This document is an English translation of quarterly financial results report released on October 31, 2023 and written initially in Japanese.
The Japanese original should be considered as the primary version.
October 31, 2023
Consolidated Financial Results for the First Six Months of
the Fiscal Year Ending March 31, 2024
Company name: | Itochu Enex Co., Ltd. |
Listing: | Tokyo Stock Exchange |
Stock code: | 8133 |
URL: | https://www.itcenex.com/english/ |
Representative: | Tomofumi Yoshida, Representative Director, President and Chief Executive Officer |
Contact: | Shinichiro Inoue, Executive Officer, Chief Compliance Officer, Assistant to Chief |
Financial Officer, Deputy Chief Operating Officer, Corporate Administration Division I | |
and General Manager, Finance & General Accounting Department | |
Tel: +81-3-4233-8008 |
Scheduled date to file quarterly securities report: November 13, 2023
Scheduled date to commence dividend payments: December 6, 2023
Preparation of supplementary results briefing material on quarterly financial results: Yes
Holding of quarterly financial results presentation meeting: Yes (for institutional investors and analysts)
(Millions of yen with fractional amounts rounded, unless otherwise noted)
1. Consolidated financial results for the first six months of the fiscal year ending March 31, 2024 (from April 1, 2023 to September 30, 2023)
(1) Consolidated operating results
Profit from | Net profit | ||||||||||||||||
attributable to | Comprehensive | ||||||||||||||||
Revenue | operating | Profit before tax | Net profit | ||||||||||||||
Itochu Enex's | income | ||||||||||||||||
activities | |||||||||||||||||
shareholders | |||||||||||||||||
Six months ended | Millions | % | Millions | % | Millions | % | Millions | % | Millions | % | Millions | % | |||||
of yen | of yen | of yen | of yen | of yen | of yen | ||||||||||||
September 30, 2023 | 455,635 | (8.8) | 15,885 | 46.7 | 15,430 | 31.1 | 10,418 | 28.0 | 8,917 | 28.5 | 11,230 | 27.2 | |||||
September 30, 2022 | 499,522 | 25.5 | 10,830 | 18.5 | 11,771 | 19.8 | 8,139 | 18.3 | 6,939 | 25.5 | 8,830 | 31.8 | |||||
Basic earnings per | Diluted earnings | ||||||||||||||||
per share | |||||||||||||||||
share attributable | |||||||||||||||||
attributable to | |||||||||||||||||
to Itochu Enex's | |||||||||||||||||
Itochu Enex's | |||||||||||||||||
shareholders | |||||||||||||||||
shareholders | |||||||||||||||||
Six months ended | Yen | Yen | |||||||||||||||
September 30, 2023 | 79.01 | - | |||||||||||||||
September 30, 2022 | 61.47 | - |
(2) | Consolidated financial position | |||||||||
Total assets | Total equity | Total shareholders' | Ratio of shareholders' | |||||||
equity | equity to total assets | |||||||||
As of | Millions of yen | Millions of yen | Millions of yen | % | ||||||
September 30, 2023 | 426,551 | 187,839 | 159,783 | 37.5 | ||||||
March 31, 2023 | 433,024 | 180,328 | 152,961 | 35.3 | ||||||
2. Cash dividends | ||||||||||
Annual cash dividends per share | ||||||||||
First quarter-end | Second quarter-end | Third quarter-end | Fiscal year-end | Total | ||||||
Fiscal year ended | Yen | Yen | Yen | Yen | Yen | |||||
March 31, 2023 | - | 24.00 | - | 26.00 | 50.00 | |||||
Fiscal year ending | - | 26.00 | ||||||||
March 31, 2024 | ||||||||||
Fiscal year ending | - | 26.00 | 52.00 | |||||||
March 31, 2024 | ||||||||||
(Forecast) | ||||||||||
Note: | Revisions to the forecasts of cash dividends most recently announced: None |
3. Consolidated earnings forecasts for the fiscal year ending March 31, 2024 (from April 1, 2023 to March 31, 2024)
(Percentages indicate year-on-year changes.)
Net profit | Basic earnings | |||||||||||
Profit from operating | per share | |||||||||||
Revenue | Profit before tax | attributable to Itochu | attributable to | |||||||||
activities | ||||||||||||
Enex's shareholders | Itochu Enex's | |||||||||||
shareholders | ||||||||||||
Millions of yen | % | Millions of yen | % | Millions of yen | % | Millions of yen | % | Yen | ||||
Fiscal year ending | 1,200,000 | 18.6 | 20,900 | (2.2) | 22,300 | (3.2) | 13,500 | (2.4) | 119.62 | |||
March 31, 2024 | ||||||||||||
Note: Revisions to the consolidated earnings forecasts most recently announced: None |
- Notes
- Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change in scope of consolidation): None
- Changes in accounting policies and changes in accounting estimates
a. Changes in accounting policies required by IFRSs: | None |
b. Changes in accounting policies other than the above: | None |
c. Changes in accounting estimates: | None |
- Number of issued shares (common stock)
a. Total number of issued shares at end of period (including treasury stock)
As of September 30, 2023 | 116,881,106 shares |
As of March 31, 2023 | 116,881,106 shares |
b. Number of treasury stock at end of period
As of September 30, 2023
As of March 31, 2023
3,996,873 shares
4,025,827 shares
c. Average number of outstanding shares during period (cumulative from the beginning of the fiscal year)
For the six months ended September 30, 2023 | 112,863,483 shares |
For the six months ended September 30, 2022 | 112,884,531 shares |
- Quarterly financial results reports are exempt from quarterly review conducted by certified public accountants or an audit corporation.
-
Proper use of earnings forecasts, and other special notes (Caution regarding forward-looking statements and others)
The forecasts and other forward-looking statements in this report are based on information currently available to the Company and on certain assumptions deemed to be reasonable by the Company. Actual business and other results may significantly differ from these forecasts due to various factors.
Contents of Attached Materials | ||
1. Qualitative Information Regarding Results for the First Six Months | 2 | |
(1) | Explanation of Operating Results | 2 |
(2) | Explanation of Financial Position | 6 |
2. Condensed Quarterly Consolidated Financial Statements and Significant Notes Thereto | 8 | |
(1) | Condensed Quarterly Consolidated Statement of Financial Position | 8 |
(2) | Condensed Quarterly Consolidated Statement of Comprehensive Income | 10 |
(3) | Condensed Quarterly Consolidated Statement of Changes in Equity | 12 |
(4) | Condensed Quarterly Consolidated Statement of Cash Flows | 13 |
(5) | Notes on Uncertainties of Entity's Ability to Continue as Going Concern | 15 |
(6) | Segment Information | 15 |
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1. Qualitative Information Regarding Results for the First Six Months
- Explanation of Operating Results
- Results of operations
During the six months ended September 30, 2023, the outlook for the Japanese economy such as the heightening of geopolitical risks and the impact of foreign exchange rates was expected to become even more uncertain going forward, although the high domestic prices of petroleum products, electricity and other energy have begun to settle.
Under these conditions, at the Itochu Enex Group, we have newly formulated our medium-term business plan "ENEX2030" in April 2023.
Overview of medium-term business plan
1. Name of the plan:
2. Period: | Eight years (FY2023 to FY2030) |
3. Overview of the Medium-Term Business Plan, ENEX2030:
1) Desired direction
- Strengthening onsite capabilities
- Enhancing the customer base and improving earnings capabilities in existing business
- Improving Group communication, building comprehensive strength, strengthening on- site capabilities
- Accelerating investment
- Accelerating investment by developing a framework for promoting investment
- Making new and strategic investment of ¥210.0 billion
- Management targets (Financial Indicators)
- Net profit: ¥20.0 billion or more, (2) Substantive operating cash flows(*1): ¥45.0 billion, (3) ROE: 9.0% or more, (4) New / strategic investments (8-year total): ¥210.0 billion
(Non-financial Indicators)
(1) GHG emissions: 50% reduction or more (comparison with FY2018, Scopes 1 and 2), (2) Ratio
of female hires: 30% or above, (3) Percentage of female managers: 10%, (4) Ratio of childcare
leave taken by male employees: 80% or more
4. Overview of the Medium-Term Business Plan, ENEX2030 '23-'24(2023-2024)
- Positioning: Developing a framework for achieving growth strategies by strengthening onsite capabilities and revenue base, in preparation for realization of the 2030 Vision
- Main initiatives: (i) Bolstering onsite capabilities (ii) Developing a framework for making investment (iii) Strengthening organizations and human resources
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- Management targets (Financial Indicators)
- Net profit (FY2023/FY2024): ¥13.5 billion, (2) Substantive operating cash flows: ¥35.0 billion each fiscal year, (3) ROE (FY2023/FY2024): 8~9%, (4) Total amount of investments: ¥60.0 billion (of which CAPEX, ¥16.0 billion)
(Shareholder returns)
Enex will pay progressive dividends with a strong emphasis on a consolidated dividend payout ratio of 40% or more.
(*1) Substantive operating cash flows excludes working capital, etc. from cash flows from operating activities.
Under the new medium-term business plan described above, we have promoted our business. The operating results for the six months ended September 30, 2023 are as follows.
Six months ended | Six months ended | |
September 30, 2022 | September 30, 2023 | |
Revenue | 499,522 | 455,635 |
Profit from operating activities | 10,830 | 15,885 |
Net profit attributable to Itochu Enex's | 6,939 | 8,917 |
shareholders | ||
(Millions of yen)
Change
(43,887)
5,055
1,978
Revenue was ¥455,635 million (down 8.8% year on year). This was mainly due to a decrease in selling prices resulting from lower crude oil and LP gas prices.
Profit from operating activities was ¥15,885 million (up 46.7% year on year). Net profit attributable to Itochu Enex's shareholders was ¥8,917 million (up 28.5% year on year). This was mainly due to contributions from the electricity power retail business and car dealer business as well as one-time profit from the sale of non-current assets due to asset turnover, despite the reactionary effect of the Industrial Business Division's strong performance in the same period of the previous fiscal year and the negative impact on profit margins from changes in unit inventory prices in the Home-Life Division.
- Results of operations by segment
Results of operations by segment are as follows.
Home-Life Division
(Millions of yen) | |||
Six months ended | Six months ended | Change | |
September 30, 2022 | September 30, 2023 | ||
Revenue | 35,085 | 28,373 | (6,712) |
Profit (loss) from operating activities | 242 | (418) | (660) |
Net profit (loss) attributable to Itochu Enex's | 583 | (653) | (1,236) |
shareholders | |||
LP gas business: The number of customers under direct LP gas supply contracts increased by approximately 8,000 from the end of the previous fiscal year to approximately 573,000 as a result of
- 3 -
acquiring new customers and sales rights in the LP gas business. LP gas sales volume decreased year on year mainly due to the impact of higher average temperatures year on year.
The operating results for the six months ended September 30, 2023 are as follows.
Revenue was ¥28,373 million (down 19.1% year on year). This was mainly due to a decrease in selling prices caused by a drop in LP gas import prices year on year.
Loss from operating activities was ¥418 million (profit of ¥242 million for the same period of the previous fiscal year). Loss attributable to Itochu Enex's shareholders was ¥653 million (profit of ¥583 million for the same period of the previous fiscal year). This was mainly due to the negative impact on profit margins from changes in unit inventory prices resulting from the decline in LP gas import prices.
Car-Life Division
(Millions of yen) | |||
Six months ended | Six months ended | Change | |
September 30, 2022 | September 30, 2023 | ||
Revenue | 273,440 | 298,388 | 24,948 |
Profit from operating activities | 4,391 | 7,013 | 2,622 |
Net profit attributable to Itochu Enex's shareholders | 2,365 | 3,831 | 1,466 |
Car-Life Stations (CS)(*2) business: The number of CS was 1,590, a decrease of 20 compared with the end of the previous fiscal year. Sales volumes of petroleum products increased year on year as demand for petroleum products showed a recovery trend due to the easing of the impact of the COVID-19 pandemic.
Automotive business: Our car dealer business subsidiary OSAKA CAR LIFE GROUP CO., LTD. experienced an increase in overall sales volume year on year due to strong new car sales volume resulting from a recovery of the semiconductor supply.
The operating results for the six months ended September 30, 2023 are as follows.
Revenue was ¥298,388 million (up 9.1% year on year). This was mainly due to an increase in sales volumes of petroleum products.
Profit from operating activities was ¥7,013 million (up 59.7% year on year). Net profit attributable to Itochu Enex's shareholders was ¥3,831 million (up 62.0% year on year). This was mainly due to strong sales of new models in the car dealer business as well as one-time profit from the sale of the CS site (¥1,534 million impact on profit from operating activities).
(*2) Car-Life Stations: Car-Life Stations are service stations offering multiple services provided by the Company.
Industrial Business Division
(Millions of yen) | |||
Six months ended | Six months ended | Change | |
September 30, 2022 | September 30, 2023 | ||
Revenue | 136,469 | 67,583 | (68,886) |
Profit from operating activities | 5,011 | 1,474 | (3,537) |
Net profit attributable to Itochu Enex's shareholders | 3,456 | 1,072 | (2,384) |
Marine fuel sales business: Sales volumes decreased year on year due to a partial reduction in transactions for ocean-going vessels.
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Environmental businesses: Sales volumes of AdBlue®(*3) increased year on year due to steady progress in developing sales channels.
Asphalt sales business: Sales volumes increased year on year due mainly to the acquisition of new commercial rights.
The operating results for the six months ended September 30, 2023 are as follows.
Revenue was ¥67,583 million (down 50.5% year on year). This was mainly due to decreases in selling prices and sales volumes resulting from lower crude oil prices.
Profit from operating activities was ¥1,474 million (down 70.6% year on year). Net profit attributable to Itochu Enex's shareholders was ¥1,072 million (down 69.0% year on year). This was mainly due to the rebound of the distribution terminal business and marine fuel sales business, which were strong in the same period of the previous fiscal year, despite the strong performance of the industrial gas sales business.
(*3) AdBlue® is a world-standardHigh-Grade Aqueous Urea used in the decomposition and detoxification of diesel exhaust. (AdBlue® is a registered trademark of Verband der Automobilindustrie e.V. (VDA).)
Power & Utility Division
(Millions of yen) | |||
Six months ended | Six months ended | Change | |
September 30, 2022 | September 30, 2023 | ||
Revenue | 54,528 | 61,291 | 6,763 |
Profit from operating activities | 807 | 7,352 | 6,545 |
Net profit attributable to Itochu Enex's shareholders | 323 | 4,435 | 4,112 |
Electricity power retail business: Although sales volume in low-voltage sales increased year on year due to the acquisition of new contracts, total sales volume decreased year on year(*4) due to a focus on profitability management in high-voltage sales. The number of customers for electricity retail for the entire Group was 321,000 (down approximately 13,000 year on year).
Heat supply business(*5): Heat sales volume increased year on year due to an increase in air conditioning use in conjunction with higher average temperatures year on year.
The operating results for the six months ended September 30, 2023 are as follows.
Revenue was ¥61,291 million (up 12.4% year on year). This was mainly due to an increase in selling prices in response to a rapid rise in resource prices.
Profit from operating activities was ¥7,352 million (profit of ¥807 million for the same period of the previous fiscal year). Net profit attributable to Itochu Enex's shareholders was ¥4,435 million (profit of ¥323 million for the same period of the previous fiscal year). This was mainly due to a contribution from the electricity power retail business due to selling price revisions and a one-time profit from the sale of a large-scale solar power plant (mega solar power plant) (¥5,019 million impact on profit from operating activities).
(*4) Sales volume of electricity power retail business includes brokerage volume for both high voltage and low voltage.
(*5) Heat supply business: The heat supply business supplies cold and hot water for air conditioning to multiple office buildings and other buildings from a heat source plant using pipes.
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- Explanation of Financial Position Assets, liabilities and equity
(Millions of yen) | |||
As of March 31, 2023 | As of September 30, | Change | |
2023 | |||
Total assets | 433,024 | 426,551 | (6,473) |
Total liabilities | 252,696 | 238,712 | (13,984) |
Total equity | 180,328 | 187,839 | 7,511 |
Total assets amounted to ¥426,551 million as of September 30, 2023, a decrease of ¥6,473 million from March 31, 2023. This was mainly due to a decrease in property, plant and equipment of ¥19,908 million due to the sale of non-current assets, a decrease in cash and cash equivalents of ¥8,222 million resulting from using the cash proceeds of sales to repay borrowings, etc., and deposits paid to the parent, and an increase in other current financial assets of ¥23,594 million. Total liabilities amounted to ¥238,712 million, a decrease of ¥13,984 million from March 31, 2023. This was mainly due to a decrease in bonds and borrowings of ¥11,373 million. Total equity totaled ¥187,839 million, an increase of ¥7,511 million from March 31, 2023, due to factors including an increase of ¥8,917 million from net profit attributable to Itochu Enex's shareholders and a decrease of ¥3,751 million by payment of cash dividends.
Cash flows
The Group maintained an operating structure capable of aggressively promoting investment to expand peripheral businesses and develop new business areas, using the cash flow generated from its core businesses.
With respect to financing capacity for the time being, we have sufficiently secured account overdraft facilities and commercial paper issuance facilities, in addition to maintaining ample cash and cash equivalents. Moreover, we have maintained healthy levels of debt thus far, which is currently reflected by our net debt-equity ratio (net DER) of negative 0.13 times.
(Millions of yen) | |||
Six months ended | Six months ended | Change | |
September 30, 2022 | September 30, 2023 | ||
Cash flows from operating activities | 11,852 | 12,489 | 637 |
Cash flows from investing activities | (5,507) | 461 | 5,968 |
[Free cash flows] | [6,345] | [12,950] | [6,605] |
Cash flows from financing activities | (14,813) | (21,224) | (6,411) |
Net decrease in cash and cash equivalents | (8,468) | (8,274) | 194 |
Effect of exchange rate changes on cash and cash | 35 | 52 | 17 |
equivalents | |||
Cash and cash equivalents at the end of the | 29,712 | 23,791 | (5,921) |
period | |||
Cash and cash equivalents (net cash) totaled ¥23,791 million as of September 30, 2023, down ¥8,222 million from March 31, 2023.
- 6 -
Cash flows from operating activities
(Millions of yen) | |||
Six months ended | Six months ended | Change | |
September 30, 2022 | September 30, 2023 | ||
Cash flows from operating activities | 11,852 | 12,489 | 637 |
Changes in working capital and others | (7,046) | (144) | 6,902 |
Substantive operating cash flow(*6) | 18,898 | 12,633 | (6,265) |
(*6) Cash flows from operating activities minus working capital and others (decrease (increase) in trade receivables, decrease (increase) in inventories, increase (decrease) in trade payables, other - net).
Operating activities provided net cash of ¥12,489 million. Major items included profit before tax of
¥15,430 million, depreciation and amortization of ¥10,499 million, gain from tangible assets, intangible assets and goodwill of ¥6,516 million, and income taxes paid of ¥8,037 million. Cash flows from operating activities increased by ¥637 million year on year. Moreover, substantive operating cash flow decreased by ¥6,265 million year on year.
Cash flows from investing activities
The Group has always made investments with an awareness of capital efficiency based on our investment strategy.
Investing activities provided net cash of ¥461 million. This was mainly due to proceeds from sales of property, plant and equipment and investment property, mainly a large-scale solar power plant (mega solar power plant) of ¥26,872 million, payments resulting from an increase in deposits of excess funds paid to the parent of ¥20,000 million, and payments for purchase of property, plant and equipment and investment property of ¥5,286 million. Cash flows from investing activities increased by ¥5,968 million year on year.
Cash flows from financing activities
The Group aims to streamline Group-wide financing activities to enhance our corporate value, and is strengthening financial management through the Group Financial System(*7).
Financial activities used net cash of ¥21,224 million. This was mainly due to repayments of bonds and borrowings of ¥11,220 million, repayments of lease liabilities of ¥5,661 million, and cash dividends paid to Itochu Enex's shareholders of ¥2,938 million. Cash flows from financing activities decreased by ¥6,411 million year on year.
(*7) The Group Financial System streamlines fund management and procurement costs by sharing funds within the Group.
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Disclaimer
Itochu Enex Co. Ltd. published this content on 02 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 November 2023 18:39:20 UTC.