Earnings Call: Q3 2026

Feb 6, 2026

Summary

Q3 ordinary profit was ¥83.5bn, or ¥113.5bn excluding a ¥30.0bn inventory valuation loss; FY2025 guidance was unchanged. A ¥25bn buyback plus dividends brings the FY2025 shareholder return ratio to 60%.

Thank you for taking the time out of your busy schedule to join our briefing on the third quarter results of FY 2025. I would like to explain the key highlights of Q3 results and initiatives to enhance enterprise value. Please turn to page three. This shows FY 2025 Q3 results key highlights. Ordinary profit was JPY 83.5 billion. This includes minus JPY 30 billion inventory valuation impact. Ordinary profit, excluding the impact of the inventory valuation, was JPY 113.5 billion. Profit attributable to owners of parent was JPY 34.9 billion. Excluding the inventory valuation, net profit was JPY 55.9 billion. Based on the progress and the oil prices, as well as the foreign exchange, FY 2025 forecast is unchanged. Next, I'd like to explain the initiatives to enhance enterprise value. Please turn to page five for shareholder return. We position appropriate shareholder returns as one of the important initiatives. In FY 2025, interim dividend of JPY 150 per share was paid. This was before the stock split. Year-end dividend plan is JPY 90 per share. This is after the stock split. This time, in addition to the dividend, we decided to implement a share repurchase program totaling JPY 25 billion. With this buyback, we achieve 60% total shareholder return ratio in a single year of FY 2025. Please turn to page six. During the three-year medium-term management plan, or MTMP, we aimed to realize cumulative total payout ratio of 60% or more. As mentioned, with the FY 2025 shareholder return, we realized three-year cumulative total payout ratio of 60% before the end of the last year of MTMP. When we formulated the current MTMP in 2022, 2023, our net profit target, excluding the inventory valuation impact, was JPY 60 billion. For both, as you can see on the right-hand side in the graph, FY 2023 and 2024, we significantly exceeded the MTMP targets and increased shareholder return. For FY 2025, shareholder return will be based on the forecast of JPY 84 billion net profit, much higher than JPY 60 billion net profit MTMP target. Therefore, three-year total shareholder returns will significantly exceed the level of MTMP. We will continue to enhance the shareholder returns. Next, please refer to page eight. Let me explain the details of each initiative. In order to maximize uptime of refineries, we are engaged in efforts to reduce unplanned shutdowns and shorten the maintenance period by leveraging digital transformation or DX. In Q3 FY 2025, we completed the data platform development in the maintenance area. From now on, we will promote further AI utilization, and as you can see in the middle in blue, we have started to develop AI agent. We continue to enhance DX at refineries to realize maximum uptime. Please turn to page nine. I'd like to now explain the green electricity supply chain. We are steadily expanding wind power generation, constructing supply/demand adjustment functions, and amplifying green electricity sales. Especially in sales, we expanded the corporate wholesale PPAs and steadily increased retail sales to achieve this fiscal year targets. We continue to expand the green electricity supply chain revenue, which is one of the green growth initiatives. The seventh MTMP is drawing to a close. We shall continue to devote our utmost efforts to each one of its initiatives until the very end, laying the groundwork for the eighth MTMP. Thank you. Let me now explain the Q3 results review. Please turn to page 11. In petroleum business, despite the higher cost due to the inflation and refinery intermediate maintenance, the profit increased JPY 7.6 billion year-on-year to JPY 66.9 billion with product margin improvement. In petrochemical business, despite the continued losses due to the sluggish product market conditions, through business restructure initiative and higher functional chemical sales, ordinary profit was up by JPY 3.3 billion year-on-year to minus JPY 1.6 billion. In oil E&P business, there was major impact of the crude oil prices and FX. Production volume increased through implementation of the water injection at Hail Oil Field. Ordinary profit was JPY 37.9 billion, down JPY 14.9 billion year-on-year. In renewable energy business, profit was JPY 0.9 billion, up JPY 0.9 billion year-on-year with the launch of the new site. Page 12 shows the consolidated income statements. Net sales were JPY 2 trillion 8.1 billion, down JPY 30.3 billion year-on-year. Ordinary operating profit, rather, was JPY 87.8 billion, down JPY 0.3 billion year-on-year. Ordinary profit was JPY 83.5 billion, down JPY 14 billion year-on-year. Profit attributable to owners of parent was JPY 34.9 billion, down JPY 8.4 billion year-on-year. Impact of inventory valuation during this term was minus JPY 30 billion. So the ordinary profit, excluding the inventory valuation impact, was down by JPY 3.2 billion year-on-year. Net profit, excluding the valuation of the inventory, was JPY 55.9 billion, down JPY 0.8 billion year-on-year. Let me turn to page 14, showing the changes of the ordinary profit by segment. Starting with the petroleum business, it was up JPY 7.6 billion year-on-year. This includes margins and the sales volume, JPY 19.2 billion. As a further breakdown, the margin of four main products was up JPY 6.9 billion. Margin improved JPY 0.5 per liter year-on-year, including JPY 0.1 per liter for time lag. Actual margin improvement was JPY 0.4 per liter. The margin of other products was plus JPY 9.6 billion. The jet fuel was positive JPY 6.1 billion, and the lower crude oil prices led to better gross margin, up JPY 3.4 billion, including sulfur and others. Volume of four main products was down by JPY 3.9 billion. The sales volume was 98.4% of the previous year. The gasoline sales increased with the digital marketing effect, but the middle distillate declined. Volume of other products was plus JPY 2.7 billion. Import and purchase, plus JPY 3.7 billion. Export decreased due to the maintenance difference between last fiscal year and this fiscal year. Expense and other was minus JPY 19.3 billion. Inflation impact on expense was minus JPY 5.3 billion. Last year was a regular maintenance, while this year was intermediate maintenance. The repair cost went up this year, and minus JPY 6.1 billion is included in the planned maintenance. Lastly, about the refinery troubles we made, the major improvements, the impact was plus JPY 7.7 billion. Petrochemical business was up by JPY 3.3 billion year-on-year. As for the petrochemical product market condition, it is about the same as the year before. Expense and other was plus JPY 3.2 billion. There was a major effect of business structure improvement of Maruzen Petrochemical, and the decrease of the depreciation expense was the major reason. Next is oil E&P business. It was minus JPY 14.9 billion. Compared with the last year, the crude oil prices was lower and nine-month average yen strengthened. Price factor was minus JPY 16.6 billion. The volume factor was positive JPY 13.5 billion due to the full operation of Hail Oil Field starting from the beginning of this term. Expense and other was minus JPY 11.8 billion, mainly due to the FX loss impact. Next is page 15. This shows the overview of balance sheet. The total assets was at JPY 2 trillion, 193.5 billion, up JPY 36.9 billion from the end of last fiscal year. Net assets was JPY 719.1 billion, up JPY 11.6 billion from the end of last fiscal year. Net worth was JPY 590.3 billion, up JPY 5.5 billion from the end of last fiscal year. Net worth ratio was 26.9%. Net debt to equity ratio was 0.78 times, achieving the MTMP target of one. Lastly, page 16, the overview of the capital expenditure. Q3 capital expenditure was JPY 61.2 billion, down JPY 7.9 billion year-on-year. Depreciation expense, JPY 43.5 billion. On the right, we are showing the CapEx by segment. Year-on-year change of the petrochemical business, the capital expenditure was minus JPY 12.2 billion. This is because of last year's ethylene plant regular maintenance. For oil E&P business, year-on-year change was up JPY 10.1 billion, and this is related to the Mubarraz oil field redevelopment starting this fiscal year.