Sumitomo Metal Mining Co Ltd

TSE:5713

Earnings Call Transcript 2022-Q3

[Daiji Toyama, executive]

Now we will begin the telephone conference of Sumitomo Metal and Mining for the announcement of its financial results for the third quarter ended December 31, 2021. My name is Daiji Toyama, Manager of PR and IR Department, and I will moderate this teleconference.

I believe you already have the materials namely consolidated financial results for the third quarter ended December 31, 2021, and supplementary explanation for financial summary near at hand. First, Takanori Shimizu, General Manager of PR and IR Department will outline the highlights of financial results.

[Unknown Executive]

This is Shimizu speaking. Thank you very much for your continued support. And I also appreciate your participation today. We have 138 people joining this call. We are pleased with your active interest. I will explain some of the key highlights of the financial results, then the manager in charge, will explain the details and the highlights of the financial results.

Now I will explain the financial results of the third quarter fiscal 2021 announced today. Please refer to the first page of the consolidated financial results.

First, with regards to the consolidated operating results of the third quarter fiscal 2021, both net sales and net profit increased year-on-year. Net sales was JPY 922.5 billion, JPY 267.3 billion higher year-on-year. Profit before tax was JPY 195.4 billion, JPY 130.8 billion higher year-on-year. Quarterly profit was JPY 180.9 billion, JPY 134.0 billion higher year-on-year. And the profit attributable to owners of parent was JPY 170.1 billion, JPY 124.7 billion higher year-on-year. So both net sales and net profit increased year-on-year.

Next, I will explain the overview of the third quarter results as compared to the previous fiscal year. First of all, Consolidated net sales, the metal prices and exchange rate used for the calculation of the consolidated net sales. Please refer to Page 2 of the Japanese version of the consolidated financial results. Copper price, which has been on the upward trend was affected by the weakening demand -- of demand caused by the COVID pandemic. Then there were times when concern of a supply shortage pushed up the copper price again. Nickel price maintained its upward trend, thanks to the recovery of the world economy. Gold price was basically on the rise due to the uncertainties over the world economy impacted by the spread of COVID variant, then it started to decline as U.S. economy recovered.

Now the gold price has been on a stable level. Therefore, as a result, the copper price throughout the third quarter year-to-date was $9,593 per ton. Nickel price was $8.51 per pound. Prices of these metals were higher than the same period last year. Gold price was lower than the same period last year at $1,799.9 per troy ounce.

As for exchange rate, average yen rate was weaker than the same period last year at JPY 111.11 to the dollar. Consolidated net sales of this period was JPY 922.5 billion, JPY 267.3 billion higher year-on-year due to the higher prices of copper and nickel.

Consolidated profit before tax was JPY 195.4 billion, JPY 130.8 million higher year-on-year. And the quarterly profit was JPY 180.9 billion, JPY 134.0 billion higher year-on-year. Profit attributable to owners of the parent was JPY 170.1 billion, JPY 124.7 billion higher year-on-year due to the higher net sales an increase in profit on equity method owing to higher copper price.

Now I will outline key topics of the business in the third quarter year-to-date. Please refer to Page 7 of the supplementary explanation for the production volume of the mines. First of all, as for the overseas copper mines. At Morenci, production volume was 296,000 tonnes lower than the production in the same period of the previous year due to reduced level of mill operation due to the impact of COVID pandemic.

At Cerro Verde copper mine, production volume was 294,000 tonnes, an increase from the previous year when the mine was placed in a care and maintenance status in response to the pandemic. Next, as for Taganito HPAL, equipment travel during the first half of the year and a power outage caused by Typhoon Hagibis in December resulted in the lower production volume than the same period of the previous year.

As for CBNC, rather Coral, COVID pandemic caused a temporary reduction in the level of operation in September and production volume was slightly lower than that of the previous year.

Lastly, as for Materials business, net sales of Materials business was JPY 203.7 billion, up JPY 53.0 billion year-on-year and segment profit was JPY 15.3 billion, up JPY 20.3 billion year-on-year due to the increase in demand for badly materials, which experienced a sudden demand in the previous year and the brisk demand for applied or powder materials. Segment profit was JPY 15.3 billion, up JPY 20.3 billion year-on-year.

Next, I would like to talk about the forecast for the consolidated full year results. We revised the full year forecast again after we announced the previous revision in November. Please refer to the bottom of the consolidated financial results and the bottom of Page 1 of the supplementary explanation. In the revised full year forecast, net sales will be JPY 1.211 billion, JPY 36 billion better than the forecast in November. Profit before tax will be JPY 314 billion, JPY 48 billion higher than the November forecast. Profit attributable to owners of parent will be JPY 248 billion, JPY 34 billion higher than the November forecast.

Metal prices and exchange rate assumptions we used for the forecast are on Page 1 of the supplementary explanation. At the bottom of Page 1 of the supplementary explanation. We expect annual average metal prices to be higher than the assumptions we used for November forecast. And the yen will be weaker than the assumption used in November.

Next, I would like to explain some of the topics related to the full year forecast. Please refer to Page 7 of the supplementary explanation for the production volume of respective mines. First of all, I would like to explain the impact of transfer of all equity interest held in Sierra Gorda copper mine.

In November, we estimated the total impact of the transfer of equity interest assuming the process will be completed by the end of March 2022 to be about JPY 70 billion. We revised this amount to be about JPY 74 billion and included this in profit before tax. The increase of JPY 4 billion is due to the difference in exchange rate. This amount is still an estimate, and it is not fixed yet.

Next, I would like to cover some of the topics at overseas compromise. At Morenci, impact of COVID pandemic is shrinking and the production volume is being ramped up since April this year. Moreover, mineral processing area, which was planned to be reopened in 2022 has already restarted operation at 50% of its capacity in July. Due to the longer-than-usual monsoon season, production ramp-up was slowed from July through September, but production recovered gradually since October. We forecast that the annual production volume at Laurence will reach 398,000 tonnes, almost in line with what we forecasted in November.

At Cenveo debt, operation continued stably based on the annual production plan, taking into consideration the influence of the spread of COVID inflection, but the ore grade is getting lower and we are trying to compensate for it by increasing throughput. Estimated annual production volume is 399,000 tonnes, which is in line with the forecast in November. At Candelaria, Mining operation delayed due to the measures to prevent the potential collapse of open pit due to the fold found in the mining area.

Our partner, LundiMining announced downward revision of annual production guidance in June measures to ensure good stability was taken and the monitoring will continue. In November, we forecasted annual production volume to be 107,000 tonnes, but we increased the forecast up to 116,000 tonnes due to reduced impact of stability measures. As for Sierra Gorda it was excluded from the coverage of equity method company in the third quarter.

Next, Taganito HPAL. November forecast included the impact of reduced production due to trouble of boiler facility, which occurred in the first quarter. Additionally, we were impacted by power outage caused by the typhoon in December. Our current forecast is the annual production of [ 26.1000 ] tonnes, about 10% lower than the November forecast.

Next, at the CBNC Cora Bay. Due to the impact of COVID pandemic, operation level was reduced temporarily in September. Additionally, shortage of material supplies will impact the production, which forecast to be lower than the November forecast.

Now I will talk about dividend. Please refer to the notice regarding revision of FY 2021 dividend forecast, which was announced today. Year-end dividend forecast was revised in line with the revision made to the full year consolidated results forecast. The full year business forecast includes the impact of Sierra Gorda transfer of interest upon the assumption that the transaction will be executed by the end of March '22.

At this point in time, however, it is not clear as to when we close the transaction. Therefore, that the year-end dividend calculation excludes the impact of Sierra Gorda and then apply 35% more of consolidated dividend payout ratio.

Consequently, year-end dividend is expected to rise by JPY 38 from the previous JPY 71 to JPY 109 per share. A search annual dividend per share is projected to reach JPY 222 marking all-time high of the company. By the way, the impact demand of Seagate transfer includes reversal of loan loss reserves as a cumulative impact for loans to Sierra Gorda SCM adjusted for the balance of retained earnings at the beginning of FY 2019 due to the application of revised IAS 28 investment in affiliates and joint control companies.

Since it is a cumulative impact of the reversal, it was adjusted from the opening balance of retained earnings at the time when the provision was recognized and was not recorded as loss. Therefore, P&L was not affected. Future dividend forecast calculation after the execution day becomes definitive will not include the reversal amount and on that basis, SMM maintains consolidated payout ratio of 35% or above according to our return policy. This is about the summary of the results and the forecast.

[Daiji Toyama, executive]

This is Toyama. Now I take the floor. So please look at the supplementary explanation of financial summary. I will only focus upon the key takeaways. Page 1 table on top shows a year-on-year comparison between cumulative in that of the last year. Please refer to the footnote. Year-on-year change of our profit before tax shown in the column 1, minus 2. Profit before tax improved by JPY 130.8 billion, year-on-year, of which contribution of strong market is JPY 117 billion. Let me explain other factors. Quantity difference attributable to Hishikari, THPAL, and Morenci on lower year-on-year sales leading to an overall decline of JPY 5.5 billion.

As for cost differential, Sierra Gorda improved significantly on strong contribution by Q2, but there was a production cutback in THPAL and CBNC, Morenci, Candelaria, Cerro Verde also declined an overall decline recorded at JPY 11.5 billion. Plus, JPY 6.3 billion for QB2 is a one-off factor as project suspension costs recorded last year disappeared this year. Plus, JPY 2 billion of others include upturns from unrealized returns in concentrated sulfuric acid.

Next, please look at the difference between the latest and November forecast. Please refer to the foot note of the table showing the difference between FY 2021 forecast. In February, vis-a-vis forecast in November, the column 4 minus 5. Profit before tax increased by JPY 48 billion from November of which a stronger market contributed to JPY 32.4 billion. Revision of Sierra Gorda impact, plus JPY 4 billion.

Here, I will explain other key factors. Quantity difference incorporates declines of sales in THP and Morenci making overall decline of JPY 3.8 billion. For cost differentials, per unit cost improved in Morenci and Candelaria, whereas it declined in THP and BNC and on that back of production decline from November figures, result in total decline is JPY 2.5 billion. Materials business quotation price difference improved by JPY 5 billion on the back of strong metal prices in battery materials business. Others, JPY 10.9 billion includes improvement of difference in equity method earnings by products in concentrated sulfuric acid amongst others.

On Page 3, please look at year-on-year comparison by segment. Gross profit of Mineral Resources segment is JPY 67.7 billion, up JPY 24.4 billion mainly attributable to overseas copper mice, primarily Morenci on the back of higher copper price, as noted in the explanation in the middle.

Gross profit of Smelting and Refining segment is JPY 81.7 billion, up JPY 39.7 billion. Improvement from corporate entity is 18.4 billion, and nickel entities is JPY 17.8 billion, respectively. Higher nickel and cobalt prices made a big contribution and inventory valuation improved in both copper and nickel entities.

As for others, improvements mainly came from concentrated sulfuric acid in copper and from exchange rate in nickel. Page 4 on top shows net sales of materials business by product group. Net sales of battery materials increased by JPY 29.4 billion to JPY 96.4 billion against the backdrop of demand recovery and the upturn. Powder Materials sales increased by JPY 13.4 billion to JPY 39.8 billion as strong demand continued.

Page 4 in the middle, equity in earnings of affiliated companies. It increased by JPY 41.3 billion to JPY 41 billion. Production and sales of Sierra Gorda went up year-on-year and with stronger copper price, earnings improved by JPY 15.8 billion to JPY 18.6 billion.

Equity method no longer applies to Sierra Gorda from Q3. That's this figure shown only covers to result until Q2. Though Q3 cumulative increased by JPY 15 billion year-on-year to JPY 8.2 billion.

Please turn to Page 5. Comparison between the latest revised FY '21 forecast in November. Please note the figures are rounded to the nearest billion. Gross profit of Mineral Resources segment is projected as JPY 91 billion, up JPY 8 billion. As noted on the table in the middle, improvements attributable to price differentials of overseas copper mines mainly Morenci and higher metal price and unit cost differentials.

Gross profit of Smelting and Refining segment to be JPY 100 billion, up JPY 13 billion. As noted at the bottom, corporate entities is expected to turn better by JPY 8.6 billion, in nickel by JPY 2.6 billion. Taganito and CBC record production and sales decline, thereby quantity and cost differentials deteriorate. On the other hand, price difference in nickel and inventory valuation of both copper and nickel contribute to large improvement.

Page 6 on top shows net sales of Materials segment by product group segments overall net sales projected as JPY 276 billion, up JPY 1 billion from the latest -- last forecast, excuse me. Steady production and sales continue in battery materials and on the back of higher metal prices, net sales projection to be JPY 134 billion, up JPY 4 billion from the last forecast whereas powder materials recorded JPY 51 billion, slightly falling short of the November forecast.

About equity method earnings of affiliates on Page 6. On table below, please note the figures are around the near JPY 0.5 billion. Cerro Verde increases by JPY 2 billion on higher copper price, Candelaria, a beneficiary of higher metal price also gains from quantity and cost differentials due to production and sales increase, projecting JPY 2.5 billion improvement.

Overall, equity method earnings goes up by JPY 7 billion to JPY 53 billion in the current forecast. So we're going to spend about 30 minutes for Q&A.

[Daiji Toyama, executive]

[Operator Instructions] First of all, I would like to ask Mr. Yamaguchi from SMBC Nikko to ask us questions.

[山口 敦 (やまぐち あつし), analyst]

This is Yamaguchi speaking. Can you hear me? Gross profit in the third quarter to the fourth quarter, it is expected to go a little lower. And what is the background for this forecast?

Well, Ishikari production and the copper price is also estimated to be lower in the fourth quarter. So please explain the background behind this. The lower fourth quarter gross margin -- gross profit -- can I continue?

[Daiji Toyama, executive]

Yes, please.

[山口 敦 (やまぐち あつし), analyst]

My second question is on Page 1 at the bottom. The -- there is a comparison between the old and new forecast -- and in others, well, the JPY 10.9 billion higher, and you talked about the concentrated sulfuric acid, but it looks a little large. So could you please explain what is meant by these others?

And in the fourth quarter in the market, well, the overseas market, the year ended in December and compared to the book value, for example, nickel price, your assumption is lower than the book value. So if this market continues, well, nickel and cobalt, do you expect the higher pricing towards the end of the fiscal year? So these are the 3 questions I have.

[Daiji Toyama, executive]

Thank you very much, Mr. Yamaguchi. Then your first question about the forecast of the gross profit in the fourth quarter, which is lower compared to the actual year gross profit. In the third quarter, please look at Page 13 of the supplementary explanation, if you could talk on Page 13. From the third quarter to fourth quarter, well, the -- so the -- there was a difference of JPY 17.1 billion from a JPY 66.2 billion to JPY 49.1 billion, and the JPY 8.1 billion lower in the smelting and the adjustment of JPY 7.1 billion.

And JPY 8.1 billion smelting and refining this difference. It is mainly because of the pricing of nickel and the inventory valuation of nickel. In the adjustment, JPY 7.1 billion, which is lower than the third quarter. In the third quarter, well, the unrealized gains between the segments was post debt and the amount was rather large in the third quarter and exchange the profit and loss.

That was also large in the third quarter. So that makes the fourth quarter number look a little lower and the -- that explains the major part of the JPY 17.1 billion, which is the difference between third quarter and the fourth quarter.

And Page 1 at the bottom, other. So the JPY 10.9 billion for others, so that's another question. So what I mentioned earlier was that the factors which are not included in the middle metal price and exchange, well, the one major item is related to equity method companies. And also the byproducts like the safe assets, which turned positive, that's another impact, which is included in others.

And also in the previous forecast, Well, some of the risk factors were looked at from the very conservative point of view, but these factors are not included in the updated forecast. So that's also part of the factors included in the others.

[Unknown Executive]

Thank you, very much. And this is Shimizu speaking. In response to the third quarter, our forecast for the market. $9,000, that is the price assumption for the copper. And from January to March, the economic condition and the change is unlikely among countries. And the those market condition is expected to continue.

And the -- so the -- after achieving the record price, well -- well, the 105 to 8700 -- but that's what we assumed. But the core range is between 1,680 and 1,830. And the median is explained between these numbers. As for Niko, supply side is increasing the NPI production, but the demand side the user side is the growing the battery business and the stainless steel business. So the short supply shortage in 2021 was the featured for the year 2022.

Well, the tightness will be released on the relaxed -- so the $8 and $5 is the assumption we have. And the current price is higher than this. If this continues, then the price sensitivity, if you could use the price sensitivity is going to be the upside for our accounts.

[Daiji Toyama, executive]

So Matsumoto, Nomura Securities.

[松本 裕司 (まつもと ゆうじ), analyst]

This is Matsumoto from Nomura Securities. Thank you for the question. First is about Tania. So the impact of the power outage. Is it going to be impacting to the fourth quarter? If so, how much impacted should I expect?

In principle, is it right to understand that this is going to be resolved in a short period of time? Second question is about Cora Bay. The shortage of materials which is something unheard of. And what's the backdrop against it. Third point, as according to the presentation of Toyama-San, regarding the materials, the upturn of the quotes on price difference on Page 1, at the bottom? Is it a difference caused by the applied price difference? Or it has a different significance? That's it.

[Unknown Executive]

Thank you for the question. So THPAL trouble, CBNC shortage up materials and Materials segment increase of profit, increase between old and new forecast are the questions. So first of all, Taganito trouble has been explained, the Typhoon '22 triggered the power outage in December.

So it's a temporary trouble. Having said that though this impact of the production cut back is anticipated into the fourth quarter. Second is about CBNC Surgeon materials or specifically the limestone related material is casing point. But that's only temporary. And currently, the issues being resolved.

Third point, I talked about a difference in quotation price. But in principle, as you rightly pointed out, the difference between liquidity and prices, but we supply price difference just relating to the improvement of the performance. So TH Power impact demand quantity and other cost that incorporated the downturn through the quantity difference in cost differentials of nickel, the negative factors those were being included and the portion is quite significant in this regard.

[Daiji Toyama, executive]

Next, From Daiwa Securities, Ms. Ozaki, over to you.

[Shinichiro Ozaki, analyst]

This is Ozaki from Daiwa Securities. Can you hear me?

[Daiji Toyama, executive]

Yes, please go ahead.

[Shinichiro Ozaki, analyst]

First question is about the materials business. In the fourth quarter, profit before tax appears a little low according to your forecast. Is it because of the price difference in the inventory? Could you please explain? And I'm looking at Page 13 of the supplementary explanation. And my second question is in Sierra Gorda, the gain from the sale was a raise from JPY 70 billion to JPY 74 billion.

And what is to be distributed as a dividend? The gain from the sale. According to the previous telephone call, of the JPY 74 billion, the rest, JPY 45.4 billion, that is the amount we should use for the distributable amount. But the -- so can we just go ahead and deduct the same amount, JPY 45.4 billion from JPY 74 billion?

[Unknown Executive]

Yes, so the first question is about the profit before tax. For the Materials business and reduction from the third quarter to fourth quarter of that item, that's your first question. In the third quarter to the fourth quarter, the battery materials, powder materials or the profit before tax goes down. badly materials and the powder materials as well as other functional materials. And they are profit before tax, they will go down.

Well, as for the base, the negative is it happens from the third quarter to fourth quarter because of the difference in the sales and selling and the buying prices. And the further material, some of the products in the Powder Materials segment. Well, there is some sluggishness in the market expected in the fourth quarter, and that is reflected on our forecast. And your second question, basically, your understanding is correct.

So from JPY 70 billion, and this is about the profit before tax level. So previously, JPY 70 billion and IAS, the number 28, that is accounting procedures that we conducted. And we reduced the opening balance of the retained earnings. And also, there was a reversal of the allowance for bad debt. So that amount is to be deducted. And that amount is not distributable as a dividend. So that's the explanation we gave you previously. And the basic idea remains the same this time.

[Shinichiro Ozaki, analyst]

That means, so what is to be deducted? So the JPY 45.4 billion is to be deducted from JPY 74 billion not paying attention to the difference of exchange rate.

[Unknown Executive]

You're right. Well, the actual amount is not fixed yet. But the idea is the same and the amount will be deducted. It remains the same.

[Shinichiro Ozaki, analyst]

Understood. And badly materials, is it because of the reduced the automotive production volume? Is it also included in the fourth quarter profit before tax number?

[Unknown Executive]

Well, talking about the battle business, but the material business. Well, the sales and the production -- well, we do not expect reduction in the production and the sales.

[Daiji Toyama, executive]

So Morgan Stanley, MUFG Securities, Shirakawa-San.

[白川 祐 (しらかわ ゆう), analyst]

This is Shirakawa from Morgan Stanley. Can you hear?

[Daiji Toyama, executive]

Yes, we can.

[白川 祐 (しらかわ ゆう), analyst]

I have 2 questions. First, is about between second quarter and the third quarter, the change of the profit in each segment. I'm referring to Page 13 of the material, particularly the middle resources and noting and refining the profit declines. What's the background against it.

Second, is kind of a big picture question very lately that the crude oil price has been on the rise and the increase of cost is being expected. And how that being reflected into the latest forecast? If not, do you think that you're going to incorporate that risk into the business performance?

Page 1, in particular, and the comparison between the for the latest in the previous forecast, JPY 2.5 billion is being reduced, the Kandarian, MCBNC declined. So that's a plus and minuses impact -- so those minuses -- how much of it comes from the cost increase or input cost increase in for the energy cost to another -- thank you. So first question is about the change of the segment profit decline between second quarter and the third quarter. Is that right?

[Unknown Executive]

That's right. Okay. So first of all, when it comes to Mineral Resources segment, is Kari volume, let's refer to Page 7. Let's say a negative figure being posted. And that's a large figure, that's a volume difference negative I'm talking about. smelting and refining segment. And there is a decline in sales in the third quarter.

In comparative terms between 32nd to third quarter and that decline in the third quarter is incorporated into comparative analysis major reasons is the one that I just talked about increase of cost. The crude oil price, in particular oil, electricity Quantitative Impact is not being incorporated in these figures on the materials, but a part of the logistics-related input cost is being impacted.

[Daiji Toyama, executive]

Next from Mr. Goroh from UBS Securities.

[Harunobu Goroh, analyst]

This is Goroh from UBS Securities. I have 3 questions. First of all, about the market and also related to smelting and refining in others. You talked about the exchange rate impact as well as safer asset and PGM-related factors. So if you have a quantitative the breakdown of these factors, I appreciate it.

Second question is related to Mr. Shirakawa's question earlier, the idea about the cost. And for next fiscal year and onward, well, the resource major companies. They are introducing the renewable energy and also the solar pave utilization and the -- many of these actions will be taken. And particularly in Latin America, well, that is the trend the same in that region, well, the end towards carbon neutrality.

So I would like to invite your view on this point. In the core equity to be acquired from the other companies that was talked about in December. And this is included in the consolidated account. So what is your intention here? And what kind of transaction the was it? So could you please explain more about that transaction? These are 3 questions.

[Unknown Executive]

So first question is about the factors included in the others and the quantitative the breakdown quantitative impact. And as a PGM, exchange rates for acid and the PGM. And so your question is related to our updated forecast. Yes. For example, the third quarter year-to-date, if you could explain about these factors up to third quarter.

Yes, third quarter or the year-to-date impact of the exchange rate. Please look at Page 4 at the bottom of Page 4. Main changes in financial income costs and others are JPY 4.1 billion for the financial income and the negative JPY 1.8 billion for other income Well, the last year, there was the exchange loss last year, but this year it's going to be a gain. Well, so the difference between the last year and this year is JPY 9.2 billion.

So these are the financial income and costs, main changes. And also, the JPY 3.1 billion, that is another factor related to the exchange rate. That's the impact of a weaker yen depreciation of the yen. So they are combining these 2, the impact was -- total impact was about JPY 10 billion.

And as for sulfuric acid as for the specific amount, we are not disclosing it -- but actual and forecast -- for both of them, well, the significant positive impact was experienced because of the increase in the price of sulfur this year, sulfuric acid, it gave us the positive impact upside -- positive impact. As for PGM perm upside was not so significant -- and the second question is about the cost idea of the cost towards the carbon neutrality.

[Harunobu Goroh, analyst]

So what's going to happen next year and onward for the carbon neutrality actions the company is going to take?

[Unknown Executive]

Yes, this is about the next year. And actually, last -- next week, we have an announcement of our next midterm plan. And our activities towards carbon neutrality will also be explained on that occasion. So please wait until that announcement meeting.

[Harunobu Goroh, analyst]

Okay. And the third question is about the CDC, the acquisition of the equity, which was released.

[Unknown Executive]

As for the impact -- as for the selling and purchasing price, 18% of the outstanding shares and JPY 9.5 billion for the 2 companies. So the total is JPY 19 billion, and we acquired these shares. And impact on our performance. is not going to be very big, limited impact on our performance.

And the purpose of this additional acquisition First of all, well, the at the CMC, we intend to operate CBNC on a long-term basis. So that's the fundamental approach for the middle as well smelting and refining, we are going to solidify this business, and we intend to continue this business and to make sure that we are going to operate on the long term, basis, we decided to buy the shares acquired the shares of these entities.

[Harunobu Goroh, analyst]

Just to confirm this, -- in terms of -- well, there is no impact on the volume of the ad or the quantities like offtake agreement?

[Unknown Executive]

No. So no particular impact on the quantity of operation there.

[Daiji Toyama, executive]

So it seems that there is no question anymore, so it's about time. We are going to end the Q&A session. So on that note, we are now wrapping up the call. Thank you so very much.

So recording of this earnings call is available until March 1, you may find a full number in the e-mail we sent to confirm your registration. Thank you very much again for your participation in the briefing. This concludes the call. You may hang up.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]