I am Ota, President of INEOS Holdings. I'd like to express my gratitude for support and advice provided regularly by shareholders and investors for the business of INEOS Group. I will explain about our financial results for the Q2 of FY 2020 with the briefing material. Please refer to Page 3. Operating income excluding inventory valuation in the first half of FY twenty 20 was JPY 125,900,000,000 down JPY 44,300,000,000 year on year.
Positive factors include steady domestic petroleum product margins due to time lag and other reasons, increased sales of electronic materials due to stronger data communications demand with growing remote work as well as OpEx decrease. On the other hand, we were negatively affected by COVID-nineteen in terms of decreased petroleum product sales due to less movement of people, lower profit in oil and natural gas development projects due to weak crude oil price and production decrease at Casirone's copper mine by reduction of workers to prevent infection. In addition, temporary loss was recognized due to the termination of Osaka Refinery by a decision to use Chiba Refinery instead for the refinery joint venture project with PetroChina International. With these factors, profit decreased year on year. As for FY 2020 forecast, while the COVID-nineteen impact was only included in the assumptions for the first half forecast announced in May, now it is reflected in the assumptions for the full year forecast.
This brings in some additional negative factors, mainly as sales volume decrease. However, contribution from steady domestic petroleum product margins in the first half and OpEx decrease were recognized as well. With these factors, we estimate 100 and 90,000,000,000 yen for operating income, excluding inventory valuation, up 25,000,000,000 yen from the previous forecast in May. Page 4 explains the progress of management indicators. As I just explained, operating income excluding inventory valuation is estimated to be 100 and 19,000,000,000 yen 25,000,000,000 yen higher than the medium term management plan.
Free cash flow, net DE ratio and ROE are expected to be in line with the original plan. Please turn to Page 5. On this page, I'd like to touch upon some of our measures we have been implementing since the first half to achieve the medium term management plan despite the COVID-nineteen pandemic. For strengthening the business foundation, our management system was changed to address rapidly changing business environment and accelerate the decision making and we have integrated the management of Innius Holdings Inc. And Innius Corporation in June for improved efficiency.
Also, we established office of CDO for speedy and cross functional execution of DX initiatives to improve efficiency and base businesses like refineries for the entire supply chain and to create new products and services. Next is about strengthening the competitiveness of the base businesses. For the refinery joint venture project with PetroChina International, we decided to terminate refinery functions of Osaka Refinery in October and changed the refinery location to Chiba Refinery in December. We also decided to terminate manufacturing function of Chita plant in October 2021, earlier than originally planned. As such, we are steadily executing supply chain reform.
Regarding Casaaronis copper mine, we have reached a basic agreement with Mitsui Mining and Smelting and Mitsui and Company Limited, joint investors in this copper mine on the transfer of all of their rights and interests in the mine. Let me explain the background of this agreement. Originally, the negotiation was started when Mitsui and company expressed their idea of pulling out of the project. When we come to feel certain about reaching an agreement, we approached Mitsui Mining and Smelting to propose transfer of their rights and interest to us. We decided this acquisition as we could agree on reasonable price for shares and credits.
As a result of this acquisition, we can expect to accelerate various decision makings and more freedom in operating Casirone's copper mine. Regarding financial impact, we can acquire credits owned by 2 companies at low price. We are currently scrutinizing if this transaction should be posted in profit and loss or handled as a capital transaction. We assume its financial impact is some tens of billions of yen.
Including some of the cash that will become recoverable from this transaction, the result will be a net cash positive and inflow, which can be used to pay down interest bearing debt. As the global trend of lower copper grades and higher impurity proceeds, the product from the Casa Ronas copper mine is becoming more valuable, thanks to the high grade and the clean copper ore. Despite the current decline in production due to COVID-nineteen, we will try to maintain an increased production at the Casarona's copper mine by focusing on automated operations using IoT. Let me explain the development of growth businesses on Slide 6. In Next Generation Energy Supply and Community Services, we completed the nationwide rollout of Enel Sudenki in June this year, expanded the customer base and options of renewable energy sources by commencing the operation of the Muroran Biomass Power Plant, participating in the offshore wind power project in Akita and starting the operation of 3 mega solar power plants in Japan.
We are working with local partners such as Shizuoka Protector, Higashimurayama City, Tokyo and Shintomi Town Miyazaki to promote the business of sustainable community development based on the concept of local production and the consumption of energy. To build a new business model, we are promoting collaboration with a number of startups to help creating new value and realizing new carbon, low carbon recycling society. To transform our service station network into a platform, we started Enos Laundry, which is laundry service attached to service stations and began the demonstration of Enel's car leasing, in addition to the delivery based car share service, whose demonstration was already started last year. Slide 7, please. The petrochemical business started a feasibility study on ENB expansion in Saudi Arabia in order to expand the scale of technologically superior products.
The materials business completed the capacity expansion of the Isohara plant in Ibaraki and the Kurami plant in Kanagawa to meet the increasing demand for electronic materials amid the ongoing shift towards IoT and AI. The lubricants business started selling Enel's X Series, which is in conformance with the latest international standards with improved energy saving performances. The recycling business made a decision to expand its logistics centers in order to strengthen the recycling business of the Saginoseki smelter and the refinery. Page 8 plots the initiatives discussed so far on the map of Japan. We will continue to implement actions for growth businesses to achieve our long term vision and the medium term management plan.
Next, I would like to talk about shareholder returns. Please refer to slide 9. The total shareholder return policy remains unchanged at 50% or higher of 3 year cumulative net income, excluding inventory valuation and annual dividends of no less than 22 yen per share, which is the level distributed at the moment. We will continue to focus on maintaining stable dividends and the shareholder returns as we consider returning profits to shareholders as an important management agenda. Although the impact of COVID-nineteen is likely to linger, the long term vision and management policies announced last year as the premise for the 2nd medium term management plan are kept unchanged.
Even after the inclusion of the impact of COVID-nineteen in our guidance. Rather, the pandemic had an effect of elevating our awareness of the importance of accelerating various initiatives. Also, the Suga administration has set a policy of going carbon neutral by 2,050. We have already set a target of carbon neutrality by 2,040 to offset our own CO2 emissions and are working toward this goal. We will continue to implement various initiatives in line with the policies of our medium term management plan.
Next, Mr. Tanaka will take you through details of the financial results and the forecasts.
I am Tanaka, and I will explain about the section from Slide 11. Graphs on Page 11 show our business environment. As you all know, in April, Dubai crude oil price was below $20 per barrel due to COVID-nineteen. After that, with resumption of economic activities in various countries, it has recovered to around $40 per barrel. The average price in this first half is $37 per barrel.
That is a year on year decrease by $27 from $64 per barrel. This resulted in a significant decrease of profit in development segment, which will be explained later. Copper price significantly declined in the end of FY 2019 due to COVID-nineteen as well. However, it rose from 0.2.18 dollars per pound at the beginning of FY 2020 to 0.03 dollars per pound in the end of September. This is because of decreased supply from major producing countries like Chile due to the pandemic as well as reopening of economy in China.
I will talk about it later, but this price increase contributed to year on year growth in metal segment. Please turn to page 12 for changes in margins of petroleum products and paraxylene. In this quarter, margins of petroleum products have been higher year on year due to positive time lag effect in the recovery phase of oil price. On the other hand, Brazilin margin has been weak affected by increased supply by startup of new facilities and slow demand growth due to COVID-nineteen. From the next slide, I'll explain about the details of first half financial results.
Please turn to Page 14. Operating income in the first half of FY twenty twenty was JPY 88,900,000,000 with inventory valuation of minus JPY 37,000,000,000 Operating income excluding inventory valuation was JPY 125,900,000,000 down JPY 44,300,000,000 year on year as explained earlier. Profit attributable to owners of the parent at the bottom was 36,400,000,000 yen down 49% year on year. Next, please turn to page 15. This slide shows operating income by segment.
I'll elaborate on this by waterfall charts from the next page onward. Please turn to Page 16. In Energy segment, operating income excluding inventory valuation was 57,100,000,000 yen down 30,200,000,000 yen year on year. While sales volume of petroleum products decreased by 41,800,000,000 yen due to decreased sales with lower demand in Japan and overseas affected by COVID-nineteen, margins recorded an increase of 46,300,000,000 yen due to stable petroleum product margin affected by time lag and other reasons explained earlier and cost reduction. This amount includes a temporary loss of 27,900,000,000 yen from restructuring of refineries.
Petrochemicals indicated on the right was down 12,500,000,000 yen year on year due to sales volume decrease and deteriorated margin in paraxylene others. Electric power increased by 5,600,000,000 yen year on year, owing to increased electric power sales by expanding sales area of Enel's Denki nationwide. Materials recorded a decrease of JPY 27,800,000,000 year on year, mainly due to sales volume decline of needle coke. Please turn to Page 17 for breakdowns of changes in operating income for Oil and Natural Gas A and P segment. Despite the sales volume increase by starting production in new oil and gas fields such as Marina and Killeen in the U.
K. And Lion in Malaysia, operating income of this segment declined by 23,300,000,000 yen year on year to 1,500,000,000 yen This is mainly because of declined oil price. Expense and other decreased by 10,800,000,000 yen and this is due to increased operating expenses for new oil fields. Please turn to Page 18 for Metals segment. Operating income was 36,900,000,000 yen up 500,000,000 yen year on year.
Functional materials, thin film materials and others increased by JPY 5,200,000,000 mainly due to sales volume increase by higher demand for data communications. Mineral Resources were affected by the production decrease at Casirone's copper mine due to COVID-nineteen. However, the positive impact of increased copper price outweighed this negative impact. And this resulted in an increase of 3,000,000,000 yen As you saw in the graph earlier, copper price increased from 2.18 dollars at the beginning of Q2 to 0.03¢ per pound at the end of Q2 and this significantly affected the result. Smelting and recycling declined by 4,400,000,000 yen due to deteriorating market for sulfuric acid.
Non allocated corporate expenses and others decreased 3,300,000,000 yen affected by consolidated internal transactions. Next, let me move on to page 19 for explanation of balance sheet and cash flow.
First, please take a look at the consolidated cash flow on the right. I will explain using the figures after the repayment of lease liabilities. Operating cash flow for the first half was an inflow of JPY 251,400,000,000, which is JPY 125,900,000,000 of operating income, excluding the impact of inventory valuation, plus JPY 124,600,000,000 depreciation and amortization and 900,000,000 yen change in working capital. Investing cash flow was an outflow of 133,900,000,000 yen. As a result, free cash flow was 117,500,000,000 yen.
The full year forecast is unchanged from the previous announcement at 140,000,000,000 yen The balance sheet is shown on the left hand side. And as of the end of September, net interest bearing debt was 1,816,300,000,000 yen The net DE ratio was 0.68 times. These are our results for the first half. From next slide on, I will explain the full year forecast for fiscal year 2020. Slide 20, please.
Assumptions for October onward are shown. Exchange rate, yen 105 crude oil price, dollars 45 and the copper price, dollars 2.80 As mentioned earlier, at the time of the main announcement, the impact of COVID-nineteen was included only for the first half, but the reverse forecast this time includes the impact also for the second half. Slide 21, please. For P and L statement. After reviewing the assumptions and the impact of COVID-nineteen, our revised full year forecast is 200,000,000,000 yen in operating income of 90,000,000,000 yen from the previous announcement, 190,000,000,000 yen in operating income, excluding the impact of inventory valuation, up 25,000,000,000 yen 90,000,000,000 yen in net income, up 50,000,000,000 yen compared with the previous guidance.
Next, please refer to slide 22, which shows projected full year operating income by segment. The slide shows the difference from the previous forecast for the first half and second half, respectively. The energy business is positive 77,100,000,000 yen for the first half, but negative 92,100,000,000 yen for the second half. For the first half, there was a significant improvement due to solid margins of petroleum products due to the time lag and expense reduction. But in the second half, we expect significant decrease in volume and the deterioration in export and the chemical margins due to the inclusion of the impact of the COVID-nineteen.
The details are provided on the next slide. Please refer to Slide 23. Operating income, excluding the impact of inventory valuation in the energy business is down 15,000,000,000 yen to 75,000,000,000 yen compared to the previous forecast of 90,000,000,000 yen. I will show you the breakdown by sub segment. For the first half, petrochemical product margin was positive 76,700,000,000 yen driven by expense reduction and the favorable petroleum margin.
The margin figure includes one time losses from refinery restructuring. For the second half, sales volume is expected to be negative 25,300,000,000 yen due to the impact of COVID-nineteen. Margin is expected to be negative 28,900,000,000 yen due to the deterioration in export margin and other factors. Petrochemicals are down 11,500,000,000 yen for the first half from the previous guidance due to a decrease in sales volume and a deterioration in the margin of paraxylene and others. The figure for the second half is down 21,500,000,000 yen Electric power is up 8,000,000,000 yen from the previous announcement, thanks to an increase in sales volume and improvement in margin.
Materials is positive for the first half, thanks to the time lag effect of lubricant margin, but negative 18,200,000,000 yen for the second half due to a decrease in the sales volume of needle cokes, etcetera. The segment is down 15,000,000,000 yen for the full year from the previous guidance. Please go to Slide 24. The Oil and Natural Gas E and P segment is expected to post an operating income of yen 5,000,000,000 yen an increase of yen 5,000,000,000 yen from the previous forecast, thanks to the impact of higher oil prices or a change in assumptions of yen 9,300,000,000 yen offsetting the impact of declining production volume from some oil fields. Next, please turn to page 25, which is a variance analysis of our metal segment's operating income.
We expect operating income to increase by JPY 25,000,000,000 to JPY 54,000,000,000 compared to the previous announcement of JPY 29,000,000,000. Here is the breakdown of sub segment. In functional materials and thin film materials, operating income is up 7,000,000,000 yen mainly due to increased sales in line with increased demand for data communications. The decrease of 1,000,000,000 yen in the other segment is mainly due to a decrease in sales of titanium for aircraft. For mineral resources, annual production at the Caserones copper mine is expected to be 131,000 tons, a decrease of 30,000 tonnes from the previous forecast due to COVID-nineteen.
On the other hand, we forecast an increase of 8,000,000,000 yen in profit, mainly due to the positive impact of the revised copper price assumption for the second half from RMB2.50 to RMB2.80 Smelting and Recycling, despite the lower sulphuric acid market, is RMB8 1,000,000,000 higher than the previous forecast due to soaring precious metal prices and a decrease in expenses. Common operating expenses are up 3,000,000,000 yen due to the effect of intercompany transactions and lower expenses. This concludes my presentation. Thank you.