Cosmo Energy Holdings Co Ltd
TSE:5021
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Cosmo Energy Holdings Co Ltd
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This is Uematsu. Thank you very much for being here today. I would like to take you through the financial results based on the materials.
Please open Page 1, fiscal year 2019 first quarter review. For the first quarter, we had a smooth operations of refineries with no regular maintenance, resulting in higher utilization of 94.6% and a significant improvement in the supply/demand balance. On the other hand, crude oil price sharply fell in June, causing negative time lag on the margins of the 4 oil products, namely gasoline, kerosene, diesel fuel and heavy fuel oil [ EA ]. The actual margin, however, was in line with the guidance for the quarter. Consequently, ordinary profit, excluding the impact of inventory valuation of JPY 106 billion, remains our target for the year. Explanation of -- by segment will be given later with a waterfall chart.
Please go to Page 2, outline of the consolidated income statement. Please refer to the line number on the leftmost column. Line 4, ordinary profit was JPY 20.8 billion. To the right, fiscal year 2018 first quarter number as well as year-on-year change are shown, indicating that ordinary profit was down JPY 20.4 billion or 50% year-on-year.
Line #8, profit attributable to owners of the parent was JPY 14.8 billion, down JPY 5.8 billion or 28% year-on-year. Line number 10, ordinary profit, excluding the impact of the inventory valuation, was JPY 18.6 billion. This is a number excluding the impact of inventory valuation of JPY 2.2 billion shown on line 9.
Oil price shown on line 11 for the April-June quarter was $67, a decrease of $5 from $72 in the previous year. The exchange rate was JPY 110 to the dollar. The yen -- depreciated JPY 1 to the dollar from JPY 109 in the previous year. For your reference, for the January-March quarter, Dubai oil price was $64, unchanged from the previous year. And on line #14, the exchange rate was JPY 110, the yen's depreciation of JPY 2 compared with the previous year.
Please turn to Page 3, outline of consolidated ordinary profit by business segment. Ordinary profit, excluding the impact of inventory valuation, was JPY 18.6 billion, as I mentioned earlier, on a consolidated basis. By segment, we had JPY 1.2 billion for petroleum business, JPY 5.6 billion for petrochemical business, JPY 9.2 billion for oil E&P business and JPY 2.6 billion for other businesses. Petroleum business was down JPY 5.5 billion; petrochemical business, up JPY 500 million; oil E&P business, down JPY 3.1 billion; and other businesses was flat from the previous year.
Please go to Page 4. This is the waterfall chart, analyzing key variable factors for each segment. Starting with the petroleum business, as mentioned earlier, ordinary income was negative JPY 5.5 billion. The breakdown is negative JPY 5.3 billion for margin and sales volume and negative JPY 200 million for expense and others.
I will break down further. Margin was negative JPY 10.6 billion, which comprises negative JPY 7 billion for fuel oil products and a negative JPY 4.3 billion for other products, including naphtha and a positive JPY 700 million for others. Sales volume was positive JPY 1.1 billion.
In terms of supply/demand balance, import and purchase was positive JPY 3 billion due to the absence of regular maintenance in Chiba. Export was positive JPY 1.2 billion. This is export of mainly diesel fuel and others.
Expense and others was negative JPY 200 million, consisting of negative JPY 1.1 billion for in-house fuel cost due to the increased throughput due to the absent of regular maintenance at Chiba refinery, cost of JPY 5.3 billion due to the absence of regular maintenance in Chiba, negative JPY 1.6 billion due to the provision made for regular maintenance, negative JPY 600 million due to increased depreciation for the Chiba pipeline and negative JPY 2.2 billion for other expenses.
Next is the petrochemical business, which was positive JPY 500 million, including a positive price factor of JPY 1.7 billion, coming mainly from the improvement of para-xylene prices. This was booked as a profit of HCP, consolidated for the January-March quarter. The volume factor was positive JPY 1.7 billion. This is due to the absence of a regular maintenance we had at the Maruzen Petrochemical in the previous year. Expense and others was negative JPY 2.9 billion. This is a total of various expense items.
Next, oil E&P was negative JPY 3.1 billion. The price factor was negative JPY 400 million. The volume factor was positive JPY 1.7 billion. Let me make some comments on this item.
Despite the reduced production at the Hail Oil Field by about 30% as reported to you earlier because of the low base in the previous year, when some sales volume was shifted from the first quarter to the second quarter, the volume factor was up JPY 1.7 billion year-on-year. Expense and others was negative JPY 4.4 billion. This is mainly due to the absence of the JPY 2.9 billion exchange rate gain we had last year due to the yen's appreciation.
The variance for other businesses was 0, while Cosmo Eco Power successfully started the operations of new sites, namely Himekami and Watarai second phase in April this year. There were associated costs as well. That's why the variance for other businesses was kept at 0.
Please turn to Page 5, outline of the consolidated balance sheet. As shown on line 4, net worth ratio was 16.5%, unchanged from the end of March. Net interest-bearing debt was JPY 653.8 billion, up JPY 9.1 billion from the end of March. This was mainly due to the payment of dividends during the first quarter.
Page 6 shows highlights of consolidated capital expenditures. As shown in the top left, capital expenditure for the first quarter of fiscal year 2019 was JPY 13.9 billion, a decrease of JPY 5.1 billion compared with the first quarter of fiscal year 2018. The annual capital expenditure for full year is more than JPY 5.1 billion. Compared with which, the actual expenditure for the first quarter was relatively small. It is because of the higher spending expected in the latter half of the year, such as regular maintenance scheduled to start in fall in preparation for the IMO environment-related regulations.
That was my brief explanation. Thank you very much.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]