Changes in the managing
environment provide
an opportunity
for growth.
Interview with the President
Kazuhiro Ikebe
Member of the Board of Directors
President & Chief Executive Officer
Kyuden Group Annual Report 201820Interview with the President
Kazuhiro Ikebe was born in Oita Prefecture in 1958. He joined Kyushu Electric Power Company,
Incorporated after graduating from the University of Tokyo Faculty of Law in 1981.
Following his role in frontline sales, Ikebe moved abroad to study at the Michael G. Foster
School of Business at the University of Washington, Seattle. In his time at the Kyushu Electric
Power, although predominantly in the corporate planning division, he has also been involved in
the power generation division, the personnel division, as well as spending time as secretary to the
president. He has also played a key role in spearheading the creation of medium-term management
policies and financial objectives, and has laid the foundation for company innovations.
He assumed position as President & Chief Executive Officer in June 2018, following roles as
Executive Officer and General Manager of the Corporate Planning Division; and Member of the
Board of Directors and Executive Director of the Corporate Strategy Division.
With a bright, forward-looking personality, Ikebe sees the deregulation of the retail electricity
market as a new opportunity for business, and is of the mind that, in order to strengthen the
company’s earning power, we must tackle each new challenge that comes our way.
His motto can be expressed in Japanese as wajifudo—the idea that cooperation should be
prudent, and conclusions should be drawn from thorough discussion.
His hobbies include raising Japanese rice fish, and swimming—an activity he took up five years
ago to improve his health. On his days off, he recuperates at one of the many hot spring districts of
Kyushu.
Our Strategy
Kyuden Group Annual Report 2018 21
Interviewwiththe
President
During FY2017, Kyushu Electric Power promoted important
strategies, including measures toward restarting the Genkai
Nuclear Power Station, responding to our competitive
environment, and cultivating growth businesses. At the same
time, we moved forward with the construction of a foundation for
medium- to long-term growth.
With respect to restarting Genkai Nuclear Power Station,
we received permission for a reactor installation change in
January 2017. Since then, we have undergone inspections
regarding permission for changes to construction plans and
safety regulations, as well as pre-operation inspections. As a
result, we successfully restored Unit 3 to commercial operation
in May 2018, followed by Unit 4 in July. Going forward, we will
work autonomously and continuously to enhance safety, and
strive actively to practice disclosure and engage in detailed
communication.
Next, as to our competitive environment, two years have
passed since the full deregulation of the retail electricity sector.
We are continuing to promote direct, face to face communication
with customers, through initiatives such as one-day sales
offices to conduct personable marketing in shopping malls.
Full deregulation of the retail gas sector also commenced in
April 2017, and we began offering electric and gas power
to customers as a set, reaching our first fiscal-year goal of
40,000 households in just six months. Going forward, senior
management, including myself, will take every opportunity to
engage in marketing activities to communicate Kyushu Electric
Power’s initiatives to a broader public. Through these efforts, we
will remain competitive with new electric power companies.
Regarding our cultivation of growth businesses for the
future, the Kyuden Group is moving to full-scale innovation
activities aimed at creating new businesses and services. Last
year, we solicited Group employees for business ideas, and
engaged in open innovation activities with other enterprises and
organizations. Several proposals, including monitoring services
using IoT technology, are undergoing verification testing. These
activities are opening up opportunities for Group entry into a
variety of fields, and there has been a perceptible increase in the
number of young employees with their sights set on the future.
To realize our goal of becoming a corporate group providing
Japan’s best energy services, as outlined in our vision for 2030,
each Group entity is promoting independent initiatives, and we
believe that these efforts are producing solid results.
How would you review FY2017 overall?Q1A1
We were successful in responding appropriately to immediate challenges, while
steadily building a foundation for medium- to long-term growth.
Kyuden Group Annual Report 201822Business results for FY2017, the first year of the term set for our
financial objectives, included a decline in electric power sales
amid increasing competition, while expenditures rose in the wake
of electricity market reform. However, thanks to other factors,
including a reduction in fuel costs relative to increased power
generation at the Sendai Nuclear Power Station, we posted
consolidated ordinary income of 73円.6 billion.
In FY2018, we began operating four nuclear power units,
which enabled us to operate a nuclear power generation system
upon which our current electricity pricing is based. In FY2019,
Matsuura Power Station Unit 2, an environment-friendly, highly
efficient coal-fired unit, will commence operation. We will
make maximum use of our competitive generating capacity and
undertake to further expand income from our electric power
generation business.
Costs are expected to rise temporarily due to costs
associated with electricity market reform. However, reducing fuel
fees through restart of nuclear power generation units and highly
efficient thermal power generation, as well as implementing
thoroughgoing efficiency measures throughout our business
activities, we will strive to reduce overall operating costs.
Moving forward, we are looking to increase profitability
through investments in growth businesses, including international
and renewable energy businesses, as well as efforts such as
promotion of innovation. We will therefore work to expand the
Group’s profitability from our existing electric power, energy-
related, IT and telecommunications, and other businesses, and
secure our targeted levels of income.
Please comment on progress toward the Kyuden Group’s financial objectives, as well
as efforts to achieve those targets.Q2A2
The Kyuden Group will work in unison to implement income-expansion and cost-
reduction measures to achieve its financial objectives.
●くろまる Financial Objectives for Realizing Our Vision
Interviewwiththe
President
(1) Equity ratio
Improve and strengthen financial position
Approx. 20%
(End of FY2021)
110円 billion or more
(FY2017–2021 average)
420円 billion
(Cumulative for FY2017–2021)
(2) Ordinary income
Expand profits for future growth
(3) Growth investments
Pursue further growth
Growth initiatives
Accelerate initiatives
Realize vision20212017 2030...
Financial objectivesNowVision
Kyuden Group Annual Report 2018 23
Two years have passed since the full deregulation of the
retail electricity sector. In response, we are strengthening our
marketing as cross-regional and cross-industry competition in
the electricity market intensifies.
We are convinced that the fundamental criteria for customer
choice of an electric power company, in addition to pricing,
are provider service and comprehensive capabilities, including
reliability and peace of mind.
In terms of pricing, our electric power rates for households
are 7% lower than the average rate charged by conventional
general electricity utilities. Compared to our competitors, our
rates are at lower levels as of July 2018. We also offer eight
service categories in such areas as household emergencies and
child-rearing support. These services are part of our Kyuden
Safety Support, and through this support, we are committed to
helping to provide our customers with daily peace of mind.
The reason the majority of customers contract with Kyushu
Electric Power over new providers, is based on the reliability
and peace of mind we can offer. Our activities in support of
customers create value for them that goes beyond mere price,
and we believe this is a source of power for our brand.
Going forward, we will promote personable marketing to
familiarize more customers with our energy services, and will
work to capture further demand by continuing to build reliability
and peace of mind.
Deregulation is a risk in itself, but also affords new business
opportunities. By extending sales efforts to new regions,
maximizing income from the wholesale electricity market, and
making other efforts, we will utilize every measure to expand
income.
(2) Introduction of new electricity markets is a medium- to long-term risk.
Japan is undertaking electricity market reform at a speed
unprecedented in other countries, aiming to ensure stable energy
supplies, achieve the lowest possible pricing, give consumers
the right to choose their energy provider, and expand business
opportunities for enterprises.
In the short term, Japan's government is considering the
establishment of a variety of markets, including base load
and capacity markets, to achieve economic efficiency through
promotion of further competition while meeting such public
welfare challenges as the stable provision of power supplies.
Up until now, one distinguishing feature of the public-centered
electricity business was the ability to foresee investment return
through the FCD method, which determined electricity prices
based on adding fair profit on top of necessary costs. However,
the advancement of deregulation, and the increase in electricity
transactions due to the introduction of new markets, will make
management decisions relating to facilities investment even more
difficult. And so, free of conventional business schemes, careful
monitoring of each market to maximize their potential as sources
of additional income will be critical.
We will respond flexibly to these major progressive changes
in Japan’s electricity market, and continue to secure the
profitability of its electric power business as a source of cash
flow.
Please characterize the risks associated with achieving the Kyuden Group’s financial
objectives.Q3A3
(1)
Our electricity business is undergoing change, and while we see certain risks in both
the short and medium term, we also see them as opportunities for further growth.
Kyuden Group Annual Report 201824We will determine the dividend based on a comprehensive review
of our business performance and other factors, with maintenance
of stable dividend payments as a fundamental policy.
The dividend for the fiscal year ended March 31, 2018
was set at 20円 (10円 for the interim and full year) after a
comprehensive review of our business performance and other
factors.
For the fiscal year ending March 31, 2019, we plan to raise
the dividend by 10円 over the previous fiscal year to 30円 (15円 for
the interim and full year), subject to a comprehensive review of
this year’s business outlook, as well as such medium- to long-
term factors as our income and expenses as well as our financial
position.
Regarding future dividend levels, although we must take
into consideration the degree to which we achieve our financial
targets, as well as our mid- to long-term revenue and financial
status, we hope to return as quickly as possible to the 50円
dividend set prior to the 2016 earthquakes.
Going forward, we will continue to regard maintenance of
stable dividend payments as a fundamental policy, and work to
expand shareholder and investor income.
For the fiscal year ended March 31, 2018, the company increased its dividend for the
third consecutive term. How do you view the future dividend outlook?Q4A4
For the fiscal year ending March 31, 2019, we plan to raise the dividend to 30,円 an
increase of 10円 over the previous fiscal year, subject to a comprehensive review of a
wide range of medium- to long-term factors, including income and expenses as well
as our financial position. Going forward, we will continue to regard maintenance of
stable dividend payments as a fundamental policy, and work to expand shareholder
and investor income.
●くろまる Dividends per Share of Common Stock
Interviewwiththe
President
Full-year
Interim
(Yen)
2014.302015.302013.302016.352017.31520302012.33020
2018.31010
2019.3
(scheduled)1515
Kyuden Group Annual Report 2018 25
Recognition has been increasing of the importance of investment
that takes into account the environment (E), society (S), and
governance (G).
Our management environment is undergoing great change,
including further intensification of competition as well as
electricity market reform. Amid these changes, our goal is to
continuously enhance our corporate value. To achieve this, we
believe it will be important to build and reinforce our corporate
governance structure, and create environments to enable our
employees to achieve maximum performance.
As one example of these efforts, in June 2018 the company
transitioned to an audit and supervisory committee model, and
reviewed its director and executive officer system. These changes
will enable us to respond more flexibly as well as dynamically to
the significant changes in our management environment.
The Kyuden Group is also developing and, to the degree
possible, procuring energy from renewable energy sources
such as geothermal power and hydropower. We are also
collaborating actively with local residents in activities to
preserve the environment. These efforts have drawn a positive
response, and were recognized with the Minister of Economy,
Trade and Industry Award at the 27th Global Environment
Awards, sponsored by the Fujisankei Communications Group for
enterprises and organizations contributing to the formation of a
low-carbon society.
Going forward, we will continue to promote ESG efforts
with the goal of continuously enhancing our corporate value and
meeting the expectations of shareholders and investors.
What is your view of the importance of ESG efforts?Q5A5
We regard ESG efforts to be important as our management environment undergoes
major change.
Kyuden Group Annual Report 201826Kyushu Electric Power’s management environment has evolved
with dizzying speed since the Great East Japan Earthquake.
Competition is intensifying, and legal unbundling of our power
transmission and distribution segments will begin two years from
now in 2020. Nevertheless, our mission as an electric power
company remains the same as it was: to provide customers with
high-quality energy on a stable basis.
Furthermore, going forward we will make every use of
opportunities for growth and innovation afforded by changes in
our management environment. To achieve our goal of becoming a
corporate group providing Japan’s best energy services, outlined
in our Medium-term Management Policy as our vision for 2030,
we will carry out commercial activities with particular emphasis
on the following three areas.
First, we will strive to capture demand in a competitive
environment. Marketing activities do not bear fruit immediately,
but we believe persistence pays off, and are working to convey
the value of our energy services to customers.
Second, we will aggressively extend our efforts to growth
markets and pursue growth through creation of new businesses.
In 2021, we are aiming to raise the share of ordinary income
to approximately 30% from businesses other than our service
area electric power business, and in the future we will aim to
increase that share even further. We must therefore generate
unprecedented profits from new businesses, including
businesses we innovate. In July 2018, we launched Incubation
Lab, a specialized entity dedicated to promoting innovation,
which will accelerate the commercialization of new ideas while
absorbing external views and expertise.
Moreover, to ensure that our employees can carry out these
efforts smoothly and realize their maximum potential, we will
promote workstyle reform. We believe it will be important to raise
productivity, and we are receiving and adopting many proposals
from employees for ways to achieve this. By incorporating these
frontline recommendations for improvement, we will undertake
to maximize the Group’s organizational power by creating
workplaces that all employees will find conducive to productive
effort.
By working to promote these efforts, we will aim for continuous
growth together with our stakeholders.
Having assumed the post of president, please comment on your medium- to long-
term aspirations for Kyushu Electric Power.Q6A6
I would like to accelerate our growth by achieving the ideal set out in our Medium-
term Management Policy: to become a corporate group that provides Japan’s best
energy services.
Interviewwiththe
President
Kyuden Group Annual Report 2018 27