ENEOS : Fourth Medium-Term Management Plan （1,678KB） （1,678KB）

About this update from Eneos Holdings, Inc.

Tokyo 5020 Security Code May 12, 2025 ENEOS Group FY2025 - FY2027 Fourth Medium-Term Management Plan Mission Harnessing the Earth's power for the common good and for the day-to-day life of each individual, we will contribute to the development of our communities and help to ensure a vibrant future through creation and innovation in energy, resources, and materials. Our Five Core Values As a member of the community Supporting day-to-day life For a vibrant future High ethical standards Focus on customers Taking on challenges Based on our core principles of integrity and fairness, we conduct all of our business activities in accordance with our high ethical standards. We strive to meet the expectations and evolving needs of our valued customers and of society as a whole through the stable provision of products and services while creating new value as only we can. Taking changes in stride, we rise to the challenge of creating new value while seeking innovative solutions for today and tomorrow. Health, safety, and environment Moving forward We give the highest priority to health, safety and environmental initiatives, which are vital to the well-being of all living things. Looking to the future, we continue to grow, both as individuals and as a company, through the personal and professional development of each and every employee. Internal External Changes since disclosure of the previous Mid-Term Management Plan (May 2023) JX Advanced Metals listed as part of business portfolio transformation for energy transition While moving toward decarbonization, there is a growing emphasis on stable and economical energy supply. (In the immediate future, social demands for a stable supply of existing energy sources, including oil, will remain unchanged.) Heightened energy security awareness US policy risk Heightened uncertainty Increased cost toward decarbonization Difficulties in predicting projects' profitability due to inflation etc. Decided to update our Mid-Term Management Plan What we want to achieve in the Fourth Mid-Term Management Plan (FY2025-2027) In order to respond to uncertainty with greater agility and flexibility, we will transform our management structure to be more robust, while maximizing corporate value through portfolio restructuring. Transformation to a robust management structure Portfolio restructuring Strengthen risk management Utilize AI across all operations to realize significant improvements in operational efficiency and organizational streamlining DX Thorough improvement of efficiency Maximize earnings of existing businesses Pursue earnings improvement opportunities through comprehensive visualization of profit and loss structure including Group companies Swiftly respond to changes in the business environment and also link to PDCA for improvement Transformation to a robust management structure Portfolio restructuring Base and materials businesses (Petroleum products, etc.) Low-carbon business (LNG, biofuels, etc.) Strengthen early earnings generation businesses , centered on overseas fuel oil business, etc. Prioritize resource allocation as a step toward a decarbonized society In addition to organic growth, pursue growth opportunities through M&A Established an M&A promotion system, planning with a global perspective Enhance investment management Human capital management Develop strong leaders who can overcome uncertain times Implement job-based talent management centered on the pursuit of expertise Aim for early realization of ROE of 10% or more Supporting "today's normal," taking the lead for "tomorrow's normal" Main Section ■ Reference 1 Direction of the ENEOS Group 4 FY2025 Carbon Neutrality Plan (excerpt) 5 25 2 Review of Third Medium-Term Management Plan 5 Details of Human Capital Management , etc. 10 31 3 Fourth Medium-Term Management Plan 6 Assumptions and Financial Plan 13 34 FY2027 Targets 14 Business Plan 15 Transformation to a Robust 18 Management Structure (Enhancing efficiency through comprehensive visualization / Promotion of AI utilization) Portfolio Restructuring 20 (Enhancing investment management) Human Capital Management 21 Financial Plan 22 (Cash allocation and shareholder returns) 5 1 Direction of the ENEOS Group The trend towards carbon-neutrality is slowing. We had anticipated that the energy transition would reach a critical juncture in around 2030, but concluded that this may occur later. Even in an uncertain business environment, we will support "today's normal" through the stable supply of energy and materials, and lead "tomorrow's normal" through low-carbon and decarbonization initiatives. Base and Materials Businesses Enhancing the Management Base Achieve high cash generation capability through streamlining and strengthening the businesses Expand business through strategic investment Secure options and carefully select resources to accommodate multiple scenarios Flexible cash allocation to create value Human capital AI Our Strategy (Petroleum Products etc.) Low-Carbon Business (LNG, biofuels, etc.) Decarbonization Business (Renewable Energy etc.) Medium- to Long-Term Business Environment Stable supply of petroleum products will remain crucial for the foreseeable future. Importance of low-carbon energy will increase during the transition period. The energy transition trend may change significantly depending on policies, regulations, and other factors. Preparing multiple options for quick and flexible responses to changes in trends toward decarbonization. Building a portfolio that balances profitability and high resilience (See the Carbon Neutrality Plan for details) Current mid-term plan 2030 2040 2050 Slowing transition Society Emissions trading begins in earnest Introduction of fossil fuel surcharge Introduction of paid auctions High uncertainty toward achieving net zero Realization of net zero Petroleum products Chemicals and high performance materials Electricity Base and materials businesses Improvement of efficiency through increased refinery operation rate Strengthening and expansion of overseas fuel oil business, etc. Improvement of earnings through increased productivity and focused investment in growth areas, reduction of CO 2 emissions through fuel conversion Operation of Goi Thermal Power Plants LNG development Biofuel (SAF, etc.), green materials Low-carbon business ENEOS Group Active injection of resources Wakayama SAF Biochemicals Renewable energy CCS 1 Hydrogen Synthetic fuel Decarbonization business H 2 Solar and onshore Ethanol (supporting E10 and E20) Methanol (Development and implementation of next- wind power 1 Carbon dioxide capture and storage Offshore wind power Priority areas in Japan Priority use for industry and power generation generation renewable energy, in cooperation with the government and communities) Expansion of use Methanol, e-SAF, e-gasoline, etc. Copyright © ENEOS Holdings, Inc. All Rights Reserved. Leveraging our strengths, including our overwhelming business scale, diverse business areas, and advanced technical expertise, contribute to the stable supply of energy and materials that society demands in every erea Base and materials businesses Low-carbon business Decarboni- zation business H 2 Petroleum products Chemicals and high performance materials Electricity - High capital efficiency through ownership of cutting-edge, high-efficiency LNG power plants LNG development - Many years of experience and expertise in Southeast Asia and Oceania Malaysia: Approx. 40 years of operator experience since the aquisition, JDC's drilling technology , favorable relationships with state-run oil companies, etc. Liquid fuels Biofuel, green materials plants at 11 locations nationwide) (technology for direct synthesis of MCH [hydrogen carrier] in electrolytic cells) Hydrogen Synthetic fuel Renewable energy - ENEOS Renewable Energy's high power source development capabilities (solar and wind power plant generation capacity: second largest in Japan ) CCS - CO 2 storage expertise accumulated at the Petra Nova CCUS Project (US) (Feb. 2025: Achieved capture of 5 million tons of CO 2 ) Approx. 50% market share of domestic fuel oil sales , with approx. 12K service stations nationwide Operating at 23 locations in 16 countries overseas , mainly in Southeast Asia One of Asia's leading supply capabilities for basic chemicals Fuel-efficient tire materials with joint development and global expansion through close collaboration with major tire manufacturers Assets in the petroleum refining and sales supply chain adjacent to potential customers (refineries and Direct MCH® technology successfully verified for the first time in the world Technological capabilities cultivated at Japan's first demonstration plant capable of manufacturing synthetic fuel from raw materials through an integrated process Generate returns that exceed the cost of capital by resolving social issues surrounding energy and materials Diversifying our portfolio toward sustainable growth Current state Low-carbon Final year of 4th Mid-Term Mgmt. Plan FY2027 ROIC 6 % ROE 10 % Decarbonization Flexible response to transition Reap the rewards of upfront investment Base and materials businesses remaining crucial Growth of low-carbon/decarbonization businesses Decarbonization Materials FY2024 ROIC 5 % ROE 8 % Base 1 Low-carbon FY2040 ROIC 7 % ROE 15 % Base Operating profit: ¥ 429.3 billion 2 389.7 Adjusted (excluding one-time : ¥ bn 3 factors etc.) FY2030 ROIC 6 % ROE 12 % Operating profit: ¥ 500.0 billion 1 Including JX Advanced Metals, NIPPO, etc. Materials Operating profit: ¥ 600.0 billion Operating profit: ¥ 900.0 billion 2 Operating profit incl. discontinued operations / excl. inventory valuation 3 Consolidated financial statements of the ENEOS Group excluding one-time factors (gain on the sale of JXAM shares, impairment of goodwill in the Petroleum Products business) and the impact of time-lag, and including JXAM operating profit as share of profit of entities accounted for using equity method. 10 2 Review of Third Medium-Term Management Plan Financial targets Shareholder returns Although continued efforts are necessary to improve capital efficiency , achieved the initial targets for profit and free cash flow in FY2024 Executed share buybacks totaling ¥250.0 billion and announced an increase in annual dividends to ¥26, implementing aggressive shareholder returns Total payout ratio: 66% Total payout ratio: 77% Share buybacks ¥250.0 bn Share buybacks ¥100.0 bn ¥4 /year dividend increase ¥22 /year ¥22 /year ¥22 /year ¥22 /year ¥26 /year FY2020 FY2021 FY2022 FY2023 FY2024 2nd Mid-Term Mgmt. Plan 3rd Mid-Term Mgmt. Plan Targets Results ROE FY2025: 10% or higher FY2023: 7.8% FY2024: 8.4% ROIC (excl. incubation businesses) FY2025: 7% or higher FY2023: 5.0% FY2024: 5.4% Profit (excl. inventory valuation) 3-year total: ¥700.0bn FY2023: ¥180.0bn FY2024: ¥210.0bn FY2025: ¥310.0bn FY2023: ¥237.9bn FY2024: ¥266.4bn Free cash flow 3-year total: ¥500.0bn ¥1,317.1bn 1 (FY2023 and FY2024) Net D/E ratio 0.8 × or lower 0.34 × Strengthening the management base Listing of JX Advanced Metals (JXAM) To transform our business portfolio and maximize our corporate value, listed JXAM on the Tokyo Stock Exchange Prime Market to manifest its value JXAM was changed from a consolidated subsidiary to an equity-method affiliate (42.4% shareholding). Made careful preparations to maximize JXAM value by concentrating on the semiconductor business Transfer of 70% of shares of Caserones copper mine operating company Transfer of 3.27% of Los Pelambres copper mine rights and interests Transfer of 20% of shares of Pan Pacific Copper Co., Ltd. Change in Group operating structure Dissolution of integrated management with holding company ENEOS Holdings and ENEOS dissolved the "substantial holding company" structure, strengthened governance, and promoted strategic leadership-type portfolio management. Balance sheet management Reviewed our assets and business structures Sale of strategic shareholdings, partial transfer of maritime transportation business, etc. ¥250.0 billion in share buybacks Establishing a solid earnings base Reduce refinery trouble / strengthening competitiveness Accelerating the realization of energy transition Reduce our greenhouse gas emissions Steadily improved through various measures such as bringing inspections forward and enhancing construction CCS Promoting research projects for value chains Forest absorption Steadily generated credits (300kt/year) quality UCL [unplanned capacity loss] 9% (FY2022) → 5% (FY2024) (Offshore Western Kyushu CCS, Northern Offshore Malay Peninsula CCS) Restructure production/supply systems Considering shutting down one Kawasaki ethylene unit Suspended lubricant production at Yokohama Plant and Contribute to the reduction of society's greenhouse gas emissions considering relocating to another site Maximize value of Oil and Natural Gas E&P business Started production on Tangguh LNG project and projects for additional development in Malaysia Renewable energy Steadily expanded power generation capacity (1,370MW 1 ) SAF Started supplying imported SAF to multiple airlines Building an in-house manufacturing system at Wakayama Plant Synthetic fuel Completed Japan's first demonstration plant capable of manufacturing synthetic fuel from raw materials through an integrated process, and started demonstration operation 1 Total of operating and under-construction power plants 13 3 Fourth Medium-Term Management Plan 14 FY2027 Target 10 % or higher 6 % or higher ¥ 320.0 bn ¥ 500.0 bn 0.7-0.9 x Fourth Medium-Term Management Plan: FY2027 Targets FY2024 Results Changes Capital efficiency ROE 1 8 ％ +2 pt. or higher ROIC Profit excl. inventory valuation Assumption for FY27 Crude oil (Dubai) 75$/B Exchange rate: ¥150/$ Profit Operating profit Financial soundness Net D/E ratio 3 5 ％ ¥ 266.4 bn 2 ¥ 429.3 bn 0.48 x +1 pt. or higher + ¥ 53.6 bn + ¥ 70.7 bn 1 R is the profit attributable to owners of the parent excluding inventory valuation 2 Operating profit incl. discontinued operations / excl. inventory valuation To appropriate leverage level 3 Based on examples disclosed by other companies, this includes lease obligations and excludes non-controlling interests from the Fourth Medium-Term Management Plan (adjusting for hybrid bonds on a total asset basis) We aim to maximize cash inflows by further improving efficiency and strengthening early earnings generation businesses , while establishing a low-carbon and decarbonized supply base with a view to a decarbonized society. Maximize refinery utilization rate Aim to reduce the repair period by implementing best practices at each refinery, and also achieve 90% refinery utilization rate excluding periodic repair in FY2027 through appropriate investment in repair costs and measures to improve reliability Through proactive efficiency investments (energy conservation investments etc.), strive to steadily improve productivity while achieving both reduced environmental impact and improved economic efficiency Expand overseas fuel oil business Considering expansion of business through acquisition of overseas assets Strengthen chemical competitiveness Aim for competitiveness, starting with considering discontinuing operation of one of the ethylene production units at the Kawasaki Refinery Increase production of jet fuel Expand facilities and ensure appropriate earnings in response to increased inbound demand (+3 to 4% per year until FY2027) Promote digital marketing utilizing apps Strengthen 1-to-1 marketing and data profitability through 20 million data points Support service station operations through pull marketing and on-site labor savings Low-carbon Biofuel Work to establish a domestic supply system through import sales, and aim to manufacture 400,000 kl of SAF annually at the Wakayama Plant in FY2028 or later Decided to invest in UK-based C2X, which plans to manufacture bio and synthetic methanol, and cosidering the development of a supply chain for the shipping sector and the expansion into synthetic fuels and chemicals using bio resources as raw materials Decarbonization Hydrogen Considering hydrogen production, transportation, and supply to industrial and transportation operators in Japan for the establishment of a large-scale hydrogen supply chain Synthetic fuel In parallel with demonstration operation aimed at establishing the technology, run Japan's first synthetic fuel shuttle buses at the Osaka-Kansai Expo to raise public awareness Oil and Natural Gas E&P (ENEOS Xplora) Two-pronged management of proactive natural gas development and environmentally friendly businesses High Performance Materials (ENEOS Materials) Differentiation of strategic business technology, business expansion through focused investment in growth areas, and improvement of earnings through increased productivity E&P Business (Exploration & Production) strengthen and expand our LNG business as demand for LNG is expected to increase until around 2040 (Next step) Contract Planning to extend contract for extension Malaysia Block SK10 Malaysia BIGST Project (Development projects through CCS FID implementation) Papua LNG Project (FID scheduled for 2025) Start of Development of expansion of Tangguh production LNG Project (Gradual start of production from 2028) + Additional acquisition of rights and interests, and consideration of purchase of assets Business for Environment (CCS/CCUS 1 ) Promote efforts toward the social implementation of CCS, utilizing the experiences of Petra Nova CCUS Project and domestic/overseas support systems SSBR (synthetic rubber) Aim to achieve growth and market share that exceed the market average through development of cutting-edge technologies that meet customer needs, a customer-oriented support system, and capture of market share through supply from three locations worldwide SSBR sales volume Raw materials for fuel-efficient tires Aim for 6% CAGR 2 3% market growth rate High grip and low rolling resistance FY24 FY25 FY26 FY27 contributing to improved fuel economy Binders for batteries Materials for lithium-ion batteries Positive Separator electrode Positive Aim to expand by targeting the electrode Negative European market , which is expected to electrode Plate see growth in EV demand following China Negative electrode Plate 1 Carbon dioxide Capture, Utilization and Storage: Technology that utilizes CO ₂ injected and stored underground Electricity (ENEOS Power) Achieve high capital efficiency by strengthening cost competitiveness through competitive power sources and AI utilization Renewable Energy (ENEOS Renewable Energy) Aim for medium- to long-term growth while focusing on capital efficiency and balancing contribution to decarbonization and economic viability Sales Steadily acquire retail customers with focus on efficiency Expand product lineup and services tailored to customer needs (Responding to decarbonization and energy conservation needs, etc.) Goi Thermal Power Plants Power sources and procurement Stable operation of in-house power plants (Goi Thermal, Kawasaki Natural Gas, Muroran Biomass) Introduce an evaluation model to quantify market price fluctuation risks, and strengthen risk management Enhance derivative transactions to stabilize and maximize earnings VPP, etc. Accumulate earnings through strengthened trading and enhancement of optimization systems in the grid storage battery business Develop business models utilizing distributed power sources (Demonstration of Ouchi de ENE Mane 1 / Dokoka de ENE Mane 2 , etc.) Common issue Realize improved capital efficiency through careful selection of investment and capital recycling, etc. Solar Improve earnings through installation of storage batteries in the Kyushu area, where output is increasingly curtailed (Introduction of over 200 MW of storage batteries is expected in FY2026) Improve earnings through transition of low-FIT projects to FIP and PPA 3 Onshore wind power JRE Miyagi Kami Wind Farm Steadily implement projects under development and reduce costs through split orders and bulk procurement of wind turbines Offshore wind power Promote development for early launch of the Happo Noshiro Project Acquire technical knowledge on floating offshore wind power through a demonstration in Norway 1 VPP service for families 2 Service that optimizes the charging and discharging of EVs at their destination 3 power purchase agreement Copyright © ENEOS Holdings, Inc. All Rights Reserved. 18 Transformation to a Robust Management Structure (1) Enhancing Efficiency through Comprehensive Visualization Thorough improvement of efficiency for a robust management structure Improvement of ROIC through comprehensive visualization Improvement of ROIC and strengthening governance of Group companies Support and promote improvements of each company By supply chain level By area By customer segment By affiliate (Companies included in the Group: 651 companies [number as of March 2025] ) ROIC improvement Strengthening governance Strengthen fundamental Visualize Strengthen profitability management situation internal control Tighten investment Respond to Strengthen management sustainability information (reduction of invested capital) disclosures security Risk management Establish FP&A organization (April 2025) Deepen ROIC management by establishing comprehensive improvement measures Provide high-quality information quickly in response to changes in the business environment and also link it to actions for improvement (PDCA) Seek further ROIC visualization, not limited to ROIC by business unit Regularly evaluate Group companies in terms of capital efficiency and strategic alignment Restructure the organizational structures of Group companies based on the evaluation results, and improve earnings and strengthen governance through ROIC management . In light of the increasing uncertainty surrounding the business environment, establish a Chief Risk Officer (CRO) and a Risk Management Department to strengthen organizational structure Identify important risks across the Group, formulate rapid and appropriate countermeasures (mitigation plans), and work to reduce risks 19 Transformation to a Robust Management Structure (2) Promotion of AI Utilization Launch a dedicated organization to promote the utilization of AI and pursue the potential of AI utilization across all operations, including the supply chain, and make significant improvements in operational efficiency and organizational streamlining through data- driven optimization Tomorrow's normal utilizing AI R&D Development of new materials utilizing atomic simulations (Matlantis) Advanced R&D in automated testing analysis, patent analysis, etc. Power generation volume forecasting AI and optimal control of EMS 1 Wind power generation anomaly detection Administration AI auditing, internal control, legal affairs, review of regulations Optimization of personnel allocation and training Enhancement of budget planning / automation of financial management Automation of IT operations Management AI prediction of management indicators Risk management using AI prediction Utilization of AI in investment management operations Introduction of AI agents for business management Manufacturing Expansion of automated plant operation (optimization / CO 2 Equipment failure prediction and maintenance reduction) Corrosion detection / leak detection through AI image diagnosis AI quality auditing Supply Cost reduction, risk management, and earnings improvement through AI-driven optimization of the entire supply chain Optimization of plans on vessel/vehicle allocations, production, inventory Sales 1-to-1 marketing aimed at service improvement Utilization of the official ENEOS app and AI support for service station earnings Proposal of ancillary services optimal for service stations based on service station conditions AI recommendation based on marketing/sales data analysis DX Digital and IT personnel What is necessary to make tomorrow's normal a reality Data preparation for AI utilization Identification of best solutions Personnel able to complete projects Data utilization Digital technology capabilities Security Four driving forces to be strengthened during the Fourth Medium-Term Management Plan period 1 Energy Management System Strengthen system for careful selection of investments and maximization of returns for portfolio restructuring Reorganization of investment screening system  Aim to reduce investment by 5% through investment screening (improve capital efficiency) investment screening team) and apply uniform investment screening rules to Gate 0 Gate 1 Gate 2 Gate 3 all investment projects screening through third-party reviews and functional reviews by Stage 0 Stage 1 Stage 2 Stage 3 Execution CxOs Proposal Examination starts FS FEED in corporate management, and conduct strict investment screening No Go No Go No Go No Go Investment reappraisal Establishment of PMI (PMI: post merger integration) Review of strategy Execution of Reappraisal Maximization of investment investment performance Reallocation of management resources Strengthen the holding company's PMI system (establish a new PMI promotion team) and link this system with the gate system to utilize it for both promotion and screening in the future Strengthen the holding company's screening system (establish an Investment screening system Define detailed requirements at each gate, and conduct comprehensive Add additional intermediate gates for projects that are particularly important Organize guidelines for reappraisals after a certain period following the execution of investment projects (start/closing) Analyze the gap between the initial plan and current status, and take necessary measures, including reviewing business strategies and reallocating management resources, to maximize investment performance M&A is extremely important as a means of promoting portfolio transformation to achieve the Long-Term Vision. In M&A, PMI is particularly vital for success to maximize synergies and managing risks after acquisition. New PMI Guidelines were established in FY2024 to improve PMI quality. Implement human resources strategy enabling the realization of portfolio restructuring (see p. 32) In particular, focus on developing strong leaders who can overcome uncertain times (succession management) , thoroughly implementing job-based talent management centered on the pursuit of expertise, and fostering a corporate culture where 75 % or more expert global ¥70,000 ¥100,000 or more perspectives etc. Thorough job-based talent management Digital expert Engineer with Person M&A Growth opportunity score 1 & 2 Training cost per person Effective personnel Independent career Strengthening of recruitment development development of external personnel Actively support growth Visualize post requirements and skills 60% of new hires have work of personnel experience 3 Job-based talent management Dynamic personnel portfolio Establish a future personnel portfolio and thoroughly implement talent management centered on assignment of the right person to the right job to resolve gaps 56 % Strengthen operational effectiveness of strategic selection, development, and appointment processes of personnel who will lead Group management for the next generation Selection and development ● Appointment Clarify selection criteria and perform fair Visualize the capabilities of the entire recruitment to implement strategic HR management team , and select development from an early stage successors through effective discussions Assigned to ●● project Transferred to ▲▲ division Seconded to ◆◆ Strengthening leader development (succession management) Present Goal (CxO, etc.) Realization of portfolio restructuring employees can work comfortably and with pride Requirements X Y Z ・・・ Current employee Candidate A Candidate B Impact through operation Fostering a corporate culture where employees can work comfortably and with pride Job satisfaction score 1 69 % 75 % or more Work environment score 1 68 % 75 % or more Health 2 (Presenteeism 4 ) 20.4 % 20 % or lower 1 Average positive response rate for engagement survey questions related to each item 2 Only includes results of ENEOS Holdings and ENEOS 3 FY2024 results of ENEOS 4 A state in which an employee continues to work without taking time off despite physical or mental health issues, resulting in decreased productivity (percentage of lost labor productivity) Copyright © ENEOS Holdings, Inc. All Rights Reserved. 3-Year Cash Allocation for the Medium-Term Management Plan Net profit (excl. inventory) ¥820.0bn Cash IN Cash OUT Capital Breakdown of capital investment over 3 years Business maintenance investments Decarbonization Base and materials Depreciation & amortization ¥960.0bn Enhancement of corporate value investment ¥1,560.0bn ¥ 820.0 bn (Mainly base and materials businesses) Strategic investments ¥ 740.0 bn (Renewable energy, CCS, etc.) ¥250.0bn Strategic investments ¥740.0bn ¥180.0bn Investment / Sale of assets, etc. ¥130.0b n shareholder returns Financial leverage Shareholder returns ¥410.0bn Allocation Management Low-carbon (LNG development, SAF, etc.) ¥310.0bn March 31, 2028 0.7 to 0.9 x March 31, 2025 0.48 x Financial discipline (Net D/E ratio 1 ) Execute flexible and strategic cash allocation to selective strategic investments, including M&A, or additional returns (around ¥500.0-1,000.0bn) Ensure flexibility even in an uncertain business environment Approach to establishing financial discipline Determined after comprehensively considering the perspectives of maintaining the current credit rating and the need to reduce the cost of capital 1 Based on disclosures by other companies, including lease liabilities and excluding non-controlling interests from the Fourth Medium-Term Management Plan (including hybrid bonds) FY2025 dividend policy: Based on our determination to realize the 4th Mid-Term Mgmt. Plan, determined a dividend per share of ¥30 Return Policy in the 4th Mid-Term Mgmt. Plan: Progressively increase dividends based on financial results , starting from ¥30/share dividends On average over the 3-year period, 50% or more of net income excl. the impact of inventory valuation will be returned through dividends and share buybacks. (No change to the approach in our Basic Policy and Return Policy below.) Return Policy: Returning profits to shareholders continues to be an important management issue. With the basic policy of implementing returns reflecting medium-term consolidated performance and forecasts, strive to continue to provide stable dividends . Capital Policy: Secure sufficient financial soundness and liquidity to withstand resource price volatility and other business risks and enable procurement of capital for sustained investment in growth. Historical Dividends 2nd Mid-Term Mgmt. Plan (FY20-22) Based on the above, utilize constant financing to maintain an optimal capital structure and capital costs. 3rd Mid-Term Mgmt. Plan (FY23-24) 4th Mid-Term Mgmt. Plan (FY25-27) ¥ 26 /share ¥ 30 /share ¥ 22 /share ¥ 22 /share ¥ 22 /share ¥ 22 /share FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 Supporting "today ' s normal," taking the lead for "tomorrow's normal" We continue to support everyday life with tireless efforts and strong leadership. We take action for positive change and continue to take on challenges, while pursuing every possible combination of the strengths of diverse people, technologies, and ideas. "Today's normal" in our day-to-day lives―its presence is anything but ordinary. From the time when "today's normal" life was not ordinary, the ENEOS Group has always been a frontrunner, committed to developing and supplying energy and materials essential to the everyday life of each age. Now, we aim to achieve "tomorrow's normal," a decarbonized, recycling-oriented society, where next-generation energy, materials and services are essential. We will continue to take the lead in creating and innovating "tomorrow's normal" to be a corporate group that is trusted by and indispensable to society. 4 For details, please refer to the press release announced today FY2025 Carbon Neutrality Plan (excerpt) With the aim of realizing a carbon neutral society, in addition to reducing the ENEOS Group's greenhouse gas emissions, we will promote energy transition and a circular economy to contribute to the reduction of society's greenhouse gas emissions. Based on the Fourth Medium-Term Management Plan, we have updated the Carbon Neutrality Plan as a roadmap to pursue the above. 1 The basic energy policy of the Japanese government. With Safety as a major premise, it aims to simultaneously achieve Energy Security, Economic Efficiency, and Environment. Policies on initiatives for the realization of a carbon-neutral society ENEOS Group measures Reduction of our greenhouse gas emissions 1 (Scope 1+2) CO 2 Mitigation of greenhouse gas emissions Appropriate processing of crude oil (according to demand) Reduction of greenhouse gas emissions in manufacturing and business operations ( energy saving, fuel conversion, utilization of renewable energy , etc.) Utilization of carbon credits and other similar mechanisms 2 Reduction through CO 2 fixation CO 2 CCS (Carbon dioxide capture and storage) (Including new methods such as BECCS 3 and DACCS 4 ) Enhancement of the biogenic CO 2 removals Generating carbon credits through removal by forests and other similar methods 5 Promotion of energy and materials transition H 2 Contribution to the reduction of greenhouse gas emissions in society (Scope 3, avoided emissions) Promotion of low-carbon fossil fuels and products (LNG and avoided emissions products) Expansion of renewable energy (solar and wind power) Utilization of resources such as biomass (biofuels and bio-based materials) Decarbonization of fossil fuels (CCS for other companies and CDR 6 ) Utilization of hydrogen (hydrogen and synthetic fuels 7 ) Promotion of a circular economy Promotion of resource recycling Resource conservation , promoting environmental contributions' value, etc. This includes initiatives of both reduction and removal actions. Removal is conducted as a mitigation activity outside the value chain. These activities are also applied to offset the operational emissions through the generation of credits. This includes non-fossil certificates and other similar mechanisms. 3 Bioenergy with carbon capture and storage. Capture and storage of CO 2 emitted during biomass power generation 4 Direct air capture with carbon storage. Direct capture and storage of CO 2 from the atmosphere 5 This includes biogenic CO 2 removals and emission mitigation methods such as blue carbon and rice paddy methane suppression in addition to afforestation and forest management. 6 Carbon dioxide removal 7 This includes bio-derived fuels. ENEOS Group's presumed societal scenarios Presumed emission reduction pathways in each scenario (in Japan) Assuming uncertainty in the future business environment, we have presumed three societal scenarios. 1 Amid the increasing uncertainty surrounding climate change, we aim to capture global trends and respond swiftly to future trends. We will formulate a resilient carbon-neutral strategy based on the emission reduction pathways corresponding to each scenario. Japan's greenhouse gas emissions Societal trends Energy trends Global average temperature 2 (2040) Global emissions 3 (2040) D rift scenario Prioritization of economic development due to intensifying regional conflicts Continued use of fossil fuels such as oil, +3.0 to 4.0 ℃ prioritizing national economies +8% C urrent scenario Limited progress in decarbonization, mainly in leading regions Progress in low-carbon measures such as LNG and biofuels, +2.0 to 2.5 ℃ centering on developed countries -24% B eyond Accelerated progress in decarbonization through international cooperation (in addition to significant technological advancements) Significant advances worldwide in improving the economic efficiency +1.5 to 2.0 ℃ of decarbonization through innovative technologies. -62% scenario 100% (FY2013 baseline) Progress of a carbon - neutral society 80% 60% 40% 20% 0% 2013 2020 2030 2040 D rift ( - 45%) C urrent ( - 56%) B eyond ( - 76%) This is a summary of future projections based on the IEA WEO2024 and IPCC Sixth Assessment Report, and it does not indicate the emission reduction targets or strategies of the ENEOS Group towards achieving carbon neutrality. Based on the average temperatures between 1850 and 1900 3 Uses emissions from 2020 as the base year Reduction of our 1,2 greenhouse gas emissions (Scope 1+2) The ENEOS Group, together with the government and society, will promote the reduction of its greenhouse gas emissions. We aim to achieve a 73% reduction in line with the government's targets by FY2040 and carbon neutrality for operational emissions by FY2050. (Units: million tons per year) FY2013 [Legend] Net emissions (actual) Net emissions (target) (Million tons per year) C urrent scenario D rift scenario -38% Greenhouse gas emissions 34 Scope 1+2 -46% 25 -60% B eyond scenario -73% Carbon Neutrality 2013 (Baseline year) 2018 2023 2030 2035 2040 2050 (FY) Assumed reduction of greenhouse gas emissions 2 (Million tons per year) Demand shift due to progress in energy transition Mitigation of Emissions CO 2 Fixation -73% 34 -0.5 to -2 -2 to -5 Biogenic CO 2 removals -2 to -6 10 (Baseline year) FY2040 net emissions (Baseline year, actual) FY2023 (Actual) FY2030 FY2035 FY2040 FY2050 Greenhouse Gas Emission Target (Scope 1+2) 34 25 19 to 21 or less ( - 38 to - 46%) 14 or less ( - 60%) 10 or less (-73%) Carbon Neutrality -16 Greenhouse gas emissions and emission targets may be adjusted as necessary, taking into account the application of future Sustainability Standards Board of Japan (SSBJ) Climate Standard. Assumes that the external environment, including policies and regulations by the government and other parties, has been sufficiently developed to achieve Japan's NDCs across the entire nation.

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