Risks of Businesses

The major risks that have the potential to impact the Group’s results of operations and financial condition are described below. Forward-looking statements are based on information available to management as of March 31, 2017.

  1. Impact of change in demand
    The sales volume and profitability of the city gas and LPG gas businesses may be affected, positively or negatively, by economic conditions as well as by changes in temperature, such as extreme heat, warm winters, and irregular water-temperature conditions. Also potentially affecting our businesses is the changes in the competitive environment that happens in the wake of full liberalization of the gas market.

  2. Impact of fluctuating fuel costs
    LNG is the primary resource for gas production. The supply-demand balance as well as fluctuating crude oil prices and exchange rates can impact the cost of LNG and other resources. Fluctuations in the LNG price are offset by adjustments in the gas sales price made in accordance with the fuel cost adjustment system. However, since there is a time lag until the adjustment is made, the operating results for a given year may be affected by such fluctuations in LNG price. Operating results and financial conditions may be affected by the development of the negotiation of LNG prices.

  3. Impact of changing interest rates and other market conditions
    Trends in market interest rates will cause the cost of debt to fluctuate, which may affect income and expenses. However, most of Toho Gas’ interest-bearing debt comprises long-term loans and corporate bonds acquired at fixed interest rates. By steadily reducing interest-bearing debt, the Company limits the risks inherent in changing interest rates.

    The value of assets held by our group, such as stocks and pensions, may change because of possible fluctuations of stock prices and interest-rate trends. Consequently, profitability of our businesses may be affected, positively or negatively.

  4. Impact of revisions in governmental policies, laws and statutory systems
    Any revision in the government’s energy policy, environmental policy, law or statutory system may have impact on the operating results of the Toho Gas Group.

  5. Impact of natural disasters
    Large-scale natural disasters may have impact on the operating results of the Toho Gas Group, as such disasters may cause damages to the production/supply facilities of the Group and customers’ business sites. Unexpected large-scale power failure may also have negative impact on the operating results of the Toho Gas Group.

    To prepare for large-scale natural disaster and to minimize resulting damage, the Company has installed in-house power generation facilities, fire-fighting equipment and other disaster control facilities and systems. The earthquake resistance of gas pipes and supply and production facilities has also been improved.

  6. Impact of serious difficulty in procuring gas resources, production or supply process
    Serious difficulty in procuring gas resources, production or supply process may have negative impact on the operating results of the Toho Gas Group

  7. Impact of mission-critical information system
    Mission-critical information system may have negative impact on the operating results of the Toho Gas Group.

  8. Impact of serious problems involving customers’ gas equipment and appliances
    Serious problems involving customers’ gas equipment and appliances may result in tangible or intangible damages, including social liabilities, being incurred by the Company.

  9. Impact of quality of products handled and services provided
    Problems involving the quality of products handled and services offered by the Toho Gas Group and companies entrusted to sell them on the Group's behalf may result in tangible or intangible damages, including social liabilities, being incurred by the Company.

  10. Impact of changes in overseas investment conditions
    Part or all of overseas investments may not be recovered properly as a result of changes in the economic conditions and other factors and such irrecoverability may affect the operating results of the Toho Gas Group.

    Changes in rules and laws, and business practices in countries where Group companies are to commence business may cause delays and stall their business operations, and lead to additional business expenses.

  11. Impact of non-compliance
    If the Company or any related party to the Company breaches any law, agreement or conducts any act against corporate ethics or social norms, this may result in tangible or intangible damages, including social liabilities, being incurred by the Company.

  12. Impact of information leak
    If customers’ personal information kept and managed by the Toho Gas Group leaks outside the Group, this may result in tangible or intangible damages, including social liabilities, being incurred by the Company.

  13. Impact of pandemic of new-type influenza or other infectious disease
    Pandemic of new-type influenza or other infectious disease may have negative impact on the operating results of the Toho Gas Group.

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