http://www.
http://www.kyuden
kyuden.co.
.co.jpjp//en_ir_index
en_ir_index