Idemitsu Kosan Co., Ltd. · TSE:5019

Idemitsu Kosan — Q2 FY2017 Earnings Presentation

42 slides from Idemitsu Kosan's earnings presentation, Nov 14, 2017

1. Slide 1: Presentation on Results for the 2nd Quarter FY 2017

   Presentation on Results for the 2nd Quarter FY 2017 Idemitsu Kosan Co.,Ltd. November 14, 2017

2. Slide 2: Table of Contents

   Table of Contents 1. FY 2017 2nd Quarter Results (1) Overview (2) Segment Information 2. Forecast for FY2017 Performance (1) Overview (2) Segment Information (3) Dividend Forecasts 3. Reference Materials Copyright©2017 Idemitsu Kosan Co.,Ltd. All Rights Reserved. 1

3. Slide 3: Crude Oil Price Trends

   Crude Oil Price Trends <Monthly Dubai Crude Oil Price Trends and Assumptions for Performance Forecasts> (US$/Bbl.) FY 2016 Actual FY 2017 Actual Assumption for Current Forecast (Nov~ ) : 5/15 Assumption US$55/Bbl. FY 2017 2Q Average: US$50.1/Bbl. Assumption Announced on 5/15: US$50/Bbl. FY 2016 2Q A

4. Slide 4: JPY/USD Exchange Rate (TTS) Trends

   JPY/USD Exchange Rate (TTS) Trends <Monthly JPY/USD Exchange Rate Trends and Assumptions for Performance Forecasts> (JPY/USD) Assumption for Current Forecast (Nov~ ) : JPY 110/USD FY 2017 1Q Average: JPY112.1/USD Assumption Announced on 5/15: JPY110/USD FY 2016 2Q Average: JPY106.3/USD FY 2016 Actua

5. Slide 5: Overview

   Overview <FY 2017 2nd Quarter Results> ■ Operating income increased by ¥53.6 billion year-on-year to ¥86.1 billion, mainly due to improved petroleum product margins and increases in crude oil and coal prices ■ Ordinary income increased by ¥57.5 billion year-on-year to ¥89.5 billion yen, and as a res

6. Slide 6: 1. FY 2017 2nd Quarter Results

   1. FY 2017 2nd Quarter Results

7. Slide 7: (1) Overview

   (1) Overview 1) Crude Oil / Exchange Rates (Units: $/Bbl., $/Ton, ¥/$) FY2016 2Q FY2017 2Q Change Crude Oil (DB FOB) 43.2 50.1 6.9 16.0% Crude Oil (Brent) 39.7 51.8 12.1 30.5% Naphtha Price (Customs) 404 465 61 15.1% Thermal Coal (NEWC) 51.3 81.8 31 59.5% Exchange Rate (TTS) 106.3 112.1 5.8 5.5% * B

8. Slide 8: (2) Segment Information: Operating Income

   (2) Segment Information 1) Operating Income (Units: ¥ billions) FY2016 2Q FY2017 2Q Change Petroleum Products 13.5 31.2 17.7 131.4% (Excluding inventory impact) 18.2 37.1 19.0 104.4% Petrochemical Products 16.9 20.6 3.8 22.3% Resources 2.3 32.8 30.5 1317.6% Oil Exploration and Production 1.5 14.0 12

9. Slide 9: (2) Segment Information: Factors Affecting Operating Income

   (2) Segment Information 2) Analysis of Factors Affecting Operating Income (Year-on-year) (Units: ¥ billions) Other Sales Segments/ Volume/ Reconcilia Price- tion related/ Foreign Exchange Explora- tion/ Foreign Price- Exchange related, Increased Improved etc. Product Product Margins, Margins etc. In

10. Slide 10: 2. Forecast for FY2017 Performance

    2. Forecast for FY2017 Performance

11. Slide 11: (1) Overview

    (1) Overview 1) Crude Oil / Exchange Rates (Units: $/Bbl., $/Ton, ¥/$) Assumptions May 15 Forecast Revised Forecast Difference (Nov-Mar average) Crude Oil (DB FOB) 50.0 52.6 2.6 5.2% 55.0 Crude Oil (Brent) 53.0 54.9 1.9 3.6% 58.0 Naphtha Price (Customs) 469 490 21 4.5% 515 Thermal Coal (NEWC) 70.0 8

12. Slide 12: (2) Segment Information

    (2) Segment Information 1) Operating Income (Units: ¥ billions) May 15 Forecast Current Forecast Difference Petroleum Products 48.0 65.0 17.0 35.4% (Excluding inventory impact) 48.0 65.0 17.0 35.4% Petrochemical Products 31.0 35.0 4.0 12.9% Resources 43.0 57.0 14.0 32.6% Oil Exploration and Producti

13. Slide 13: (2) Segment Information: Factors vs. 5/15 Forecasts

    (2) Segment Information 2) Analysis of Factors Affecting Operating Income (vs. 5/15 forecasts) (Units: ¥ billions) Other Segments/ Price- Reconcilia Explora- related, etc. tion tion/ Sales Foreign Increase in Exchange, Sales Volume/ Price- etc. Improved Volume/ Foreign related/ Product Margins Excha

14. Slide 14: (3) Dividend Forecasts

    (3) Dividend Forecasts ■Dividends per Share Taking into account our interim results and performance forcast among other factors, we revised our FY 2017 interim and end year dividends forecast upward by ¥15 per share, to ¥40 per share, for an annual total forecast upward revision of ¥30 per share, to

15. Slide 15: 3. Reference Materials

    3. Reference Materials

16. Slide 16: Table of Contents

    Table of Contents 1. Financial Reporting 3. Sales and Production (1) Net Sales by Segment (1) Sales/Production Volume (2) Extraordinary Gains/Losses (2) Sales/Production Volume Forecast (3) Consolidated Balance Sheet 4. Foreign Exchange (4) Consolidated Statement of Cash Flows 5. Market Conditions 2

17. Slide 17: FY 2017 2Q Net Sales by Segment

    1. Financial Reporting (1)-1 FY 2017 2Q Net Sales by Segment (Units: ¥ billions) FY2016 2Q FY2017 2Q Change Petroleum Products 1,086.6 1,294.0 207.4 19.1% Petrochemical Products 208.1 228.3 20.3 9.7% Resources 104.8 143.5 38.8 37.0% Oil Exploration and Production 33.3 42.5 9.2 27.6% Coal, etc. 71.4

18. Slide 18: FY 2017 Net Sales Forecast by Segment

    1. Financial Reporting (1)-2 FY 2017 Net Sales Forecast by Segment (Units: ¥ billions) May 15 Forecast Revised Forecast Difference Petroleum Products 2,720.0 2,820.0 100.0 3.7% Petrochemical Products 430.0 430.0 0.0 0.0% Resources 290.0 290.0 0.0 0.0% Oil Exploration and Production 75.0 75.0 0.0 0.0

19. Slide 19: Extraordinary Gains/Losses

    1. Financial Reporting (2) Extraordinary Gains/Losses (Units: ¥ billions) FY2016 2Q FY2017 2Q Change Gain on Sale of Fixed Assets 1.3 0.9 (0.4) Gain on Sale of Affiliate Stock 0.0 0.0 0.0 Other 0.3 0.0 (0.3) Total Extraordinary Gains 1.6 0.9 (0.7) Loss on Sale and Depletion of Fixed Assets 1.3 0.8 (

20. Slide 20: Consolidated Balance Sheet

    1. Financial Reporting (3) Consolidated Balance Sheet (Units: ¥ billions) 3/31/2017 9/30/2017 Change 3/31/2017 9/30/2017 Change Cash and Deposits 91.4 149.6 58.2 Payables 331.6 291.8 (39.8) Receivables 327.4 311.1 (16.3) Short-term Borrowings 471.6 351.0 (120.5) Inventory 430.9 423.3 (7.6) Other Cur

21. Slide 21: Consolidated Statement of Cash Flows

    1. Financial Reporting (4) Consolidated Statement of Cash Flows (Units: ¥ billions) FY2016 2Q FY2017 2Q Change CF from Operating Activities 32.9 136.3 103.4 Net Incom e before Tax Adjustm ents 32.0 88.9 56.9 Depreciation Expense 33.8 34.3 0.5 Increase in Sales Receivables and Inventory ▲ 10.4 24.0 3

22. Slide 22: Sensitivity

    2. Sensitivity (1) Impact of a US$1/bbl. Increase in Crude Oil Prices(Nov~) Increase in refinery Petroleum (￥0.2 billion) fuel costs, etc. Products Inventory impact ￥2.0 billion ￥1.8 billion Oil Exploration & Production ￥0.3billion (2) Impact of a 1 JPY/USD Depreciation(Nov~) Increase in refinery Pe

23. Slide 23: Sales Volume (Domestic Fuel Oil)

    3．Sales and Production (1)－1.Sales Volume (Domestic Fuel Oil Sales Volume: Non-consolidated) and KL,% ） （Units:Thousand KL,% ） FY 2016 2Q FY 2017 2Q Change Gasoline 4,089 4,048 (41) (1.0%) (Premium-Unleaded) 449 435 (14) (3.1% ) (Regular-Unleaded) 3,641 3,613 (27) (0.8% ) Naphtha 110 112 2 1.8% Jet

24. Slide 24: Sales Volume (Petrochemical Products, Lubricants)

    3．Sales and Production （1）－2.Sales Volume (Petrochemical Products: Non-consolidated) ons, % ) (Units:Thousand tons, % ) FY 2016 2Q FY 2017 2Q Change Petrochemical Products-Total 1,630 1,626 (4) (0.2%) (Basic Chemicals) 1,609 1,605 (4) (0.3% ) (Performance Chemicals) 22 22 0 1.1% （1）－3.Sales Volume (

25. Slide 25: Oil Exploration & Production and Coal Production Volume

    3．Sales and Production （1）－4.Oil Exploration & Production – Production Volume (including Gas) d BOED） （Units:Thousand BOED） FY 2016 2Q FY 2017 2Q Change Norway 34.2 37.1 2.9 8.5% United Kingdom 4.7 4.9 0.1 3.1% Vietnam 0.3 0.0 (0.3) (100.0%) Total('000BOED) 39.2 42.0 2.8 7.1% Total('000BOE) 7,133 7,

26. Slide 26: Sales Forecasts (Domestic Fuel Oil)

    3．Sales and Production （2）－1.Sales Forecasts (Domestic Fuel Oil Sales Volume: Non-consolidated) （Units:Thousand KL,% ） May 15 Revised Difference Forecast Forecast Gasoline 7,780 7,910 130 1.7% (Premium-Unleaded) 840 850 10 1.2% (Regular-Unleaded) 6,940 7,060 120 1.7% Naphtha 260 260 0 0.0% Jet Fuel

27. Slide 27: Sales Forecasts (Petrochemical Products, Lubricants)

    3．Sales and Production （2）－2.Sales Forecasts (Petrochemical Products: Non-consolidated) (Units:Thousand tons, % ) May 15 Revised Difference Forecast Forecast Petrochemical Products-Total 3,390 3,470 80 2.4% (Basic Chemicals) 3,340 3,420 80 2.4% (Performance Chemicals) 50 50 0 0.0% （2）－3.Sales Foreca

28. Slide 28: Production Volume Forecasts (Oil and Coal)

    3．Sales and Production （2）－4.Oil Exploration & Production – Production Volume Forecasts (including Gas) （Units:Thousand BOED） May 15 Revised Difference Forecast Forecast Norway 30.7 32.8 2.2 7.1% United Kingdom 4.6 4.6 (0.0) (0.6%) Vietnam 0.0 0.0 0.0 0.0% Total('000BOED) 35.3 37.4 2.2 6.1% Total('0

29. Slide 29: Foreign Exchange (1) USD

    4．Foreign Exchange （1）USD Copyright©2017 Idemitsu Kosan Co.,Ltd. All Rights Reserved. 25

30. Slide 30: Foreign Exchange (2) Norwegian Krone

    4．Foreign Exchange （2）Norwegian Krone Copyright©2017 Idemitsu Kosan Co.,Ltd. All Rights Reserved. 26

31. Slide 31: Foreign Exchange (3) Norwegian Krone

    4．Foreign Exchange （3）Norwegian Krone Copyright©2017 Idemitsu Kosan Co.,Ltd. All Rights Reserved. 27

32. Slide 32: Foreign Exchange (4) Australian Dollar

    4．Foreign Exchange （4）Australian Dollar Copyright©2017 Idemitsu Kosan Co.,Ltd. All Rights Reserved. 28

33. Slide 33: Foreign Exchange (5) Australian Dollar

    4．Foreign Exchange （5）Australian Dollar Copyright©2017 Idemitsu Kosan Co.,Ltd. All Rights Reserved. 29

34. Slide 34: Market Conditions (1) Crude Oil Prices

    5．Market Conditions （1）Crude Oil Prices (Dubai and Brent) Copyright©2017 Idemitsu Kosan Co.,Ltd. All Rights Reserved. 30

35. Slide 35: Market Conditions (2) Gasoline, Crude Oil CIF

    5．Market Conditions （2）Gasoline, Crude Oil CIF (Prices and Spreads) Copyright©2017 Idemitsu Kosan Co.,Ltd. All Rights Reserved. 31

36. Slide 36: Market Conditions (3) Diesel Oil, Crude Oil CIF

    5．Market Conditions （3）Diesel Oil – Crude Oil CIF (Prices and Spreads) Copyright©2017 Idemitsu Kosan Co.,Ltd. All Rights Reserved. 32

37. Slide 37: Market Conditions (4) Paraxylene, Naphtha

    5．Market Conditions （4）Paraxylene, Naptha (Prices and Spreads) Copyright©2017 Idemitsu Kosan Co.,Ltd. All Rights Reserved. 33

38. Slide 38: Market Conditions (5) Styrene Monomer, Naphtha

    5．Market Conditions （5）Styrene Monomer, Naptha (Prices and Spreads) Copyright©2017 Idemitsu Kosan Co.,Ltd. All Rights Reserved. 34

39. Slide 39: Capacity Utilization at Refineries

    6．Capacity Utilization at Refineries Copyright©2017 Idemitsu Kosan Co.,Ltd. All Rights Reserved. 35

40. Slide 40: Number of Service Stations

    7．Number of Service Stations Copyright©2017 Idemitsu Kosan Co.,Ltd. All Rights Reserved. 36

41. Slide 41: Precaution statement about forecasts

    Precaution statement about forecasts Any information about forecasts for the Company’s operating results, management strategy and management policy contained in this documents other than historical facts is prepared, according to judgments made by the top management of the Company based on informati

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