COSMO REPORT 2020 COSMO ENERGY HOLDINGS - COSMO ENERGY HOLDINGS CO., LTD.
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COSMO ENERGY HOLDINGS
COSMO REPORT 2020
COSMO ENERGY HOLDINGS CO., LTD.
Corporate Communication Department/Sustainability Initiative Department
1-1, Shibaura 1-chome, Minato-ku, Tokyo 105-8302, Japan
Phone +81-3-3798-3180 Fax +81-3-3798-3841
Cosmo Energy Group Management Vision
Desired types of energy change. In striving for harmony and symbiosis between our planet, people and society,
We dedicate all our strengths to responding we aim for sustainable growth towards a future of limitless possibilities.
to this change.
Harmony and Symbiosis Creating Future Values
The Cosmo Energy Group will strengthen its financial condition by increasing profitability of the Oil Harmony and Symbiosis with the Global Environment Creating the Value of “Customer First”
Exploration and Production Business and the Petroleum Business. Harmony and Symbiosis between Energy and Society Creating Value from Diverse Ideas of the Individual
Harmony and Symbiosis between Companies and Society Creating Value by Expressing Collective Wisdom
From the perspective of long-term changes in the business environment, the Group will also expand
its business portfolio by actively investing in the Renewable Energy Business and increasing the
Brand Statement
competitiveness of the Petrochemical Business.
“Filling Up Your Hearts, Too.”
01 COSMO REPORT 2020 02
Cosmo Energy Group’s Value Creation Strategy and Achievements Message Financial Analysis Business activity Sustainability Data
History of Value Creation
Thirty-four years have passed since the establishment of Cosmo Oil and the start of the Cosmo Energy Group.
Amid a variety of environmental changes, the Cosmo Energy Group’s mission of a safe and stable energy
Related to all businesses Related to the Petroleum Business Related to the Renewable Energy and Other Businesses
supply remains unchanged and the Group aims to contribute to society.
Related to the Oil E&P Business Related to the Petrochemical Business
1933 1985 1986 2006 2007 2012 2013 2020
Birth of a new Cosmo Oil toward a Prospects for a New journey as the
Prologue to Cosmo Oil new development stage new growth path Cosmo Energy Group
Became unwaveringly competitive despite rough waves of Damage and reconstruction from the March 2011 Striving to grow based on the Group’s established business
Daikyo Oil and Maruzen Oil started operation.
liberalization. Earthquake. base and contributing to a sustainable society.
Corporate Origin
1933 Maruzen Oil established.
1984 “Cosmo Oil” (Refining) 1986 Cosmo Oil established. 2015 Cosmo Energy Holdings established.
established.
1939 Daikyo Oil established.
1989 Asian Oil merged into Cosmo Oil to form
an organization of four refineries.
1933 Maruzen Oil established. 1986 Cosmo Oil established through tripartite merger 2007 Business alliance formed with IPIC (currently MIC). 2013 Sakaide Refinery closed, becoming an organization of
of Daikyo Oil, Maruzen Oil and former Cosmo Oil three refineries.
1939 Daikyo Oil established. 2007 Japanese education program launched in the UAE.
(Refining). 2013 Hyundai Cosmo Petrochemical started commercial
1943 Yokkaichi Refinery constructed. 1986 Office in Abu Dhabi opened. 2008 Full-scale entrance made into the petrochemical operation of new paraxylene manufacturing unit.
business. Hyundai Cosmo Petrochemical established.
1944 Matsuyama Refinery constructed. 1986 Cosmo Service Stations redesigned. 2014 Strategic comprehensive alliance entered into with
2010 Shares of Eco Power acquired and full-scale entrance CEPSA.
1963 Chiba Refinery constructed. 1989 Asian Oil merged into Cosmo Oil to form an made into the wind power generation business.
2015 Business alliance entered into with Showa Shell
organization of four refineries.
1968 Sakai Refinery constructed. 2010 Delayed coker unit started operation at Sakai Refinery. (currently Idemitsu Kosan).
1997 Qatar offshore concession area acquired and Qatar
1968 Abu Dhabi Oil established. 2010 Started the automobile leasing business Cosmo 2015 Cosmo Energy Holdings established.
Petroleum Development established.
Vehicle Lease*. 2016 Maruzen Petrochemical becomes a consolidated
1972 Sakaide Refinery constructed. 1997 “Filling up your hearts, too.” adopted as corporate
The Cosmo Energy Group’s History
2011 Fire and explosion accident at Chiba Refinery, due subsidiary.
message.
1984 Cosmo Oil (Refining) established. to the Great East Japan Earthquake.
1997 IPP business entered. 2017 The Hail Oil Field production started.
2011 Construction of mixed-xylene distillation unit
1999 Business alliance formed with Nippon Mitsubishi Oil 2018 Fuel conversion work at the Yokkaichi Kasumi Power
completed at Yokkaichi Refinery.
(currently ENEOS). Plant completed.
2012 Abu Dhabi Oil’s new concession agreement entered
2000 LNG business entered. 2018 Joint company Chiba Arkon Production Limited
into force.
established by Cosmo Energy Holdings, Maruzen
2004 Wind power generation started in Sakata City. 2012 Operation resumed at Chiba Refinery’s No. 2 Crude
Petrochemical, and Arakawa Chemical.
Distillation Unit (CDU).
2005 Full-scale entrance made into mixed-xylene business 2018 Sale of electricity started at Cosmo Denki (Electricity).
and CM Aroma established. * Currently Cosmo My Car Lease
2018 Fiftieth anniversary of Abu Dhabi Oil celebrated.
2006 Construction of delayed coker unit started at Sakai
Refinery. 2019 Eco Power becomes wholly owned subsidiary,
renamed Cosmo Eco Power.
Yokkaichi Refinery Chiba Refinery
Sakaide Refinery Sakai Refinery Cosmo Service Station redesigned Corporate logo for “Filling up your Offshore oil collection base for oil Delayed coker unit at Sakai Refinery Maruzen Petrochemical’s Chiba Plant Wind power generation
hearts, too.” development
03 COSMO REPORT 2020 04
Cosmo Energy Group’s Value Creation Strategy and Achievements Message Financial Analysis Business activity Sustainability Data
Value Creation Model
As an integrated energy company, indispensable in people’s daily lives, the Cosmo Energy Group aims to
solve social issues through its business activities.
Environmental Challenges
and Social Issues Inputs Cosmo Energy Group’s business activities Outcomes
Consolidated Medium-Term Management Plan
Number of employees (consolidated) 6,846
Average number of temporary workers 3,169 Social value
Human capital * As of March 31, 2020
Mega-trends in the Consolidated Medium-Term Consolidated Medium-Term CSR
energy business Operational Management System (OMS) as a basis for Management Plan Management Plan Stable energy supply to society
P 09 P 13
safe operation and stable supply
Accelerating shift from fossil fuel Safety and
technology capital
Expanding production of clean
Paris Agreement
(greenhouse gas reduction) Our business activities energy, mainly around wind
Fourth Industrial Revolution power generation
(IT technology innovation) Crude oil processing capacity 400,000barrels/day
Accelerating dissemination of Operating rate of refineries April 1, 2019 to March 31, 2020 CD-based 87.9%
Four business segments
electric vehicles (EVs) Offering value that supports car-life,
Number of service stations As of March 31, 2020 2,755 mobility and the lives of people
Crude oil production Approx.51,000barrels/day Oil Exploration Renewable
FY2019 result Petroleum Petrochemical
(Comparison with refining capacity: Approx. 13%) and Production Energy and Other
Business Business
Petrochemical production capacity As of March 31, 2020 Business Businesses
Manufactured
Olefinic production capacity Ethylene 1.29million tons/year
P 33 P 37 P 41 P 45
capital Aromatic production capacity Para-xylene*1.36million tons/year Outputs
*As of July 31, 2020
Benzene 0.74million tons/year
Global mega trend Mixed-xylene 0.62million tons/year
Increase in global population Wind power plant capacity As of July 31, 2020 266,000kW Economic value
No. 3 in Japan and 7% domestic share Our business base
Climate change and global (FY2022 targets in the Sixth
warming Medium-Term Management Plan)
Low energy self-sufficiency rate Number of Cosmo the Card holders 4.21million cards
As of March 31, 2020
Sustainable management P 51
Pandemic
Cosmo My Car Lease As of March 31, 2020 Cumulative total 73,634cars
Diversity & inclusion Ordinary income
Carlife Square App membership As of March 31, 2020 1.92million members Promotion of environmental Fulfillment of human rights and
Consideration for human rights E S (excluding impact of inventory valuation)
Social and measures social contribution measures
relationship capital
Friendly relationship with oil-producing countries Approx. 50years
Thorough implementation of
Over ¥ 120billion
Corporate brand awareness 98.4% G G Enhanced governance structure
Surveyed 1,239 individuals, 18-64 years old, who visited a service station by car in the previous month (as of October 30, 2017) safety measures Profit attributable to owners of parent
Over ¥ 50billion
Crude oil reserves 160million barrels
Total energy consumption FY2018 results
(equivalent to approx. 17years of supply)
744,623TJ
Our values Net worth Over ¥ 400billion
Natural capital
Japan’s mega-trend Wind power, sunlight and other natural energy
Brand statement Filling up your hearts, too. Free cash flow Over ¥ 150billion
Expansion of the sharing economy (FY 2018 - FY 2022, five years total)
Growth in demand for renewable
¥1,639.8 billion Cosmo Energy Group Management Vision
energy Total assets Net D/E Ratio 1.0~1.5times
Aging society and declining Net assets ¥ 362.8 billion In striving for harmony and symbiosis between our planet, man
working population
Financial capital Free cash flow ¥ 27.5 billion
and society, we aim for sustainable growth towards a future of
limitless possibilities.
ROE 10%
Over
(FY2019 results)
05 COSMO REPORT 2020 06
Cosmo Energy Group’s Value Creation Strategy and Achievements Message Financial Analysis Business activity Sustainability Data
Realizing the Cosmo Energy Group Management Vision and
CONTENTS “Filling Up Your Heart, Too.” Our Activities
The Cosmo Energy Group is engaged in the stable supply of energy to Every day we are dedicated to activities that “Fill Up Your Heart, Too,”
create an affluent society for “Filling Up Your Heart, Too.” for all stakeholders of the Cosmo Energy Group.
Cosmo Energy Group’s Value Creation Business Activities
01 Cosmo Energy Group Management Vision 29 Cosmo Energy Group’s Business 37 Petroleum Business
03 Value Creation Model 31 Business Overview 41 Petrochemical Business
05 History of Value Creation 33 Oil Exploration and Production Business 45 Renewable Energy and Other Businesses
Strategy and Achievements
Sustainability
09 Outline and Progress of the Consolidated Medium-Term Management Plan
51 Cosmo Energy Group’s Sustainable Management 65 Strengthening Corporate Governance Structure
11 Materiality and SDGs
53 Engagement with the Environment 67 Corporate Governance
13 Consolidated Medium-Term CSR Management Plan
57 Engagement with Employees 69 Directors and Executive Officers
15 Major Key Performance Indicators (KPI) Used as Targets
59 Engagement with Society 71 Messages from Outside Directors
63 Ensuring Safety Measures
Messages
17 Message from Representative Director, Group CEO
23 Message from CFO
Data
73 Eleven-Year Selected Financial and Operating Data 79 Consolidated Management Indicators
75 Consolidated Balance Sheet 80 Share Information
Financial Analysis 77 Consolidated Statements of Income and Comprehensive 81 Corporate Data
Income
25 Business Results & Forecast, Cash Flow Situation, and Analysis of
78 Consolidated Statements of Cash Flow
Financial Position
07 COSMO REPORT 2020 08
Cosmo Energy Group’s Value Creation Strategy and Achievements Message Financial Analysis Business activity Sustainability Data
Progress of the Consolidated Medium-Term Oil&New Long-Term
Direction
The previous medium-term management plan was positioned as “five years to
Management Plan (FY2018-FY2022) establish a solid business foothold for further expansion.” Under this plan, we made
In view of the transition to a fossil-fuel-free society,
structural improvements, such as improving the profitability of the oil refining and shift the focus to the renewable energy business
Under the slogan “ ” the sixth five-year consolidated
sales business, as a leading initiative, and rationalizing the supply division. through active investment while increasing the
management plan (the sixth management plan) began in FY2018. The sixth management plan is based on the profit foundation established in the fifth competitiveness of petroleum-related businesses.
By increasing our earnings power and improving our financial condition, we aim to achieve a net worth that plan. We are continuing the fifth plan’s main initiative of improving the profitability of Contribute to the achievement of SDGs
can sustain us over changes in the market environment and a net D/E ratio of 1.0 to 1.5 times. We also strive the oil refining and sales business (Oil) as well as advancing growth investment in through the sustainable growth of the
to enhance our future growth drivers, mainly focusing on the Petrochemical Business and the Wind Power the wind power generation business and the petrochemical business (New) with Cosmo Energy Group.
Generation Business. the aim of expanding the business portfolio, which anticipates no use of fossil fuel.
The Fifth Consolidated Medium-Term
Management Plan’s Main Initiatives
Basic policy The Sixth Consolidated
Recovery in profitability Medium-Term
Closed the Sakaide Refinery and shifted to a
Increase the profitability of the petroleum business, for example, by
three-refinery structure, as part of rationalization,
Management Plan
complying with the IMO1 regulations on use of high-sulfur C fuel oil
Oil and taking the lead in the supply of clean marine fuels.
to ensure competitiveness.
Execution of growth strategy
The Consolidated Medium-
Term CSR Management Plan Improve the business portfolio for subsequent growth in view of
Strengthen the financial condition based on earning power. Executed large-scale growth investment (the Hail the long-term direction.
Oil Field, para-xylene plant, and new wind power The Sixth Consolidated
plants) Medium-Term Management Plan Strengthen the financial foundation by increasing the
Invest in wind power generation and other businesses that will
New lead the next growth stage. Restored profitability in the Fifth Plan, which led Goal 2022 profitability of the Oil E&P and Petroleum businesses.
to new investments in the sixth management plan
Contribute to the achievement of SDGs2 through business activities.
1
An air pollution preventive measure for reducing ships’ emissions of sulfur oxide (SOx)
adopted by the International Maritime Organization (IMO) that requires the reduction of
sulfur content in marine fuel oil from 3.5% to 0.5% from the beginning of 2020.
2
The Sustainable Development Goals (SDGs) were adopted by 193 member countries at
the United Nations Summit in September 2015.There are 169 targets for 17 goals, to be
achieved in 15 years, from 2016 to 2030.
The Fifth Consolidated
Medium-Term
Secure profitability to enable reinvestment
Management Plan
Expand growth drivers with a future orientation
FY2013 - FY2017
Improve financial condition
Strengthen the group management foundation
Realignment of the Business Portfolio
In view of the transition to a fossil-fuel-free society, shift the focus to the renewable energy business through active Progress of Management Goals
investment while increasing the competitiveness of petroleum-related businesses. Management Goals FY2018 FY2019 FY2022 In FY2019, the second year of the sixth management plan, ordinary
Contribute to the achievement of SDGs through the sustainable growth of the Cosmo Energy Group. Ordinary income income, excluding the impact of inventory valuation, decreased by
(excluding the impact of ¥107.4billion ¥ 68.5billion Over ¥120 billion ¥38.9 billion from FY2018 to ¥68.5 billion, due to a decline in oil
inventory valuation)
A Possibility of peak out after 2030 B Domestic onshore sites are mostly occupied
Strength
prices and oil product margin deterioration, caused by the effects of
Cost competitiveness is key but offshore expansion is possible Profit attributable to
A Renewables ¥ 53.1billion ¥ -28.2billion Over ¥ 50 billion the COVID-19 pandemic.
Sixth Maximize onshore owners of parent
Sixth Maintain production level & reduce (wind power)
MTMP* OPEX MTMP* Expand to offshore A decline of ¥52.2 billion in the inventory valuation, driven by lower
Over ¥150 billion
Oil Free cash flow ¥ 6 billion ¥ 27.5billion oil price, resulted in recording loss attributable to owners of the
Long Become one of the core businesses (FY2018 - FY2022 Five years total)
Long Seek added-value projects utilizing E&P New
term the Company’s strengths term Aim to be a domestic leading company in Business
B parent of ¥28.2 billion, down ¥81.3 billion in profit from FY2018.
Net worth ¥ 281.1billion ¥ 239.8 billion Over ¥ 400 billion
offshore wind power generation (exploration) (Net worth ratio) (16.5%) (14.6%) (Over 20%) The COVID-19 pandemic affected and deteriorated management
C Domestic demand will continue to D International markets are growing based on an increase
Oil Refining Net D/E Ratio* 1.98times 2.41times 1.0 to 1.5times indicators for FY2019 year on year. In the meantime, we anticipate
decline, but relative competitiveness will in the global population Petrochemicals
and Sales Integration that the temporary impact of the COVID-19 pandemic on profit
increase until around 2030 Ethylene production to maintain competitiveness ROE 20.4% -10.8 % Over 10 %
Able to swing from petroleum fuel
decline will gradually dissipate in FY2020. Therefore, we are
Sixth Focus on profitable products Threat Opportunity
MTMP* Strengthen synergy with the Precondition projecting ¥30 billion in ordinary income excluding the impact of
Sixth Strengthen competitiveness in global market
petrochemical business MTMP* Development of differentiating products C D Dubai crude oil price inventory valuation and ¥14.5 billion in profit attributable to owners
69 60 70
Weakness
Long Shift from petroleum fuel to Synergy with oil refining business
[Example]
(USD/B) of the parent.
term petrochemical feedstock Exchange rate We will continue steady implementation of the measures of the
Long Shift from petroleum fuel to
term petrochemical feedstock Now Future (Yen/USD)
111 109 110
sixth management plan, aiming to achieve the plan’s goals.
*MTMP:Medium-Team Management Plan *The bubble size is a conceptual image. * Concerning the ¥30 billion hybrid loan made on March 31, 2020, 50% of this loan is included in Equity.
09 COSMO REPORT 2020 10
Cosmo Energy Group’s Value Creation Strategy and Achievements Message Financial Analysis Business activity Sustainability Data
Materiality and SDGs
Recently, companies must address a wide range of social As a company whose public mission is to supply continual, safe, its business activities. According to the materiality, we develop We are committed to focusing on initiatives related to materiality
issues, including climate change, resource depletion, and other and reliable energy, which is indispensable in society, the Cosmo goals and action plans, and promote activities. By doing so, we and contributing to the realization of SDGs, as a guideline
environmental issues as well as issues regarding human rights Energy Group has identified materiality (priority issues) to work aid in solving social issues and simultaneously strengthen our in realizing sustainable growth as declared in the Group’s
and labor, among others. on in view of the mega trends, to solve social issues through corporate competitiveness. Management Vision.
The Sixth Management Plan’s Basic Policy
Environmental Challenges and Social Issues Materiality and Priority Measures Related SDGs
Secure a system of safe, stable operation in the oil refining business Reduce CO2 emissions of the entire
supply chain
Accelerating shift from fossil fuel Secure profitability Take action ahead of the IMO regulations
Paris Agreement (greenhouse gas reduction) to enable Strengthen the Vehicle Life business
E Reduce environmental pollutants and work on
resource circulation
Fourth Industrial Revolution (IT technology reinvestment Achieve synergy with the petrochemical business Enhance disaster response capacity
innovation) Steadily recover the investment in the Hail Oil Field
Mega-trends in Accelerating dissemination of electric Promote the health of employees and reduce
the energy business vehicles (EVs) Strengthen competitiveness in the petrochemical business and
long working hours
Expand growth increase its product-line
drivers with a Early development of offshore wind power generation S Support the empowerment of diverse
personnel and long-term career development
future orientation Explore new businesses for future growth in the domestic and
Improve customer satisfaction
overseas markets (Asia and Abu Dhabi)
Increase in global population
Climate change and global warming Increase shareholders’ equity based on profits Prevent work-related accidents and major
Low energy self-sufficiency rate Improve financial Strengthen cash management G accidents
condition Prevent serious quality-related accidents
Careful selection of investments with an eye on the long-
Pandemic
term environment
Global Diversity & inclusion
Risk management, fraud prevention
mega trend Consideration for human rights Implement sustainable management
Consolidated Medium-Term CSR Management Plan
G Disclose information to stakeholders
Refer to page 13 for details
Promoting environmental measures
Enhancing human rights & social contribution measures
Strengthen the To achieve sustainable growth as declared in the
Ensuring safety measures
Management Vision of the Cosmo Energy Group,
Expansion of the sharing economy group management Strengthening corporate governance structure
we aim to solve social issues through our business
Growth in demand for renewable energy foundation activities, which are responsible for supplying
Increase productivity through work-style and operational energy to support people’s daily lives. We respect
Aging society and declining working
innovation the 17 SDGs as a guideline, select the above goals
Japan’s population
Promoting diversity as priorities related to our business, and proactively
mega-trend
Thoroughly increased operation efficiency using robotic process work on them.
automation (RPA) and AI
The United Nations Global Compact* Principle Support and respect of human rights
Principle Precautionary approach to Enhancement of sustainable management
Human 1:
Rights 7: environmental challenges
We signed the United Nations Global Compact in 2006 and use its Ten Principle Not complicit in human rights abuses Based on the conviction that earnest efforts to address materiality will lead to achieving the
2:
Principles as a reference in recognizing social issues. Freedom of association and Principle Initiatives to promote greater sixth management plan’s goals and contribute to solving social issues, we intend to review our
Principle recognition of the right to collective Environment
8: environmental responsibility organization, systems, and other aspects to enhance sustainable management.
3:
bargaining
In addition, in executing strategies to realize the Group’s Management Vision and achieve the sixth
Principle Elimination of forced and compulsory labour Principle Development and diffusion of
Labour 4: 9: environmentally friendly technologies management plan, we continue to examine the importance of the materiality from the perspective of
* The United Nations Global Compact: Initiatives addressed by the UN Principle Effective abolition of child labour our company and society to meet the needs of the times.
Secretary-General to businesses at the World Economic Forum in 1999. 5:
Anti- Principle Work against corruption in all its We plan to conduct interviews within and outside the company and report to the Board of Directors.
Companies are encouraged to comply with the Ten Principles concerning Principle Elimination of discrimination in respect corruption 10: forms, including extortion and bribery
human rights, labour, environment, and anti-corruption. 6: of employment and occupation
11 COSMO REPORT 2020 12
Cosmo Energy Group’s Value Creation Strategy and Achievements Message Financial Analysis Business activity Sustainability Data
The Consolidated Medium-Term
CSR Management Plan (FY2018-FY2022) Board of Directors
To achieve sustainable growth as declared in the Group’s Management Vision, the Cosmo Energy Group has developed the Consolidated
Medium-Term CSR Management Plan (FY2018– FY2022; the CSR plan) in line with the Sixth Consolidated Medium-Term Management Plan. Executive Officers’ Committee
The CSR plan has identified materiality from the perspective of ESG (environmental measures; human rights and social contribution measures;
safety and governance) and set KPIs as specific targets. We strive to achieve these targets through our business activities, thereby contributing
to the realization of SDGs by our entire group.
Cosmo Energy Holdings
Reporting of measures Internal Control Committee
Direction and Materiality of the Consolidated and results
Medium-Term CSR Management Plan
E S
Safety and Risk Management Committee Environmental and Social Initiatives Committee
Promoting environmental Enhancing human rights & Chairperson: Vice Chairperson: Officer in charge of Corporate Vice Chairperson: Officer in charge of Corporate
In promoting group-wide comprehensive,
Officer in charge Planning Dept. Planning Dept.
efficient and sustainable management, we measures social contribution measures
of Sustainability
Corporate Ethics and Human Rights Committee Information Disclosure Committee
have established four committees in charge of Initiative Dept.
PDCA cycle Vice Chairperson: Officer in charge of Human Resource Vice Chairperson: Officer in charge of Corporate
ESG promotion initiatives to handle safety, risk
evaluation and and General Affairs Dept. Communication Dept.
management, human rights, the environment, and instructions for
other issues. Each of these committees runs a improvement
PDCA cycle – from planning for a single year and G
the long term to doing, checking, and acting – to Ensuring safety Strengthening corporate
measures governance structure Core and semi-core companies
achieve continual improvement.
Cosmo Energy Group CSR Customer
Safety Risk
Promotion Liaison Meeting Satisfaction (CS) and
(Environmental) Management
Cosmo Energy Holdings Management Quality Assurance
CSR plan control Committee Committee
Sustainability Initiative and operation Committee
and promotion
organization
Department
Materiality Target Progress and future plan Materiality Target Progress and future plan
Reduction of CO 2 emission reduction Implemented energy-saving investment in refineries and investment in wind
greenhouse gas of 1.2 million tons from power generation business and reduced CO2 emissions by 0.59 million tons Zero serious One serious labor-related accident in FY2019 (vs. one in FY2018) and 122
Safe operations
Promoting environmental emissions FY2013 by FY2022 from FY2013 (from 7.462 million tons in FY2013 to 6.875 million tons in FY2019) labor-related work-related accidents in FY2019 (vs. 151 in FY2018)
E Ensuring safety
and stable
accidents at all Start of study on PDCA for reduction in crisis occurrence and rebuilding of a
measures Reduction of
Planned abolition of use Shift of lighting equipment in refineries and plants from mercury lamps to G supply
group companies reporting method during a crisis
environmental
of mercury lamps environmentally friendly LED lamps is exceeding the plan (164%) measures
pollutants PCB waste disposal
Continual implementation of PCB waste disposal by the legal deadline
management Zero occurrence of a
Actions to recycle Quality serious product (quality)
Reduction in industrial waste Continual promotion of industrial waste recycling Zero serious product (quality) accidents in FY2019 (vs. 1 in FY2018)
resources assurance accident caused by group
Cosmo Energy Holdings and its three core operating companies: Ratio of paid companies
Occupational Promotion of employees’ health holidays taken: 87.7% in FY2019
safety & health Cosmo Energy Holdings was recognized as a 2020 Certified Health and
management Reduction in long working hours Productivity Management Organization by the Ministry of Economy, Trade Strengthened selection
Thorough risk management and solid response to measures for priority risks
and Industry (METI) and Nippon Kenko Kaigi. and implementation of
Risk by each group company
measures for priority
Empowerment of diverse Ratio of women hired – 26% in FY2019; ratio of people with disabilities in the management Establishment of a team for crisis measures in response to the COVID-19
risks in each group
personnel workforce – 2.22% as of June 2020 pandemic (from January 2020)
company
Diversity 30% in the ratio of Selected for the first time as a Nadeshiko Brand company by METI and the
women hired; adherence to
Enhancing human rights the employment quota Tokyo Stock Exchange (TSE) for its proactive efforts to support women to
for people with disabilities play active roles in the workplace. Enhancement of fraud Two serious compliance violations in FY2019 (zero in FY2018)
S & social contribution Maximization of Strengthening corporate Compliance prevention initiative Conducting of FY2019 survey on the current status of CSR
measures
Human Training expenses: ¥50,000 per employee G Zero serious Holding of a training course on corporate ethics and human rights, and a course on power
resources employees’ capabilities
training expenses of
Ratio of employees who sign up for a correspondence course for personal governance structure compliance violations harassment, lectured by an outside lawyer; continual operation of a whistleblower system
development ¥ 50,000 per employee development: 8.7%
Improved evaluation on CSR-based Development of a CSR Established the Cosmo Energy Group CSR Procurement Policy in October 2019
the three promises AA-rated service stations in evaluation on the three promises: 46.0% in procurement procurement policy Established the Cosmo Oil CSR Purchasing Guidelines in November 2019
50% service stations to be FY2019 (vs. 44.7% in FY2018)
AA-rated Number of complaints received in the Customer Center: 253 (achieved the
Customer Reduction in the number target of 290 by FY2022) Release of non-financial information in the COSMO REPORT and on the company’s
Handling of ESG sustainability website
satisfaction of complaints
Information evaluations Continually selected in the FTSE4Good Index Series, FTSE Blossom Japan Index, and the
Cosmo Oil Eco Card holders: Increase of about 1,000 year on year (65,000 at by investors,
FY2019-end; 64,000 at FY2018-end) disclosure SOMPO Sustainability Index
Expansion of the Cosmo Oil shareholders, and
consumers Selected as a constituent of the MSCI Japan Empowering Women (WIN) Select Index for the
Eco Card Fund Launch of a new service to provide donations from the Carlife Square first time
application and by joining the Cosmo Denki (Electricity) plan
* Cosmo Energy Exploration & Production Co., Ltd., Cosmo Oil Co., Ltd., and Cosmo Oil Marketing Co., Ltd.
13 COSMO REPORT 2020 14
Cosmo Energy Group’s Value Creation Strategy and Achievements Message Financial Analysis Business activity Sustainability Data
Major Key Performance Indicators (KPI)
Used as Targets
Financial
Ordinary income Profit attributable to
(excluding the impact of inventory valuation) owners of parent Free cash flow Net worth Net D/E Ratio ROE
Management Goals (FY2022) Management Goals (FY2022) Management Goals (FY2022) Management Goals (FY2022) Management Goals (FY2022) Management Goals (FY2022)
Over ¥ 120 billion Over ¥ 50 billion Over ¥ 150 billion
(FY 2018 - FY 2022 Five years total)
Over ¥ 400 billion 1.0 ~1.5 times Over 10%
2019 68.5 2019 -28.2 2019 27.5 2019 239.8 2019 2.41 2019 -10.8
2018 107.4 2018 53.1 2018 6.0 2018 281.1 2018 1.98 2018 20.4
2017 95.9 2017 72.8 2017 96.2 2017 238.7 2017 2.25 2017 36.1
2016 42.0 2016 53.2 2016 -64.4 2016 164.7 2016 3.58 2016 39.0
2015 32.6 2015 -50.2 2015 -14.4 2015 108.0 2015 4.60 2015 -36.5
Reason for selection as KPI Reason for selection as KPI Reason for selection as KPI Reason for selection as KPI Reason for selection as KPI Reason for selection as KPI
The company maintains a 70-day Profit attributable to owners of Free cash flow is emphasized The level of net worth is used as a The net debt-to-equity ratio The ROE is used as a KPI as a
equivalent volume inventory, conforming parent is used as a KPI because in assessing ongoing business KPI in order to gauge improvement is used as a KPI because of measure of emphasis on efficient
to the oil product stockpiling obligation net profit is related to net worth, activities, as well as appropriate of the company’s financial the importance of the balance generation of profit by use of net
for private oil companies. Ordinary net debt-to-equity ratio, and investment and the dividend condition, which had been impaired between net worth and interest- worth.
income (excluding the impact of inventory other financial indicators that the payment level. It is therefore used mainly by the impact of inventory in bearing debt.
valuation) is therefore used as a KPI as it company finds important. as a KPI. the past.
reflects real ordinary income.
Rate of usage The ratio of the “AA” evaluation Serious Work-Related
Pre-Financial
CO2 emissions1 of annual paid holidays2 rating of three promises* Accidents3
Management Goals (FY2022) Management Goals (FY2022) Management Goals (FY2022) Management Goals (FY2022)
6.26 million
ton-CO 2 100% 50.0% None
2019 6.88 2019 87.7% 2019 46.0% 2019 1
2018 6.65 2018 90.4% 2018 44.7% 2018 1
2017 7.27 2017 89.1% 2017 39.2%
2016 7.12 2016 91.1% 2016 35.0%
(Average of three evaluation results per year)
2015 89.7%
Reason for selection as KPI Reason for selection as KPI Reason for selection as KPI Reason for selection as KPI
“Reduction of greenhouse gas emissions” The rate of usage of annual paid With the aim of raising customer Safe, stable operation is one of the most
is one of KPIs in the Consolidated holidays is used as a KPI with the satisfaction, Cosmo Oil important issues of the Cosmo Energy
Medium-Term CSR Management Plan, aim of promoting efficient operation service stations use an outside Group and is also recognized as priority 1
Definition and coverage: The petroleum and petrochemical segments, the renewable energy segment,
while “Harmony and Symbiosis with and employees’ work-life balance. research institute to conduct issue in the sixth medium-term plan and
and others of the Cosmo Energy Group, which are covered in the consolidated medium-term CSR
the Global Environment” and “Harmony Group companies set their targets an investigation by mystery the CSR medium-term plan. In particular, management plan.
and Symbiosis between Energy and separately, depending on their examiners three times a year. The Cosmo Oil, which adopted an Operations 2
Definition and coverage: Employees, contract employees, and part-time employees of Cosmo Energy
Society” are stated in the Cosmo Energy business category. ratio of service stations with an Management System (OMS; details on Holdings, Cosmo Energy Exploration & Production, Cosmo Oil, and Cosmo Oil Marketing are included.
Group Management Vision. The Cosmo “AA” rating is used as a KPI. See page 64 . ) and strives for achieving Those who were out of work during the entire term and those who retired during the term are excluded
Energy Group identifies reduction in safe operation and stable supply, from the calculation.
environmental impact, including CO2 improving operations, and avoiding 3
Definition and coverage: Total work-related accidents that require and do not require time off from work.
emission, as one of priority issues. opportunity loss. Accidents involve both directly-hired employees and those working at subcontractors of Cosmo Energy
Holdings, Cosmo Energy Exploration & Production, Cosmo Oil, Cosmo Oil Marketing, Maruzen
* Evaluation on fulfillment of Petrochemical, and 41 related companies.
See page 53 See page 58 three promises: See page 59
15 COSMO REPORT 2020 16
Cosmo Energy Group’s Value Creation Strategy and Achievements Message Financial Analysis Business activity Sustainability Data
view is that oil demand will decrease by about half of
Our commitment to steadily implement the
the present level by 2040, I expect that the transition to
basic policies of "Oil & New" remains unchanged,
a fossil-fuel-society may be accelerated in light of the
despite the changing environment
impact of COVID-19. The "Oil & New" basic policy is to
The global economy and the energy industry have been capture long-term big trends, flexibly respond to short-
hit by the turbulent waves of successive, unprecedented term changes, and increase the competitiveness of the
events, such as the spread of the novel coronavirus petroleum-related business while simultaneously promoting
(COVID-19) and a drop in crude oil prices. While the Cosmo the shift to renewable energy. We are determined to
Energy Group is not immune to these events, I believe that execute this policy steadily and promptly, with the aim of
what we need to do remains unchanged even under the raising our corporate value.
current circumstances.
I am strongly convinced that the structural reform we have
FY2019 results
pushed forward with corporatewide efforts since the 5th
Medium-Term Management Plan has made our business In FY2019, net sales decreased by ¥32.4 billion from the
more resilient. For example, as a part of the structural previous year to ¥2,738.0 billion, ordinary profit excluding
reform, we established a structure that is well prepared for the impact of inventory valuation decreased by ¥38.9
a medium-term decline in demand for fuel oil. We therefore billion to ¥68.5 billion. Profit attributable to owners of
responded to the recent decline in fuel oil demand by parent decreased by ¥81.3 billion to loss of ¥28.2 billion,
adjusting procurement from outside the Group, without mainly due to inventory evaluation loss of ¥52.2 billion that
lowering the operating rate of our refineries. Amid industry stemmed from a temporary drop in crude oil prices.
consolidation, our strategy to emphasize a balance, rather The Petroleum Business benefitted from the start of the
than an expansion in scale by integration, has worked well. fuel oil supply to Kygnus Sekiyu and the improved low-
Crude oil and other fossil fuels are indispensable energy sulfur fuel oil market, which was driven by the tightened
sources for people's daily lives, but their consumption is International Maritime Organization (IMO) regulations, but
expected to be restrained due to the aggravating climate the markets of various products deteriorated due to the
change caused by global warming. While the prevalent impact of the COVID-19 pandemic, which resulted in
We strive to realize “Oil & New” The 6th Consolidated Medium-Term Management Plan
while flexibly and optimally
responding to the changing environment
Representative Director, Group CEO The Cosmo Energy Group is making a new and vigorous step into the future.
Building the next business portfolio with the petroleum-related business at its core
Hiroshi Kiriyama
Increase the competitiveness of 1 Secure profitability to enable reinvestment
Oil petroleum-related businesses
Basic 2 Expand growth drivers with a future orientation
policy
3 Improve the financial condition
New Develop the next growth drivers
4 Strengthen the Group management foundation
17 COSMO REPORT 2020 18Cosmo Energy Group’s Value Creation Strategy and Achievements Message Financial Analysis Business activity Sustainability Data
a decline in profit. The Petrochemical Business' decline in the 6th Medium-Term Management Plan. A variety of of Yurihonjo, Akita Prefecture, Northwest Coast of Aomori disposable diapers and other hygiene products in FY2020.
in profit was attributable to the deterioration of the measures have been implemented toward the management Prefecture, and Akita Central Sea Area. We aim to become In the same year, Hyundai Cosmo Petrochemical (HCP), a
petrochemical market, which more than offset the benefit goal of ¥120 billion in ordinary profit, excluding the impact a leading company in offshore wind power generation, with joint venture between the Cosmo Energy Group and Hyundai
from improvement in output after resolving the negative of inventory valuation by FY2022. generation capacity of 1.0 million kW by 2030, when all rotors Oilbank in South Korea, will complete investments to increase
impact of regular maintenance conducted in FY2018. The are spinning. production capacity for para-xylene and energy saving in
Oil E&P Business also posted a decline in profit as the Hail Enhanced competitiveness of the The Petrochemical Business is positioned as one of our order to become more competitive. We plan to start the
Priority measure 1
Oil Field reduced production output and crude oil prices Petroleum Business growth drivers. We are aggressively making investments while commercial operation of a propylene rectifying tower, which is
declined, despite a recovery in production output by the Regarding the petroleum Business, the IMO has adopted pursuing synergies with the Petroleum Business. Maruzen jointly being constructed with Maruzen Petrochemical to add
existing oil fields. marine fuel regulations that ban the use of the high- Petrochemical, with Japan’s largest-class ethylene production value to basic chemical products in FY2021.
sulfur fuel oil in all marine areas. The Cosmo Energy capacity, strives to expand the highly functional product
Group has increased the capacity of the Delayed Coker business, which is less prone to changes in the market Operational innovation
We are making steady progress Priority measure 3
unit at the refinery and has already built a refining environment. As an example, Maruzen Petrochemical plans to (diversity, work-style innovation)
on the 6th Medium-Term Management Plan
system that does not produce high-sulfur fuel oil before establish a joint business with Arakawa Chemical Industries In anticipation of a declining working population over the
We are making steady progress with our priority measures the regulation came into force in 2020. Moreover, in to manufacture hydrogenerated petroleum resin, used in medium term in Japan, I believe that we must substantially
Sustainable Development Goals (SDGs)
July 2019, we commenced the fuel products supply to reduce work that depends on individuals, promote business
Priority measure 2 Business portfolio transition More advanced, autonomous,
Kygnus Sekiyu, our capital and business alliance partner process outsourcing (BPO), and invest in robotic process
and profound ESG management
since 2017. Such increase in sales volume is expected to The Renewable Energy Business is centered around the automation (RPA), AI, and other IT technologies as a part
help generate the profit improvement impact in FY2020. wind power generation business. Cosmo Eco Power is of operational innovation. We will transform to use a system As a company in the energy business, the Cosmo Energy
In the Oil E&P Business, the Hail Oil Field began one of pioneers in wind power generation and has the third that allows for a shorter, more flexible work-style, and aim to Group has been ahead of its peers in undertaking
production in FY2017, but intentionally reduced largest market share in Japan. The company is making raise productivity and promote diversity. environmental management based on awareness of
production output in FY2019 as the rate of decline in steady progress on its plan to expand onshore wind power Major companies of the Cosmo Energy Group have adopted providing safety and security to people's everyday lives
the reservoir pressure at Hail Oil Field was higher than generation capacity from 230,000kW to 400,000kW by our work-at-home program for employees to support their and of bearing responsibility for protecting the global
initially expected. We planned to invest in secondary oil FY2022. In case of offshore wind power generation, the childcare or nursing care. In FY2019, we expanded the environment. Our recent efforts include energy saving
recovery, but in light of a drop in crude oil prices and change from the feed-in tariff (FIT) scheme to the bidding program, enabling employees to telework from any location in refineries and plants, expansion of the wind power
the global economic conditions, we are reconsidering scheme is likely to entice large companies to enter the market, irrespective of the reason for two days a week (no limit in the generation business, and sales of virtually CO 2 -free
the timing of the investment. In the future, full but we can maintain our competitive advantage, as we are number of days for employees with childcare or nursing care electricity (Cosmo Denki Green). The Cosmo Energy Group
production is expected to expand the profit contribution ahead of other large companies and are undertaking projects as a reason). The program's utilization rate increased by is highly rated for its environmental efforts, as recently
by the Hail Oil Field. in many areas, including Akita Port, Noshiro Port, Coast more than three times year over year in FY2019. shown by its ranking as third most environmentally
19 COSMO REPORT 2020 20Cosmo Energy Group’s Value Creation Strategy and Achievements Message Financial Analysis Business activity Sustainability Data
conscious company out of 627 companies by business
people in the 2020 Nikkei Corporate Image Survey.
Along with the Consolidated Medium-Term Management
Plan, we are implementing the Consolidated Medium-
Term CSR Management Plan. In light of increasing greater
social demand for environmental, social, and governance
(ESG), our ESG efforts need to be more advanced,
autonomous, and profound. In April 2020, we therefore
established the Sustainability Promotion Department to
advance environmental activities and to augment our
social and governance activities to a cutting-edge level,
similar to that of the environmental activities. In February
2006, the Cosmo Energy Group signed the United Nations
Global Compact (UNGC). Endorsing its 10 principles on
the protection of human rights, the elimination of unfair
labor, environmental initiatives and anti-corruption, we will
continue efforts to realize these principles.
I have seen great progress in promoting diversity. In
FY2019, we welcomed Ms. Takayama as independent
outside director. I felt the Board of Director's discussion
became substantially more active and diverse by having
a woman join the Board. We also promoted a female
employee to an executive officer position in April 2020.
As a result, the Cosmo Energy Group was selected as a
"Nadeshiko Brand," which was jointly sponsored by the
Tokyo Stock Exchange and Japan's Ministry of Economy, our unique value and existence known through it, and raise affected by a decline in crude oil prices and is expecting a situation comprehensively from the medium- to long-term
Trade and Industry (METI), which selects outstanding our brand value. decrease of ¥49.0 billion year on year in ordinary profit. viewpoint and decided to pay dividends of ¥80 per share
companies in promoting the advancement and success of There is no doubt that the business environment will be in FY2019. We intend to make sustainable, stable dividend
women in the workplace. harsh, but our mainstay Petroleum Business has strength payments while achieving optimal financial conditions at
FY2020 forecasts
in terms of positioning in the supply/demand balance as the same time.
For FY2020 (ending March 31, 2021), we are forecasting mentioned above. Specifically, we are in a short position The COVID-19 pandemic is having a great effect on the
"Filling up your hearts, too" under the COSMO brand
ordinary profit of ¥30.0 billion, excluding the impact of and our production capacity is less than our sales volume, Cosmo Energy Group and we may have to reconsider the
The Cosmo Energy Group has been recognized under the inventory valuation, and profit attributable to owners of as we started the supply to Kygnus Oil in FY2019. This timing of implementation for some measures. I believe
brand name "Cosmo Oil." However, in view of the transition parent of ¥14.5 billion. While global demand in fuel oil is places us in a unique position compared to most other that now is a time of testing for companies and their
to a fossil-fuel-free society, we are transforming our expected to decline due to the impact of COVID-19, the refineries in the world, which are plagued with excess management on the correctness of their judgments,
business portfolio with a growing focus on the Renewable Petroleum Business is projecting a similar sales volume capacity and currently run at a low operating rate. Even according to the situation at hand.
Energy Business in addition to positioning the Petroleum as in FY2019, thanks to an increase in the supply of fuel if demand for fuel oil drops further due to the impact of I am confident that the Cosmo Energy Group is becoming
Business as the main business. In view of this, we also products to Kygnus Sekiyu. In addition, ending of the COVID-19, we believe that we can continue operation a company that can flexibly rebalance its business portfolio
intend to promote COSMO as a brand that unifies the entire negative time lag by which the product margin reflects without lowering the operating rate. and establish its scenario depending on the changing
group, including the Renewable Energy Business, to replace the FY2019 drop in crude oil prices, and assuming the environment. I can say this because measures we have
"Cosmo Oil." Our corporate message, "Filling up your hearts, absence of impact from accidents caused by typhoons or implemented have made us stronger. The current harsh
Shareholder return is promoted while considering
too," will continue to be used as a brand statement for the other events, enable us to forecast higher ordinary profit business environment should be a great opportunity for
optimal financial conditions at the same time
entire group. A brand that is established based on consistent (excluding the impact of inventory valuation) by ¥22.6 billion our group. Our entire group will work together to become a
branding earns the trust and expectations of consumers from the previous year. In contrast, the Petrochemical In FY2019 we posted an inventory evaluation loss, caused good company that we can all be proud of and a prevailing
and leads to enhanced business competitiveness. Such a Business is expecting a decrease of ¥7.7 billion year on by a drop in crude oil prices, and did not make sufficient company that can grow sustainably.
brand may facilitate the hiring of excellent people and raise year in ordinary profit due to the deteriorating overseas progress in improving the overall financial condition. We sincerely hope that our shareholders, customers,
the work morale of employees. We will therefore unify our markets and the impact of regular maintenance of Maruzen Nevertheless, in light of steady progress on implementing business partners and all other stakeholders will continue
diverse business activities under the "COSMO" brand, make Petrochemical. The Oil E&P Business will be negatively the measures of each business, we considered the to extend their support for many years to come.
21 COSMO REPORT 2020 22Cosmo Energy Group’s Value Creation Strategy and Achievements Message Financial Analysis Business activity Sustainability Data
somewhat, mainly due to the decline in crude oil Net Worth and Net D/E Ratio
prices, caused by the COVID-19 pandemic in FY2019. (Billion yen) Net worth (LH) Net D/E ratio (RH) (Times)
500 5
However, our petroleum business in Japan, which is a
Improving financial strength
4.6 Over
400 400 4
core source of profit, remains robust. Depending on the 3.6
300 3.6 281.1 239.8 3
state of the recovery in crude oil prices, the temporary 238.7
while responding well to the
2.41
200 167.2 164.7 2
negative impact that occurred in prior years may be 2.3
100 108.0 1.98 1
eliminated. We will continue to strive to achieve the sixth
changing business environment
0 1.0~1.5 0
management plan. FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2022
* Subordinated loan: A form of hybrid finance that lies between equity and Dubai crude oil price
(USD/bbl, annual 84 46 47 56 69 60 70
debt. It is also a capital financing method that has similar characteristics and average)
features to equity. Impact of inventory
Representative Director, Senior Executive Officer valuation (Billion yen) -116.1 -68.7 39.4 21.0 -10.7 -52.2 —
Net interest-bearing
In charge of Corporate Communication Dept., debt (Billion yen) 597.7 666.2 727.3 635.8 644.7 628.3 —
Accounting Dept. and Finance Dept.
Responding to the COVID-19 pandemic
Takayuki Uematsu Due to the global economic slowdown and the Investment Plan (FY2018-FY2022)
deteriorating business environment caused by the (Billion yen)
Sale and
COVID-19 pandemic, we have focused on securing Oil Refining leaseback, etc.
and Sales 88
new ¥30 billion subordinated loan. Because the amount of the liquidity in hand and financial stability.
Toward achieving the Sixth Consolidated Medium- 145
loan was reduced by half, the interest burden has been greatly Concerning liquidity in hand, we are maximizing use of
Term Management Plan
curbed. At the same time, we have obtained more favorable Group financing and centrally managing the Group’s cash Oil E&P 62
Net investment
value
The Sixth Consolidated Medium-Term Management Plan, conditions with the new loan, such as the provision of a profit and deposits to secure sufficient cash to withstand the Petrochemicals
which started in FY2018, aims to strengthen our financial redemption clause, no interest rate step-up, and the inclusion of changing business environment. 92 360
(Down 22% from the
Wind Power previous consolidated
position as one of its basic policies. It has the goal of 50% of the loan in equity. As for financial stability, we have secured sufficient medium-term
Generation
management plan)
increasing our earnings power and improving our financial As for ESG financing, we procured the first sustainability- procurement limits in yen and foreign currencies with multiple New strategy 25
93
position to achieve a net worth that can tide us over amid linked loan in Japan’s oil industry. This loan sets sustainability financial institutions. We also have a commitment line on a IT 19
Other 12
changes in the business environment, such as a decline in performance targets (SPTs) aligned with the borrowing scale of ¥100 billion. We see this as more than sufficient for us
crude oil prices. company’s CSR plans, and the achievement of these targets is to cope with unstable conditions going forward.
The financial target for the sixth management plan are cumulative incentivized by aligning interest rate terms with the borrower's I believe we have to be prepared for the prolonged impacts Cash Balance and Use of Funds (FY2018-FY2022)
free cash flow of over ¥150 billion, net worth of over ¥400 billion, performance. The SPTs stipulated under the agreement are: of the COVID-19 pandemic. We will continue to strive for (Billion yen)
Incoming Cash Outgoing Cash
net worth ratio of over 20%, and net D/E ratio of 1.0-1.5 times to (1) The number of new onshore wind power stations that cost reduction across the group, will review the timing
be achieved by FY2022. commence operations, and (2) the availability of existing wind and composition of investment, and will take all possible
535.0 360.0
In FY2019, the second year of the plan, the COVID-19 pandemic, power stations. measures to avoid hindering our business activities. Aiming to increase Profit attributable
shareholders’ equity to owners of
Saudi Arabia’s oil policy to boost its production capacity, and We believe that this financing will push us further into to over the parent
Investment*
other factors led to a decline in crude oil prices, which affected promoting the renewable energy business, which is one of ¥400.0billion 225.0 360.0
Message to investors
us mainly in the form of temporary deterioration in margins on our Group’s major policies. Depreciation, Free cash flow
etc. Decrease in debt
petroleum products. Actual ordinary income, excluding the In FY2020, the COVID-19 pandemic is expected to make our For FY2019, despite the deterioration in our financial position with interest
310.0 175.0
impact of inventory valuation, decreased by ¥38.9 billion to business environment harsh. Nevertheless, we expect to due to the net loss attributable to owners of the parent, we Dividend
¥68.5 billion, while we recorded net loss attributable to owners maintain the sales volume, thanks to growth in supply to Kygnus paid a per-share dividend of ¥80, as initially announced. This * Strategic investment is net amount reflecting sale and leaseback etc.
of the parent of ¥28.2 billion, affected by a decrease of ¥52.2 Sekiyu, despite an expected decline in domestic demand. was because we recorded actual ordinary income excluding
billion in inventory valuation. Japan’s market environment is projected to remain robust. As the impact of inventory valuation of ¥68.5 billion and we
Dividends per share
Free cash flow was a positive ¥27.5 billion, supported by an a result, we forecast ordinary income, excluding the impact regarded the COVID-19 pandemic as a one-off factor.
(Yen)
improvement in working capital associated with the decline in of inventory valuation of ¥30.0 billion, and profit attributable to In FY2020, the business environment is expected to be harsh, 80 80 80
80
crude oil prices. Net worth decreased by ¥41.3 billion to ¥239.8 owners of parent of ¥14.5 billion, marking a return to profitability. but we intend to maintain a per-share dividend of ¥80 under
billion, while the net worth ratio was down 1.9 percentage points In FY2020, free cash flow is expected to be negative, mainly due our basic policy of stable dividend payments. In the future, 60
50 50
to 14.6% and the net D/E ratio down 0.43 points to 2.41 times. to the investment burden and a decline in earnings. Therefore. we will seek to raise the ratio of return to shareholders while
40
40
As major initiatives in FY2019, we refinanced the subordinated we intend to review the timing and composition of investment considering the balance with the financial position.
loan* of ¥60 billion and realized ESG financing with an objective and reduce cash outflow from investing activities. Nonetheless, Lastly, dialogues with investors is important to my role as
20
to diversify funding source. we will maintain important growth investment that will lead to the CFO. I am determined to proactively engage with investors
In particular, we made an early repayment of the ¥60 billion enhancement of corporate value. and apply their feedback in management. I would like to ask 0
FY2015 FY2016 FY2017 FY2018 FY2019 FY2020
subordinated loan, procured in FY2015, and refinanced with a Our balance sheet improvement may appear to have stalled for your continued support. (Planned)
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