Earnings Call: Q1 2027

Aug 6, 2026

Summary

Q1 ordinary profit reached ¥133.0B, while adjusted profit excluding inventory valuation effects was ¥122.1B, supported by time-lag gains and overseas product prices. The FY forecast is unchanged, but a negative time-lag effect may emerge from Q2.

Thank you very much for joining us. This is FY2026 Q1 financial results of Cosmo Energy Holdings. Before we start the briefing, we would like to offer heartfelt sympathies to those affected by the earthquakes in Kumamoto. As we work on the stable supply, we hope for a swift recovery in affected areas. Now, let me get started with the financial results. Please turn to page 4. This shows our initiative following the heightened tensions in the Middle East. Despite the heightened tension, our group continued stable supply in Japan by utilizing national crude oil reserves and steadily procuring alternative crude oil and petroleum products. As for alternative crude oil, shown on the left, in petroleum business, we have been maintaining a stable supply through diversified crude oil procurement routes. Specifically, sourcing the Middle Eastern crude oil without passing through the Strait of Hormuz, and sourcing the crude oil produced in the U.S. and Mexico, shown on the left. On the right-hand side, we are showing Oil E&P business. Our operation is in Abu Dhabi in UAE. As of today, we have had no damage on people or facilities, and after confirming the safety, we are returning the personnel to the region and continuing the coordination with the oil-producing countries to advance efforts to resume normal operations. Please turn to page 5. This shows key highlights of Q1 results. Number 1, ordinary profit was JPY 133 billion. Number 4, ordinary profit excluding the impact of inventory valuation was JPY 122.1 billion. Number 2, profit attributable to owners of the parent was JPY 84 billion. Profit excluding the impact of the inventory valuation was JPY 76.3 billion. Those numbers include the impact of the time-lag effect due to the changes of the oil prices. The time-lag effect occurs during the peacetime, but due to the heightened tension in the Middle East, this prolonged and complicated the lead time from the crude oil procurement to receipt, resulting in changes to the time-lag effect. In Q1, as part of the procured oil was based on the lower prices before the price hike, the positive effect was recorded. This is a major positive time-lag effect. There was also high overseas market prices, which pushed up our profit. From Q2 onwards, this tense situation is likely to continue, and it is uncertain, and the positive effect recorded in Q1 is expected to diminish due to a negative time-lag effect arising from the receipt of the crude oil procured following the escalation of the tensions in the Middle East. The full-year forecast announced in May, therefore, remains unchanged at this time. We will continue to watch and monitor the situation, including that of our Middle East, and take the appropriate measures to reflect the changes in the external environment to our business performance. That concludes my part of presentation. Let me now start the presentation of the details of the Q1 results. Please turn to page 7. This is the review of Q1 results. Consolidated ordinary profit was JPY 133 billion. Ordinary profit excluding the impact of the inventory valuation was JPY 122.1 billion. By segments, in petroleum business, profit increased by JPY 96.7 billion year-on-year to JPY 107.1 billion due to the positive time-lag effect, as well as high overseas market prices for products other than the four main products. Petrochemical business profit increased by JPY 10.1 billion year-on-year to JPY 7.2 billion due to the impact of beginning inventory, which with the lower-than-market price. Oil E&P business profit decreased by JPY 1.3 billion year-on-year to JPY 7.6 billion due to the impact of heightened tensions in the Middle East on production volume. The renewable energy business profit improved JPY 0.1 billion year-on-year to JPY 0.3 billion, following the commencement of operations at new sites. Next is page 8. This is the income statement. Number 1, net sales were JPY 761.6 billion, up JPY 113.1 billion year-on-year. Operating profit, JPY 126.9 billion, up JPY 118.9 billion year-on-year. Ordinary profit, JPY 133 billion, up JPY 128.8 billion year-on-year. Number 8, the profit attributable to owners of parent was JPY 84 billion, up JPY 86 billion year-on-year. The impact of the inventory valuation was about JPY 10 billion. Excluding that, ordinary profit was JPY 122.1 billion, up JPY 101 billion year-on-year. Profit excluding the impact of the inventory valuation was JPY 76.3 billion, up JPY 66.5 billion. Line 12, this is the April-June average oil price, which was $96 per barrel, and exchange rate average was JPY 160 to the dollar. Please go to page 10. This is the changes of the consolidated ordinary profit. As mentioned earlier, the consolidated ordinary profit, excluding the impact of the inventory valuation, was up JPY 101 billion year-on-year. In petroleum business, it was up JPY 96.7 billion. The margin of four main products was up JPY 65 billion. It was JPY 17.3 per liter year-on-year change. The margin of other products, positive JPY 54.6 billion. Jet fuel was JPY 43.1 billion. The heavy fuel oil C was JPY 8.3 billion, naphtha JPY 5.2 billion. The volume of four main products was minus JPY 5.8 billion. Compared with the year before, it was 95.7%. Next is import, purchase, and export was minus JPY 13.8 billion. Due to the tense situation in the Middle East, we imported products for the stable supply. Expense and other was minus JPY 5.2 billion, including the in-house fuel cost, minus JPY 3.1 billion. The inflation impact of the variable, as well as fixed expenses was minus JPY 1.9 billion. Next is petroleum business. It was up by JPY 10.1 billion year-on-year. Price factor was positive JPY 9.2 billion. This is related to the impact of beginning inventory. Volume, plus JPY 1.2 billion. In the previous year, there was an export. Compared to that, it was lower. As for the Oil E&P business, it was minus JPY 1.3 billion year-on-year. Price was minus JPY 2.7 billion. This is due to the oil price and FX fluctuation. The volume was minus JPY 8.2 billion due to the lower shipment because of the impact in Middle East. Expense, this is mainly the gain on FX, JPY 8.3 billion. Please turn to page 11. This is the consolidated balance sheet. The first line, total assets, were JPY 2,551.5 billion, up JPY 354.9 billion compared to the end of last fiscal year. Net assets, JPY 810 billion, up JPY 74.2 billion. Net worth was JPY 676.9 billion, up JPY 70.7 billion. Net worth ratio was 26.5%. Net interest-bearing debt was JPY 420.8 billion. As a result, net D/E ratio was 0.62 times. Please turn to page 12. This is a CapEx and depreciation. In Q1, CapEx were JPY 24.4 billion. Depreciation expense was JPY 14.1 billion. By segment, petroleum business was JPY 7.2 billion, Oil E&P business, JPY 9 billion, renewable energy business, JPY 1.8 billion. That concludes my presentation.