Idemitsu Kosan Co., Ltd. · TSE:5019
Idemitsu Kosan — Q2 FY2020 Earnings Presentation
40 slides from Idemitsu Kosan's earnings presentation, Nov 10, 2020
Slide 1: Presentation on Results for the 2nd Quarter FY2020
Presentation on Results for the 2nd Quarter FY2020 November 10,2020 Idemitsu Kosan Co.,Ltd.
Slide 2: Summary of Financial Results
Summary of Financial Results FY2020 2Q Financial overview Operating losses were reported in FY2020 2Q mainly due to inventory impact Segment income excluding inventory impact decreased by ¥37.1 billion year-on-year, due to a continued decrease in demand following the COVID-19 pandemic and incr
Slide 3: Summary of Financial Results: Forecast Overview
Summary of Financial Results FY2020 Forecast overview The operating income outlook for FY2020 was revised to reflect ¥50 billion in inventory impact losses, as the initial forecast assumed a Dubai crude oil price of $40/bbl The forecast for segment income excluding inventory impact was revised
Slide 4: Key Topics
Key Topics Impact of COVID 19 Pandemic on Idemitsu’s Operations While sales of the 4 core products recovered to about 90% year-on-year in Jul-Sep, jet fuel remained at about 40% of the previous year [％] 2H 1Q 2Q 1H Forecast 4 Core Products 87.8 89.9 88.8 97.6 Jet Fuel 23.5 43.1 32.2 44.9 *Sales
Slide 5: Initiatives Amid the COVID-19 Pandemic
Initiatives Amid the COVID-19 Pandemic • Savings of ¥5 billion relative to 1H last year due to elimination of unnecessary spending Cost • Forecasting ¥10 billion reduction for the full-year compared to last year through Reduction continued strengthening of expense control and focused initiatives to
Slide 6: Operating Environment
Operating Environment Dubai Crude Oil Australian Coal Exchange Rate [USD/bbl] Price [USD/ton] Spot price [JPY/USD] (USD) 80.0 120.0 113.0 67.4 70.0 110.0 112.0 62.1 61.2 60.0 100.0 95.8 111.0 109.9 50.0 90.0 110.0 50.7 108.8 80.2 42.9 40.0 80.0 109.0 65.4 108.9 67.3 30.0 70.0 108.0 30.5 67.8 107.3 2
Slide 7: Overview
Overview Crude Oil / Coal / Exchange Rates [USD/bbl, USD/ton, JPY/USD] FY2019 2Q FY2020 2Q Change Crude Oil (Dubai) 64.3 36.7 (27.5) (42.8%) Crude Oil (Brent)* 66.0 39.7 (26.3) (39.9%) Thermal Coal * 88.1 61.2 (26.9) (30.5%) Exchange Rate (TTM) 108.6 106.9 (1.7) (1.6%) *Brent prices and thermal co
Slide 8: Segment Information
Segment Information Operating Income + Equity Income [￥ billions] FY2019 2Q FY2020 2Q Change Petroleum (5.5) (30.3) (24.8) － Excluding inventory impact 15.4 27.3 11.9 77.3% Basic Chemicals 14.3 (2.0) (16.3) － Functional Materials 13.7 6.2 (7.5) (54.8%) Power and Renewable Energy 0.4 (0.5) (0.9) －
Slide 9: Segment Information
Segment Information Factors Affecting Operating Income + Equity Income (excluding inventory impact, year on year) [￥ billions] Volume Oil Exploration Coal and Production (16.7) (6.2) Cost etc. Margin FX etc Margin Synergies, Income from subsidiaries Volume FX Lubricants Volume etc. etc etc. Volume
Slide 10: Segment Information
Segment Information [Petroleum] YoY ¥11.9 bn (FY19 2Q：¥15.4 bn ➡ FY20 2Q：¥27.3 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) [Thousan
Slide 11: Segment Information
Segment Information [Basic Chemicals] YoY- ¥16.3 bn (FY19 2Q：¥14.3 bn ➡ FY20 2Q：-¥2.0 bn) Decreased due to reduced styrene monomer and paraxylene margins Product FY2019 2Q FY2020 2Q Change Price Margin Price Margin Price Margin PX 860 343 520 185 (340) (158) MX 697 180 419 90 (278) (90) SM 1,037 5
Slide 12: Segment Information
Segment Information [Oil E&P] YoY -¥6.2 bn [Coal] YoY ‐¥16.7 bn (FY19 2Q：8.6 bn ➡ FY20 2Q：2.5 bn) (FY19 2Q：17.8 bn ➡ FY20 2Q：1.1 bn) <Crude Oil Production Volume and Brent <Coal Production Volume and Australian Coal Crude Oil Price Trends> Spot Price Trends> [Thousand BOE] [USD/bbl] [Thousand tons]
Slide 13: Balance Sheet
Balance Sheet [¥ billions] 3/31/2020 6/30/2020 Change 3/31/2020 6/30/2020 Change Total Current Cash and Deposits 132.2 105.0 (27.2) Liabilities 1,648.4 1,531.7 (116.7) Receivables, Total Fixed Inventory,etc. 1,418.1 1,274.5 (143.6) Liabilities 1,038.0 1,044.6 6.7 Total Current Assets 1,550.3 1,379.5
Slide 14: Statement of Cash Flows
Statement of Cash Flows [¥ billions] Cash Flows from Operating Activities 48.3 Net income before tax (33.1) Depreciation expense 47.7 Change in working capital 94.1 Other (60.4) Cash Flows from Investing Activities (91.7) Purchase of tangible fixed assets (70.4) Other (21.3) Cash Flows from Financin
Slide 15: FY2020 1H: ESG Topics
FY2020 1H: ESG Topics Environment １．Entered into an agreement to supply 100% renewable energy including after-FIT power to metropolitan-owned facilities https://www.idss.co.jp/news/2020/200821.html ２．Cultivating sorghum for biomass power generation in idle areas of Ensham coal mines in Australia htt
Slide 16: Changes in Assumptions for 2020 Forecasts in Light of the COVID-19 Pandemic
Changes in Assumptions for 2020 Forecasts in Light of the COVID-19 Pandemic Segment Assumptions for May 26 Forecasts Assumptions for Revised Forecasts Petroleum Reduction in fuel demand due to government requests Recovery in domestic demand due to economic to stay at home and decrease in economi
Slide 17: Overview
Overview Crude Oil / Coal / Exchange Rates [USD/bbl, USD/ton, JPY/USD] 5/26 Revised Assumptions Change Forecast Forecast (2nd half) Crude Oil (Dubai) 25.0 38.4 13.4 53.6% 40.0 Crude Oil (Brent)* 30.0 42.6 12.6 42.0% 41.0 Thermal Coal * 55.0 56.6 1.6 2.9% 52.0 Exchange Rate (TTM) 105.0 106.0 1.0 0.
Slide 18: Inventory Impact
Inventory Impact [USD/BBL] <Crude Oil Price Trends (Arabian light, USD/bbl)> 70 68 when 60 announcing 1Q results: 58 $46.5 50 $7 45 difference 40 44 42 37 Current 2H 30 35 assumption: $39.8 20 25 19 10 Jan Feb Mar Apr May Jun Jul Aug Sep 2H When announcing 1Q results, we expected that inventory im
Slide 19: Segment Information
Segment Information Operating Income + Equity Income [¥ billions] 5/26 Revised Change Forecast Forecast Petroleum 35.0 (3.0) (38.0) － Excluding inventory impact 35.0 47.0 12.0 34.3% Basic Chemicals 0.0 (6.0) (6.0) － Functional Materials 0.0 10.0 10.0 － Power and Renewable Energy (5.0) (5.0) 0.0 －
Slide 20: Segment Information
Segment Information Factors Affecting Operating Income + Equity Income [¥ billions] (excluding inventory impact, Compared to the previous forecast) Oil Exploration and Production Coal 7.0 (2.0) Lubricants etc. Pricing Income From Subsidiaries, Cost etc. Volume Pricing Volume Margin Cost etc. Petro
Slide 21: Reference Materials
Reference Materials € idemitsu
Slide 22: 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- 41 million KL/year biotechnology, solid electrolyte) Number of
Slide 23: Financial Data
Financial Data Net Sales by Segment [¥ billions] FY2019 2Q FY2020 2Q Change Petroleum 2,368.8 1,570.7 (798.2) (33.7%) Basic Chemicals 234.3 144.0 (90.3) (38.5%) Functional Materials 196.0 155.4 (40.7) (20.7%) Power and Renewable Energy 64.3 62.2 (2.2) (3.4%) Resources* 135.6 82.3 (53.3) (39.3%) Oi
Slide 24: Financial Data
Financial Data Quarterly segment income（accumulated、excluding inventory impact） [¥ billions] FY2019 1Q FY2019 2Q FY2019 3Q FY2019 FY2020 1Q FY2020 2Q Petroleum 3.5 15.4 26.1 (20.1) (9.4) 27.3 Equity income (2.7) (14.9) (26.0) (32.7) (27.2) (28.8) Basic Chemicals 5.9 14.3 18.0 11.9 0.1 (2.0) Equity
Slide 25: Sales and Production
Sales and Production Sales Volume(Petroleum Segment) [Thousand KL,％] FY 2019 2Q FY 2020 2Q Change Gasoline 7,385 6,308 (1,077) (14.6%) Naphtha 115 162 47 41.2% Jet Fuel 2,626 844 (1,782) (67.8%) Kerosene 985 971 (14) (1.4%) Diesel Oil 5,343 4,799 (544) (10.2%) Heavy Fuel Oil A 1,426 1,372 (54) (3.
Slide 26: Sales and Production
Sales and Production Sales Volume (Basic Chemicals Segment) [Thousand tons,%] FY 2019 2Q FY 2020 2Q Change Basic Chemicals 2,148 1,975 (173) (8.1%) ※There was an error in FY2019 2Q figure released last year, which has corrected as above. Sales Volume (Functional Materials Segment) [Thousand KL,
Slide 27: Sales and Production
Sales and Production Oil E&P – Production Volume, including Gas (Resources Segment) [Thousand BOED,%] FY 2019 2Q FY 2020 2Q Change Norway 20.7 22.4 1.7 8.2% Total('000BOE) 3,751 4,077 326 8.7% *Figures based on interest owned by Idemitsu's resource development subsidiaries Coal – Production Volu
Slide 28: Sales and Production - Forecast
Sales and Production ‐ Forecast Sales Volume(Petroleum Segment) [Thousand KL,％] Revised FY 2019 Change Forecast Gasoline 14,119 12,710 (1,409) (10.0%) Naphtha 265 280 15 5.5% Jet Fuel 4,979 1,900 (3,079) (61.8%) Kerosene 3,940 4,250 310 7.9% Diesel Oil 10,585 9,780 (805) (7.6%) Heavy Fuel Oil A 3,
Slide 29: Sales and Production - Forecast
Sales and Production ‐ Forecast Sales Volume (Basic Chemicals Segment) [Thousand tons,%] Revised FY 2019 Change Forecast Basic Chemicals 4,065 3,760 (305) (7.5%) Sales Volume (Functional Materials Segment) [Thousand KL, Thousand tons,%] Revised FY 2019 Change Forecast Lubricants 1,192 1,070 (122
Slide 30: Sales and Production - Forecast
Sales and Production ‐ Forecast Oil E&P Production Volume, including Gas (Resources Segment) [Thousand BOED,%] Revised FY 2019 Change Forecast Norway 20.9 22.9 2.0 9.7% Vietnam 0.0 0.3 0.3 － Total('000BOED) 20.9 23.2 2.3 10.9% Total('000BOE) 7,622 8,460 838 10.9% *Figures based on interest owned b
Slide 31: 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 32: Crude Oil Prices (Dubai and Brent)
Crude Oil Prices (Dubai and Brent) [USD/bbl] 90 Brent Dubai 80 70 60 50 40 30 20 10 Apr-16 Apr-17 Apr-18 Apr-19 Apr-20 32
Slide 33: 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-16 Apr-17 Apr-18 Apr-19 Apr-20 33
Slide 34: Diesel Oil – Crude Oil (Domestic spot prices and Spreads)
Diesel Oil – Crude Oil (Domestic spot prices and Spreads) Spreads [JPY/L] [JPY/L] Prices 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-16 Apr-17 Apr-18 Apr-19 Apr-20 34
Slide 35: 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-16 Apr-17 Apr-18 Apr-19 Apr-20 35
Slide 36: 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-16 Apr-17 Apr-18 Apr-19 Apr-20 36
Slide 37: Paraxylene, Mixed xylene, Naptha (Prices and Spreads)
Paraxylene, Mixed xylene, Naptha (Prices and Spreads) [USD/ton] Prices Spreads [USD/ton] 1,400 700 PX spread Mx spread Naptha 1,200 PX MX 600 1,000 500 800 400 600 300 400 200 200 100 0 0 Apr-16 Apr-17 Apr-18 Apr-19 Apr-20 37
Slide 38: Styrene Monomer, Naptha (Prices and Spreads)
Styrene Monomer, Naptha (Prices and Spreads) [USD/ton] Prices Spreads [USD/ton] 1,600 1,200 1,400 1,000 1,200 800 1,000 800 600 600 400 400 200 200 SM spread Naptha SM 0 0 Apr-16 Apr-17 Apr-18 Apr-19 Apr-20 38
Slide 39: Operational data
Operational data Refineries Utilization FY 2020 FY 2016 FY 2017 FY 2018 FY 2019 2Q Idemitsu Kosan 88% 88% 88% 87% 70% Former Showa Shell 85% 88% 93% * Utilization rate based on BCD Number of Service Stations FY 2020 FY 2016 FY 2017 FY 2018 FY 2019 ２Q Idemitsu Kosan 3,589 3,545 3,501 3,446 3,437
Slide 40: 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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