I am Ota, President of ENEOS Holdings. Let me express my sincere gratitude to our shareholders and investors for your continued support and advice on the business activities of the ENEOS Group. Now I will start explaining the financial results according to the PowerPoint slides in front of you. Please turn to page three. These are the key headlines for the briefing today. First point is business environment. As you know, while resource prices have been rising due to the global economic recovery and supply constraints resulting from the progress in vaccinations against COVID-19, demand for domestic petroleum products continues to be weak, as it is still below the level before the outbreak of COVID-19. On the other hand, there have been emerging changes accelerated by COVID-19, such as movement toward a decarbonized and recycling-oriented society and advancements in a data society.
Regarding financial performance, the first half recorded increased profits year-on-year, and we also expect higher profits for the full year than the forecast in May 2021, mainly due to a rise in resource prices and extremely strong demand for advanced materials. Last point is progress in our business strategy. The most important theme in the current medium-term management plan is promoting reform to realize the long-term vision. We are halfway through the three-year period of the management plan, and we are steadily laying the groundwork for decarbonization and strengthening our growth businesses, as shown at the bottom of page three. Please refer to page four for the results of the first half of FY 2021. Operating income, excluding inventory valuation effects, was JPY 168.6 billion, an increase of JPY 42.7 billion year-on-year.
While Energy segments reported a decline in profits severely affected by the deterioration in domestic petroleum product and export margins and the refinery operation troubles that occurred mainly in the first quarter, oil and natural gas, E&P, and Metal segments reported a significant increase in profits due to higher resource prices and increased sales of advanced materials. Net income for this first half was JPY 211.4 billion, an increase of JPY 175 billion, or almost six times over the previous year result, including an accounting gain due to inventory valuation effects. Please turn to page five for the full year forecast. Operating income, excluding inventory valuation effects, is forecasted as JPY 310 billion, an improvement of JPY 80 billion from the May forecast.
Assumption for the second half is $70 for crude oil and $4.00 for copper from November onward, and they are much lower than the current level. This profit forecast improvement was driven by the increase in profits of oil and natural gas, E&P and metal segments, reflecting a rise in resource prices and other factors. Net income is now forecasted as JPY 280 billion, an upward revision of JPY 140 billion from the May forecast. Please turn to page seven. I will now explain the progress of the medium-term management plan. We are now at the halfway point of the medium-term management plan, and we have steadily implemented measures in the current fiscal year in line with the policy of the plan, as we did in FY 2020.
Regarding enhancement of growth businesses, in addition to the previously announced acquisition of elastomer business in early spring and enhancement of production capabilities of sputtering targets for semiconductor devices and acceleration of its schedule, we have acquired the shares of Japan Renewable Energy and materialized innovation through Green Innovation Fund. As for optimization of our business portfolio, in July, we completed the sale of overseas coal mine interests in our coal business, which we had already decided to withdraw from, and also decided to make our subsidiary, NIPPO, go private and dissolve the parent-child listings with a view to its future independence and relisting. With accelerated changes to the world view we envision for a long- term, we are steadily implementing various measures to achieve the goals of the medium-term management plan.
We will continue to promote initiatives in line with the business strategies and investment plans to enhance our corporate value. The amount of investment in the medium-term management plan remains unchanged from the May announcement as JPY 1.5 trillion for three years. Please turn to page eight. As I mentioned a little in the summary, we recently announced acquisition of shares in Japan Renewable Energy, or JRE, one of the leading renewable energy companies in Japan that is engaged in comprehensive operations from development of power sources to operation and maintenance of power plants and owns generation capacity of over 700,000 kW as of September 2021, including those under construction.
They're also a pioneer in the offshore wind power generation, which is expected as an effective measure for making renewable energy a main power source. Contribution to a decarbonized and recycling-oriented society is one of our aspirations, and we have been strengthening our renewable energy business both in Japan and overseas. Going forward, we'll combine JRE's advanced business development capabilities with our expertise in energy business, and aim to become a leading renewable energy company in Japan. With this acquisition, the combined capacity of the two companies was originally announced to aim at 1 million kW as a target in the medium-term management plan. Now we set a higher target of about 1.2 million kW. In the future, we'll increase the capacity further, and by combining renewable energy, whose generation volume fluctuates depending on weather conditions, with energy management system.
We'll build a system that enables stable and efficient supply of CO2-free electricity. We also expect high potential for the synergy with hydrogen in the future, which is covered in the next slide. Please refer to slide nine. As you know, the Japanese government has established a Green Innovation Fund with JPY 2 trillion in total to support companies trying to achieve ambitious goals toward carbon neutrality by 2050. As first GI Fund projects, four of our projects for CO2-free hydrogen supply chain have been selected. In the Sixth Strategic Energy Plan approved by the cabinet last month, renewable energy was defined as main power sources, and hydrogen was defined as new resource for which the government will try to achieve early social implementation. Our company, which believes in the long-term potential of hydrogen, have been trying to make the hydrogen business one of the future pillars.
We have established the ENEOS Hydrogen Fund in 2006, provided hydrogen stations in major cities in Japan, and supplied hydrogen to the Tokyo Olympics. The GI Fund projects, which aim to build a large hydrogen supply chain, ENEOS will play a central role in a demonstration project and lead the innovation and the social implementation efforts. Although hydrogen has a number of mid to long-term challenges to overcome for each segment of the supply chain, such as technology development and procurement of low-cost energy sources, we will develop hydrogen as one of the core businesses of ENEOS in the future. Please turn to page 10, a list of major initiatives taken last fiscal year. Let me just briefly discuss it.
While nurturing and strengthening growth businesses, we have implemented the restructuring of our production and the supply network, including refineries and the manufacturing plants, to strengthen the competitiveness of base businesses, namely petroleum refining and distribution, and copper smelting. Amid declining demand for domestic oil, we must study and implement new measures continuously, particularly in this area. Page 11, please. These are the main initiatives implemented in the first half. In petrochemical and materials, in view of the growing demand for offshore wind power transmission lines, we have decided to expand the production capacity in Kawasaki of polyethylene for ultra-high and high-voltage wire insulation, which is a technology-based business.
In next generation energy, we are pursuing partnerships with local governments and others to build supply bases and networks, and decide to participate in several projects in Japan and overseas, as we did last year, related to solar power and offshore wind power to expand our renewable energy business. In hydrogen supply chain, we plan to start a demonstration this month of dehydrogenation of overseas organic hydrides at our existing refinery facilities, and started to consider collaboration with overseas partners in Australia and Malaysia. In environmentally conscious and next-generation businesses, we received approval for the development plan of the LNG plant and the project, including CCUS, promoted by our consortium, and started examination and development of new services using our service stations. Page 12, please.
We've announced our decision to delist the stock of our subsidiary, NIPPO, after having discussed regularly about whether NIPPO's listing should be maintained or not from the perspective of our mid to long-term business portfolio and governance structure amid the growing demand for fair and transparent governance system. Our conclusion is that it is difficult to find substantial synergy opportunities between our future growth businesses and NIPPO, and it is best to privatize the company jointly with Goldman Sachs, who has a global network and expertise in real estate development to optimize management and maximize enterprise value of NIPPO. Our intention is to relist NIPPO on the stock exchange as an independent company in the future after maximizing enterprise value through privatization. Finally, please turn to slide 13. There is no change to the existing policy on shareholder returns, as stated here.
As for total payout ratio, we will return at least 50% of net income, excluding inventory valuation effects for the three-year midterm management plan period, while maintaining the dividend of at least JPY 22 per share, which is same as the current level regardless of changes in profits. That's all from myself. Next, Senior Vice President Tanaka will take you through the financial results.
Now, I will continue for the explanation and the details of the financial results for the second quarter of fiscal year 2021 and the full-year forecast. Let me start with indices on page 15. Dubai crude oil price started at $62 per barrel at the beginning of the fiscal year and was $76 at the end of September, and the average price for the first half was $69, up $32 year-on-year. In August, the price temporarily declined as OPEC+ decided to scale back its coordinated production cuts. It is now in the $80 range in response to expectations for economic recovery due to the progress in vaccinations against COVID-19 and OPEC+'s decision not to perform additional production increase. For the full-year forecast, we have set the price from October as $70 per barrel.
Copper price hit a record high in May due to economic recovery by economic stimulus measures in each country and expectations of growth for copper demand in China. It fell to $4.10 in the end of September due to the price restraint and concerns about the economy in China. Recently, it started to rise again to around $4.40. For the second half, we estimate the price at $4.40 for October and $4.00 from November onward. Please turn to page 16. Petroleum product margin index has remained steady, although demand has not recovered significantly due to the remaining impact of COVID-19. In the first quarter, our margin was lower than the previous year, not in line with this index, but no such year-on-year deviation occurred in the second quarter. The paraxylene margin index remained unchanged from the first quarter.
Please turn to page 18 for details of the financial results. Operating income for the first half was JPY 337.8 billion. Inventory valuation was JPY 169.2 billion. Operating income, excluding inventory valuation, was JPY 168.6 billion, up JPY 42.7 billion year-on-year. Profit attributable to owners of the parent increased JPY 175 billion to JPY 211.4 billion. Page 19 shows operating income by segment. More details will be explained by the waterfall charts from the next page onward. Please refer to page 20. Operating income, excluding inventory valuation in the energy segment, was JPY 27.3 billion, a decrease of JPY 29.8 billion year-on-year. Petroleum products reported a decline of JPY 35.9 billion year-on-year.
Sales volume improved by JPY 3.2 billion, owing to an increase in exports despite a slight decrease in sales affected by the warm temperatures in early spring. However, margins decreased by JPY 39.1 billion due to decline in domestic petroleum products and export margins and the impact of operation troubles at some refineries, despite the absence of a one-time loss of JPY 27.9 billion recognized in the previous year for refinery restructuring. Petrochemicals sales increased as the impact of COVID-19 eased slightly, and its positive impact on sales volume was JPY 1.1 billion. Margins improved by JPY 14.9 billion, significantly affected by the improvement in benzene market. This resulted in a JPY 16 billion improvement in the total petrochemicals margins.
In electric power, the sales growth by the increased number of customers with ENEOS Denki and other factors was offset by a rise in electricity procurement costs, resulting in a year-on-year decrease of JPY 8.2 billion.
Materials decreased by JPY 1.7 billion year-on-year, mainly due to a temporary deterioration in lubricant margins affected by the time lag. Next, please turn to page 21. Operating income in the oil and natural gas E&P segment was up JPY 37.3 billion year-on-year to JPY 38.8 billion. Production volume was unchanged from the previous year, but profits substantially increased, mainly due to significant increases in crude oil and natural gas prices. Next, please refer to page 22. Metals segment is up JPY 41.8 billion to JPY 78.7 billion. Functional materials, thin film materials, and others is up JPY 10.1 billion on higher sales volume of advanced materials used for data communications. Mineral resources is up JPY 15.2 billion due to higher copper and other resource prices, which offset the lower production volume caused by the labor strike at Caserones.
Smelting and recycling is up JPY 9.2 billion, mainly due to higher prices for metals and sulfuric acid as a by-product. Next, I will explain the balance sheet and cash flow on page 23. First is cash flow on the right-hand side, excluding IFRS lease accounting shown by the red dotted line. Cash flow from operating activities was negative JPY 81.5 billion as a result of negative JPY 373.3 billion in working capital and others due to higher resource prices against JPY 168.6 billion in operating income, excluding inventory valuation, and JPY 123.2 billion in depreciation and amortization. Cash flow from investing activities was a cash outflow of JPY 164.3 billion. As a result, free cash flow was a cash outflow of JPY 245.8 billion. Net cash flow, including dividends and other, was a negative JPY 296.3 billion. The balance sheet is shown on the left-hand side.
As of the end of September, net interest-bearing debt, excluding cash on hand, was JPY 1,910.4 billion, an increase of JPY 292.5 billion from the year-end. The equity ratio was 29.5%, and the net D/E ratio was 0.64 x. The D/E ratio was 0.56 x when the hybrid bonds issued in June this year is taken into account. Next, I would like to explain our full year forecast for FY 2021. Please refer to page 25. For the second half, the Dubai oil price assumption is $70 per barrel. Copper price is $4.00 per barrel from November, and $4.07 per barrel in the second half. The exchange rate is JPY 110 .
Based on these assumptions, full year operating income is revised up by JPY 210 billion to JPY 470 billion, or excluding inventory valuation factors by JPY 80 billion to JPY 310 billion. Net income attributable to owners of the parent is forecasted at JPY 140 billion higher at JPY 280 billion. Operating income by segment is shown on page 26. Details by segment will be explained on the next several slides. Please refer to page 27. Energy segment operating income, excluding inventory valuation, is forecasted at JPY 75 billion, unchanged from the previous forecast.
First, petroleum product is plus JPY 4 billion due to improved margins for domestic petroleum products and cost reductions, despite lower sales volume of petroleum products and refinery trouble in the first half. Next, petrochemicals is - JPY 6 billion due to lower sales volume and margin deterioration. Electric power is - JPY 7 billion, mainly due to an increase in procurement costs.
Materials is + JPY 9 billion, mainly due to improved margins for lubricants and needle coke. Next, please refer to page 28. Operating income in the oil and natural gas E&P is revised up JPY 30 billion to JPY 75 billion, mainly due to the revised assumptions for crude oil and natural gas prices. Moving on to page 29. Operating income for metals segment is revised up JPY 50 billion to JPY 110 billion. Functional materials, thin film materials, and other is + JPY 13 billion, mainly due to increased sales resulting from higher demand for data communications. Mineral resources is + JPY 26 billion, despite the reduced annual production at Caserones by 17,000 tons to 119,000 tons due to the pandemic and the labor strike. The revised forecast is higher due to the revision of copper price assumptions and other factors, which offset the impact of production cut.
Smelting and recycling is +JPY 14 billion, mainly due to higher prices for copper, precious metals, and sulfuric acid. This concludes the explanation of our full year forecast. Page 30 onwards is about various topics, assumptions, and sensitivities, just for your reference. This concludes my presentation. Thank you very much for your kind attention.