TEPCO forecasts net loss of 580 billion yen for fiscal 2011

October 27, 2011

Tokyo Electric Power Co. expects an unconsolidated net loss of 580 billion yen ($7.64 billion) for fiscal 2011 mainly because of the enormous expenses needed to deal with its crippled nuclear plant, sources said.

TEPCO's forecast will be incorporated in its emergency business plan that will be prepared at the end of this month by the utility and the government's nuclear accident compensation aid organization.

According to the forecasts, TEPCO's revenues will drop by more than 60 billion yen from a year ago to 5.08 trillion yen for the full business year that ends in March 2012.

The company expects an operating loss of 330 billion yen, a reversal of the 356.7 billion yen in operating profits for fiscal 2010. Operational expenses have climbed by 620 billion yen in fiscal 2011 due largely to an increase in fuel costs to run thermal power plants, the sources said Oct. 26.

TEPCO's net loss will stem mainly from an extraordinary loss related to expenses needed to bring the Fukushima No. 1 nuclear plant's damaged reactors to a state of "cold shutdown," as well as compensation for victims of the accident caused by the March 11 Great East Japan Earthquake.

However, the expected net loss for fiscal 2011 is 680 billion yen lower than that reported in fiscal 2010. The power company earmarked a total 884.5 billion yen in fiscal 2010 for dealing with the accident.

The extraordinary loss for compensation in fiscal 2011 will be offset by extraordinary income of the same amount in government funds provided through the compensation organization, TEPCO said.

TEPCO, which has estimated the compensation money needed in this fiscal year at 700 billion yen, will ask the government for financial support. Without government aid, the company's debts could exceed its assets, which are expected to drop by more than 500 billion yen to 700 billion yen in fiscal 2011.

The power company will have to repay the government funding over several years.

TEPCO plans to present its midterm earnings projections for fiscal 2012 and beyond in the general special business plan, which will be drawn up next spring.

However, the prospects of the company returning to profitability appear bleak without a resumption of operations at its Kashiwazaki-Kariwa nuclear plant in Niigata Prefecture or an increase in electricity fees.

All seven reactors at the Kashiwazaki-Kariwa nuclear plant are expected to be offline by March.

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