Tokyo Electric, Tokyo Gas Gain on Improved Outlooks

By Megumi Yamanaka
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Nov. 4 (Bloomberg) -- Tokyo Electric Power Co., Asia's biggest utility, and Tokyo Gas Co. climbed in Japan trading after improving their earnings forecasts as fuel costs drop.

Tokyo Electric gained 4 percent to 2,890 yen on the Tokyo Stock Exchange, the highest close since Sept. 10. Tokyo Gas advanced 6 percent to 445 yen, a one-month high. Osaka Gas rose 5 percent to 362 yen.

Utilities in the world's third-biggest energy-consuming nation are benefiting from a drop in crude-oil prices, which have more than halved since reaching a record $147.27 on July 11, cutting estimated costs for purchasing petroleum, liquefied natural gas and coal, which move in tandem with oil.

``We can expect a V-shaped recovery for gas and power utilities' profits, reflecting drops in costs for purchasing LNG and other fossil-fuel costs,'' Hirofumi Kawachi, an energy analyst at Mizuho Investors Securities Co. in Tokyo, said by phone today. ``In the past couple of years, they suffered from surges in oil prices. The opposite will likely happen during the next year.''

Tokyo Electric on Oct. 31 forecast a narrower full-year net loss of 220 billion yen ($2.2 billion) for the year ending March 2009, compared with the 280 billion yen loss forecast in July. The improved result would still be a record loss for the utility. Tokyo Gas, the country's largest distributor of the fuel, predicted profit of 9 billion yen, reversing its 7 billion yen loss forecast made in July.

Pretax Loss

Tokyo Gas on the same day posted the biggest pretax loss since it began releasing group earnings in fiscal 2000. The utility had a pretax loss of 11.5 billion yen for the six months ended Sept. 30.

Osaka Gas, Japan's second-biggest gas distributor, on Oct. 31 unveiled a plan to enter the Australian gas and power market by purchasing a stake in an unlisted energy company from Australia's APA Group, together with Tokyo-based Marubeni Corp. The Japanese group will hold an 80.1 percent stake, of which Osaka Gas plans to own 30.2 percent, by the end of December.

Crude oil in New York traded at $64.05 a barrel at 3:41 p.m. Tokyo time.

To contact the reporter on this story: Megumi Yamanaka in Tokyo at myamanaka@bloomberg.net.