Idemitsu Kosan Co., Ltd. · TSE:5019
Idemitsu Kosan — Q2 FY2021 Earnings Presentation
56 slides from Idemitsu Kosan's earnings presentation, Nov 9, 2021
Slide 1: Presentation on Results for the 2nd Quarter FY2021
Presentation on Results for the ２ND Quarter FY2021 November 9, 2021 Idemitsu Kosan Co.,Ltd.
Slide 2: Table of Contents
Table of Contents Executive Summary FY2021 2nd Quarter Results Forecast for FY2021 Progress on the Medium-term Management Plan Reference Materials 2
Slide 3: Executive Summary
mExecutive Summary € idemitsu
Slide 4: Executive Summary (FY21 2Q Results)
Executive Summary（FY21 2Q Results） Overview Quarterly operating + equity income (“segment income”) turned positive due to a recovery in crude oil and resource prices. Segment income increased by ¥217.1 billion, driven by inventory impact Segment income excluding inventory impact increased by ¥
Slide 5: Executive Summary (FY2021 Forecasts)
Executive Summary（FY2021 Forecasts） Overview Segment income and net income were revised upward due to positive inventory impact and an expected profit increase in the resources segment keeping careful watch on the unclear situation of soaring resources prices and uncertainty for inflation [¥ b
Slide 6: Executive Summary (Progress on the Medium-term Management Plan)
Executive Summary（Progress on the Medium-term Management Plan） Overview Forecast for ROIC and ROE is higher than mid-term plan in May Majority of FY 2021 profit results from external factors such as resources prices. We made no change in recognition of business environment of mid-term plan and
Slide 7: FY2021 2nd Quarter Results
FY2021 2nd Quarter Results 7
Slide 8: Key Topics
Key Topics Trends in petroleum demand Sales of the 4 core products remained flat year-on-year in 1H due to the extension of the state of emergency. Jet fuel recovered to about 130%. Demand trends seen in 1H are expected to continue in 2H, as the impact of COVID-19 is expect to linger in 2H. [％
Slide 9: Operating Environment
Operating Environment Dubai Crude Oil Australian Coal Exchange Rate Price [USD/ton] Spot price [JPY/USD] (USD) [USD/bbl] 80.0 200.0 112.0 111.0 70.0 180.0 71.7 66.9 110.0 60.0 160.0 169.1 110.1 60.0 109.0 109.5 50.0 140.0 108.0 40.0 44.6 120.0 42.9 107.0 107.6 30.0 100.0 108.4 30.5 106.0 106.2 20.0
Slide 10: Overview
Overview Crude Oil / Coal / Exchange Rates [USD/bbl, USD/ton, JPY/USD] FY2020 2Q FY2021 2Q Change Crude Oil (Dubai) 36.7 69.3 32.6 +88.6% Crude Oil (Brent)* 39.7 64.9 25.2 +63.5% Australian Coal Spot price* 61.2 98.8 37.6 +61.4% Exchange Rate (TTM) 106.9 109.8 2.9 +2.7% *Brent prices and Australia
Slide 11: Segment Information
Segment Information Operating Income + Equity Income [￥billions] FY2020 2Q FY2021 2Q Change Petroleum (30.3) 155.7 186.0 － Excluding inventory impact 27.3 45.1 17.7 +64.8% Basic Chemicals (2.0) 10.9 13.0 － Functional Materials 6.2 10.2 4.0 +64.5% Power and Renewable Energy (0.5) (2.8) (2.3) － Reso
Slide 12: Segment Information: Factors Affecting Income
Segment Information Factors Affecting Operating Income + Equity Income (excluding inventory impact, year on year) [￥billions] Price Price Performance Chemicals Volume etc. Margin FX etc. Margin FX etc. Volume (time lag) Equity income Cost Power etc. etc. Volume Oil Exploration Fuel cost and Produc
Slide 13: Segment Information: Petroleum
Segment Information [Petroleum] YoY +¥17.7 bn (FY20 2Q: ¥27.3 bn ➡ FY21 2Q: ¥45.1 bn) <Year-on-year Change in Petroleum <Trends in Domestic Petroleum Product Margins*> Sales Volume (4 Core Products)> *Average of gasoline, diesel oil, kerosene, and heavy oil A margins (domestic spot –crude oil) FY202
Slide 14: Segment Information
Segment Information [Basic Chemicals] YoY +¥13.0 bn (FY20 2Q: -¥2.0 bn ➡ FY21 2Q: ¥10.9 bn) Earnings improved by ¥13.0 bn YoY due to a recovery in product margins, especially of styrene monomers [USD/ton] Product FY20 2Q FY21 2Q Change Price Margin Price Margin Price Margin PX 520 185 889 248 +369
Slide 15: Segment Information: Oil E&P and Coal
Segment Information [Oil E&P] YoY +¥14.8 bn [Coal] YoY +3.0 bn (FY20 2Q: ¥2.5 bn ➡ FY21 2Q: ¥17.3 bn) (FY20 2Q: ¥1.1 bn ➡ FY21 2Q: ¥4.2 bn) <Crude Oil/Gas Production Volume <Coal Production Volume and Australian Coal and Brent Crude Oil Price Trends> Spot Price Trends> [Thousand BOE] [USD/barrel] [T
Slide 16: Balance Sheet
Balance Sheet [¥ billions] 3/31/2021 9/30/2021 Change 3/31/2021 9/30/2021 Change Total Current Cash and Deposits 131.3 73.8 (57.6) 1,621.3 1,633.7 12.4 Liabilities Receivables, 1,534.2 1,789.8 255.6Total Fixed Liabilities 1,118.0 1,183.5 65.4 Inventory,etc. Total Current Assets 1,665.5 1,863.6 198.1
Slide 17: Statement of Cash Flows
Statement of Cash Flows [¥ billions] Cash Flow from Operating Activities 53.6 Net Income before tax 203.4 Depreciation Expense 51.9 Change in Working Capital (139.0) Other (62.6) Cash Flow from Investing Activities (45.1) Purchase of tangible fixed assets (55.4) Other 10.3 Cash Flow from Financing A
Slide 18: Forecast for FY2021
€ idemitsu mForecast for FY2021 18
Slide 19: Key Topics
Key Topics Soaring Resource Prices Revised crude oil and Australian coal spot price assumption due to a global increase in energy prices Resources prices are expected to continue at high level as entering into demand season [USD/bbl, USD/ton] 2021 2021 2021 Assumption for Oct Jan-Mar Apr-Jun J
Slide 20: Overview
Overview Crude Oil / Coal / Exchange Rates [USD/bbl, USD/ton, JPY/USD] 5/11 Revised Assumptions Change Forecast Forecast (2nd half) Crude Oil (Dubai) 60.0 72.1 12.1 +20.2% 75.0 Crude Oil (Brent)* 61.0 70.4 9.4 +15.5% 78.5 Australian Coal Spot price* 80.0 135.5 55.5 +69.4% 175.0 Exchange Rate (TTM)
Slide 21: Segment Information
Segment Information Operating Income + Equity Income [¥ billions] 5/11 Revised Change Forecast Forecast Petroleum 84.0 233.0 149.0 +177.4% Excluding inventory impact 84.0 93.0 9.0 +10.7% Basic Chemicals 10.0 15.0 5.0 +50.0% Functional Materials 16.0 16.0 － － Power and Renewable Energy (6.0) (11.0)
Slide 22: Segment Information: Factors Affecting Forecast
Segment Information Factors Affecting Operating Income + Equity Income (excluding inventory impact, Compared to the 5/11 forecast) [¥ billions] Oil Exploration Coal and Production 34.0 2.0 Price FX etc. Margin Price (time lag) Equity Margin income Volume Cost etc. Equity Cost income Volume etc. et
Slide 23: Segment Information
Segment Information [Petroleum] YoY +¥9.0 bn (5/11 forecast: ¥84.0 bn ➡ Revised forecast: ¥93.0 bn) Increase in refining margins due to positive time lags offset by fuel costs Segment income increase mainly due to increase in equity income from LPG related affiliate [Basic Chemicals] YoY +¥5.0 b
Slide 24: Segment Information
Segment Information [Power and Renewable Energy] YoY -¥5.0 bn (5/11 forecast : -¥6.0 bn ➡ Revised forecast: -¥11.0 bn) Revised downward due to increased procurement costs resulting from increased wholesale prices in the power business [Oil E&P] YoY +¥2.0 bn (5/11 forecast : ¥33.0 bn ➡ Revised fore
Slide 25: Investments
Investments [¥ billions] FY2021(1st half) FY2021(5/11 Forecast) Maintenance Maintenance Strategic Total Strategic Total Renewal Renewal Petroleum Basic Chemicals 2.1 34.9 37.0 9 82 91 Power/Renewable Functional 5.7 4.5 10.3 28 19 47 Materials ,Others Resources 18.0 6.6 24.6 38 17 55 Total 25.9 46.0
Slide 26: Progress on the Medium-term Management Plan
Progress on the Medium-term Management Plan 26
Slide 27: Progress on basic strategy towards 2030
Progress on basic strategy towards 2030 ROIC management Establish KPIs suited to the characteristics of each business division Implement planned sales of general affairs and idol assets Evolve the business platform Accelerate Accelerate DX projects each division（Selected DX stocks 2021) DX
Slide 28: Progress on portfolio evolution aimed at carbon neutrality
Progress on portfolio evolution aimed at carbon neutrality We are various launching/strengthening efforts relating to energy/material transition, advanced materials, and next-generation mobility and community in order to achieve a carbon-neutral society Advanced Materials Lithium solid electrolytes/
Slide 29: Progress on Business Strategy (Petroleum, Basic Chemicals)
Progress on Business Strategy (Petroleum, Basic Chemicals) Turn apollostation into a “Smart Yorozuya (One-stop shop)” Commenced pilot programs for mobile brain medical checkup and food delivery services from SS (Shizuoka , Mie Prefecture) Turn refinery/complex into stablish a “CNX* Center” *CNX
Slide 30: Progress on Business Strategy (Functional Materials, Power and Renewable Energy)
Progress on Business Strategy (Functional Materials, Power and Renewable Energy) Commercialize lithium solid electrolytes and accelerate development of advanced materials Commenced operating pilot facilities toward the commercial production of solid electrolytes(2) Strengthen R&D framework and a
Slide 31: Progress on Business Strategy (Resources)
Progress on Business Strategy (Resources) Oil E&P: Shift to Southeast Asian gas development, CCS initiatives using developed technologies Full-scale production and earnings contributions from Vietnamese gas fields Commenced production at Duva oil/gas field in the Norwegian North Sea Coal: Shif
Slide 32: Signed purchase agreement for ENEOS Chita paraxylene manufacturing facilities
1) Signed purchase agreement for ENEOS Chita paraxylene manufacturing facilities, etc. Description Signed purchase agreement for ENEOS Chita’s paraxylene manufacturing facilities, etc. Target facilities Paraxylene manufacturing facilities: 400,000 tons/year (including peripheral deices such as
Slide 33: Start of verification facility of all solid electrolytes
2)Start of verification facility of all solid electrolytes Description location：Chiba complex Trial operation：FY2021 2 nd half Background and Objectives Growing EV battery market All solid lithium ion battery as next generation battery with higher durability and faster charge Appearance
Slide 34: Decision to transform Solar Frontier into a next-generation systems integrator
3) Decision to transform Solar Frontier into a next-generation systems integrator Description Management resources being used in research and manufacturing of general-purpose solar battery panels, which is currently facing fierce price competition, will be shifted to growth areas where the Idemi
Slide 35: Coal: Shifting to the low-carbon solutions business
4)Coal：Shifting to the low-carbon solutions business １．Black pellet(Idemitsu green energy pellet) Description Commercial plant in Vietnam with 120k t/y expected start in FY2022 1st half Background and Objectives Stable supply of a low-cost, sustainable fuel is crucial for the achievement of
Slide 36: Reference Materials
€ idemitsu mReference Materials 36
Slide 37: Overview of the Company
Overview of the Company ∎ Petroleum Segment ∎ Functional Materials Segment Refining Capacity 945,000 BD *1) (Lubricants, performance chemicals, electronic Domestic fuel oil sales volume materials, functional asphalt, agricultural- 34 million KL/year *2) biotechnology, solid electrolyte) Number
Slide 38: Financial Data
Financial Data Net Sales by Segment [¥ billions] FY2020 2Q FY2021 2Q Change Petroleum 1,570.7 2,230.1 659.5 +42.0% Basic Chemicals 144.0 250.5 106.6 +74.0% Functional Materials 155.4 194.0 38.6 +24.8% Power and Renewable Energy 62.2 57.0 (5.2) (8.3%) Resources* 82.3 133.9 51.5 +62.6% Oil Explorati
Slide 39: Financial Data
Financial Data Quarterly segment income（accumulated、excluding inventory impact） [¥ billions] FY2020 1Q FY2020 2Q FY2020 3Q FY2020 FY2021 1Q FY2021 2Q Petroleum (9.4) 27.3 64.9 94.7 29.6 45.1 Equity income (27.2) (28.8) (37.2) (41.1) 6.0 8.6 Basic Chemicals 0.1 (2.0) (1.0) 3.4 6.7 10.9 Equity incom
Slide 40: Financial Data
Financial Data Quarterly segment income（Q on Q, excluding inventory impact） [¥ billions] FY2020 1Q FY2020 2Q FY2020 3Q FY2020 FY2021 1Q FY2021 2Q Petroleum (9.4) 36.7 37.6 29.7 29.6 15.4 Equity income (27.2) (1.6) (8.4) (3.9) 6.0 2.6 Basic Chemicals 0.1 (2.2) 1.0 4.4 6.7 4.2 Equity income 0.3 0.1
Slide 41: Sales and Production
Sales and Production Sales Volume(Petroleum Segment) [Thousand KL,％] FY 2020 2Q FY 2021 2Q Change Gasoline 6,308 6,406 99 1.6% Naphtha 162 60 (102) (63.0%) Jet Fuel 613 806 192 31.3% Kerosene 971 788 (183) (18.8%) Diesel Oil 4,799 4,898 99 2.1% Heavy Fuel Oil A 1,372 1,345 (28) (2.0%) Heavy Fuel O
Slide 42: Sales and Production
Sales and Production Sales Volume (Basic Chemicals Segment) [Thousand tons,%] FY 2020 2Q FY 2021 2Q Change Basic Chemicals 1,787 1,769 (18) (1.0%) *FY20 2Q figure was collected due to counting error Sales Volume (Functional Materials Segment) [Thousand KL, Thousand tons,%] FY 2020 2Q FY 2021 2Q
Slide 43: Sales and Production
Sales and Production Oil E&P – Production Volume, including Gas (Resources Segment) [Thousand BOED,%] FY 2020 2Q FY 2021 2Q Change Norway 22.4 23.6 1.2 5.2% Vietnam 0.0 11.8 11.8 － Total('000BOED) 22.4 35.3 12.9 57.8% Total('000BOE) 4,077 6,396 2,319 56.9% *Figures based on interest owned by Idemi
Slide 44: Sales and Production - Forecast
Sales and Production ‐ Forecast Sales Volume(Petroleum Segment) [Thousand KL,％] Revised 5/11 Forecast Change Forecast Gasoline 13,230 13,030 (200) (1.5%) Naphtha 100 140 40 40.0% Jet Fuel 1,990 1,810 (180) (9.0%) Kerosene 4,050 3,930 (120) (3.0%) Diesel Oil 10,210 10,150 (60) (0.6%) Heavy Fuel Oil
Slide 45: Sales and Production - Forecast
Sales and Production ‐ Forecast Sales Volume (Basic Chemicals Segment) [Thousand tons,%] 5/11 Revised Change Forecast Forecast Basic Chemicals 4,020 3,930 (90) (2.2%) *5/11 Forecast figure was collected due to counting error Sales Volume (Functional Materials Segment) [Thousand KL, Thousand tons
Slide 46: Sales and Production - Forecast
Sales and Production ‐ Forecast Oil E&P Production Volume, including Gas (Resources Segment) [Thousand BOED,%] 5/11 Revised Change Forecast Forecast Norway 25.1 26.8 1.7 6.9% Vietnam 14.5 13.2 (1.3) (8.8%) Total('000BOED) 39.5 40.0 0.5 1.2% Total('000BOE) 14,430 14,590 160 1.0% *Figures based on i
Slide 47: Sensitivity
Sensitivity Impact on FY earnings Items Range Impact on earnings Petroleum (¥4.0 billion) Crude Fuel cost, etc. ¥1.0 billion １$/bbl Inventory impact (¥5.0 billion) Decrease Oil Oil Exploration & Production (¥1.0 billion) Petroleum (¥2.5 billion) Foreign Exchange Fuel cost, etc. ¥0.5 billion １JPY/$
Slide 48: Crude Oil Prices (Dubai and Brent)
Crude Oil Prices (Dubai and Brent) [USD/bbl] 90 Brent 80 Dubai 70 60 50 40 30 20 10 Apr-17 Apr-18 Apr-19 Apr-20 Apr-21 48
Slide 49: Gasoline – Crude Oil (Domestic spot prices and Spreads)
Gasoline – Crude Oil (Domestic spot prices and Spreads) [JPY/L] Prices Spreads [JPY/L] 80 18 70 16 14 60 12 50 10 40 8 30 6 20 4 Spread 10 Crude oil 2 Gasoline 0 0 Apr-17 Apr-18 Apr-19 Apr-20 Apr-21 49
Slide 50: Diesel Oil – Crude Oil (Domestic spot prices and Spreads)
Diesel Oil – Crude Oil (Domestic spot prices and Spreads) [JPY/L] Prices Spreads [JPY/L] 80 20 18 70 16 60 14 50 12 40 10 8 30 6 20 Spread 4 10 Crude oil 2 Diesel oil 0 0 Apr-17 Apr-18 Apr-19 Apr-20 Apr-21 50
Slide 51: Gasoline – Crude Oil (Singapore spot prices and Spreads)
Gasoline – Crude Oil (Singapore spot prices and Spreads) [USD/bbl] Prices Spreads [USD/bbl] 100 16 90 14 80 12 70 10 60 8 50 6 40 4 30 2 20 Spread Dubai 0 10 Gasoline 0 -2 Apr-17 Apr-18 Apr-19 Apr-20 Apr-21 51
Slide 52: Diesel Oil – Crude Oil (Singapore Spot prices and Spreads)
Diesel Oil – Crude Oil (Singapore Spot prices and Spreads) [USD/bbl] Prices Spreads [USD/bbl] 100 20 90 18 80 16 70 14 60 12 50 10 40 8 30 6 20 Spread 4 Dubai 10 2 Diesel Oil 0 0 Apr-17 Apr-18 Apr-19 Apr-20 Apr-21 52
Slide 53: Paraxylene, Mixed xylene – Naphtha (Prices and Spreads)
Paraxylene, Mixed xylene ー Naphtha (Prices and Spreads) [USD/ton] Prices Spreads [USD/ton] 1,400 700 PX spread Mx spread Naptha PX 1,200 MX 600 1,000 500 800 400 600 300 400 200 200 100 0 0 Apr-17 Apr-18 Apr-19 Apr-20 Apr-21 53
Slide 54: Styrene Monomer – Naphtha (Prices and Spreads)
Styrene Monomer ー Naphtha (Prices and Spreads) [USD/ton] Prices Spreads [USD/ton] 1,600 1,000 900 1,400 800 1,200 700 1,000 600 800 500 400 600 300 400 200 200 100 SM spread Naptha SM 0 0 Apr-17 Apr-18 Apr-19 Apr-20 Apr-21 54
Slide 55: Operational data
Operational data Refineries Utilization FY 2021 FY 2017 FY 2018 FY 2019 FY 2020 2Q Idemitsu Kosan 88% 88% 87% 78% 73% Former Showa Shell 88% 93% * Utilization rate based on BCD Number of Service Stations FY 2021 FY 2017 FY 2018 FY 2019 FY 2020 2Q Idemitsu Kosan 3,545 3,501 3,446 3,426 3,405 Form
Slide 56: 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
Idemitsu Kosan Co.,Ltd. — Q2 FY2021 Earnings Presentation on 6ix