Cosmo Energy Holdings Co Ltd
TSE:5021
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Cosmo Energy Holdings Co Ltd
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Please turn to Page 1. First quarter fiscal year 2018 review. Although affected by regular maintenance at a refinery and a petrochemical plant, profitability increased, helped by the expanded crude oil production of the Hail Oil Field, and ordinary profit was a record high for first quarter, both for including and excluding inventory valuation.
Moving on to information by segment. The petroleum business secured an appropriate margin despite regular maintenance at a refinery. Ordinary profit, excluding the impact of inventory valuation, was down JPY 1.2 billion year-on-year to JPY 6.7 billion due to the impact of the regular maintenance of the Chiba Refinery.
The Petrochemical business enjoyed a strong market but suffered from a decline in sales volume due to regular maintenance at Maruzen Petrochemical. Ordinary profit was JPY 5.1 billion, down JPY 3.2 billion year-on-year.
The oil E&P business benefited from the full production commenced in January at Hail Oil Field, overcoming the impact of a rising crude oil price. As a result, ordinary profit was JPY 12.3 billion, up JPY 6.9 billion year-on-year.
Please turn to Page 2. Consolidated income statement and changes from Q1 FY 2017. Line 4. Ordinary profit was JPY 41.2 billion, an increase of JPY 26.2 billion year-on-year.
Line 8. Profit attributable to owners of parent was JPY 20.6 billion, up JPY 15.9 billion year-on-year.
Line 10. Ordinary profit, excluding the impact of inventory valuation of JPY 14.5 billion, was JPY 26.7 billion, up JPY 3.4 billion year-on-year. All in all, we had a positive year-on-year growth at all levels of profits.
Line 11, Dubai crude oil price during April-June period was $72 per barrel, up $22 year-on-year. For your information, Dubai crude oil price for the January-March period, which is the first quarter for the petroleum development business, was $64, up $11 year-on-year.
Please turn to Page 3. Consolidated ordinary profit by business is as shown on the table. Year-on-year changes are shown in the rightmost column. Total ordinary profit, excluding inventory valuation, was up JPY 3.4 billion.
Allow me to discuss the drivers on next page using a waterfall chart. Page 4, please. This is consolidated ordinary profit, analysis of changes from first quarter of fiscal year 2017. Ordinary profit, excluding inventory valuation, is JPY 23.3 billion for Q1 2017. As you can see on the leftmost column to the right, the petroleum business decreased ordinary income by JPY 1.2 billion year-on-year, which is broken down to JPY 7.2 billion for margin and sales volume and negative JPY 8.4 billion for expenses and other. In margin and sales volume, margin contributed JPY 9 billion after absorbing JPY 3.1 billion cost of import and a purchase incurred by insufficient production at the Chiba Refinery due to regular maintenance. Out of JPY 9 billion, JPY 1.4 billion came from naphtha, jet fuel and heavy fuel oil C. Sales volume decreased ordinary profit by JPY 1.8 billion mainly due to a decrease in exports.
Expense and other of negative JPY 8.4 billion is broken down to JPY 5.6 billion for Chiba Refinery regular maintenance and JPY 2.8 billion for in-house refinery fuel cost and other expenses.
The petroleum business decreased ordinary profit by JPY 3.2 billion, which is broken down to JPY 800 million for price and market factors and JPY 2.4 billion for the volume factor related to regular maintenance at Maruzen Petrochemical.
To the right, the oil E&P business increased ordinary profit by JPY 6.9 billion, which is broken down to JPY 3.1 billion and JPY 3.8 million. JPY 3.1 billion is due to price increase by $11, and the JPY 3.8 billion is due to the volume increased by the production commencement of the Hail Oil Field. Please note that the production volume was lower than the plan. The lower production volume was caused by the failure of ESP pumps and other factors at oil fields. That's the reason for the lower volume.
The other segment added JPY 900 million to ordinary profit.
In total, we had JPY 26.7 billion in ordinary profit, excluding the impact of inventory valuation for the first quarter of fiscal year 2018.
Please move on to Page 5, consolidated balance sheet. Line 3. Net worth as of the end of June 2018 was JPY 254.1 billion. And net worth ratio was 15%, an improvement of 0.9 points year-on-year.
Line 6. Net debt equity ratio after accounting for 50% of the hybrid loan was 2.3x, unchanged from the end of the previous year.
Page 6 shows highlights of consolidated capital expenditure. The table on the left shows capital expenditure of JPY 19 billion or 20% progress vis-à-vis the full year plan and JPY 4.3 billion decline from the same period of the previous year. For reasons, breakdown by segment is shown on the right-hand side. The main reason for lower CapEx is the completion of major investments at the Hail Oil Field.
Page 7 shows our policy for the second quarter onwards. We will continue to increase profitability by maintaining the maximum production at the Hail Oil Field and promoting alliance with refineries.
Also, as for the forecast, although product market conditions are expected to remain steady for the second quarter onwards, as the outlook for crude oil prices is uncertain, the first half and full year forecast, will be kept unchanged this time.
This concludes my brief explanation. Thank you.