Security Code Tokyo 5020

August 12, 2020

FY2020 1Q Financial Results

Tanaka Soichiro

Senior Vice President

Agenda

Highlights

２

Business Environment

４

Financial Results for FY2020 1Q

７

Reference

15

Copyright © ENEOS Holdings, Inc. All Rights Reserved. 1

1Q20 Results

1Q20

Highlights

1Q19

Actual

vs 1Q19

Operating Income

49.3

→

21.0

billion yen

▲28.3 billion yen

Operating Income

69.0

→

83.2

billion yen

＋14.2 billion yen

Excl. Inventory Valuation

  • Operating Income decreased by 28.3 billion yen vs.1Q19,due mainly to decrease➢ 営in業crude利益oil price前年and同petroleum期比 ▲283product億sales円減resulting益のfrom要因 theはeffects以下ofのCOVID通り-19
  • Despite lower salesofpetroleum products,Operating Income excl.Inventory Valuation increased by 14.2 billion yen vs.1Q19,due mainly to the following factors:
    • Steady domestic petroleum product margin, with positive time lag
    • Real estate development by NIPPO
    • Sales increase of electronic materials (functional and thin film materials) due to
    • telecommunication volume increase
    • Opex decrease (timing effect, reduction effort)

Effects of COVID-19

  • Crude oil price decrease resulted in inventory valuation loss

■ as well as decrease in Oil and Natural Gas E&P segment earnings

  • Reduced transportation demand resulted in lower sales of petroleum products
  • Lowered Caserones production to prevent COVID-19 infection

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2

Forecast for FY2020

(Operating Income excluding Inventory Valuation)

Highlights

Full Year Forecast

165 billion yen

unchanged

Assumptions for Previous Release (May 2020)

As the impact of COVID-19, assumed a certain decrease in demand for petroleum products for the first half of the year

  • No COVID-19 impact assumed in the second half

Present Forecast

  • Achieved 51% of the above full year forecast with 83.2 billion yen in 1Q,
  • thanks largely to one-time positive effect such as time lag in petroleum

product margins

・From 2Q20, the following negative factors are expected: Continuation of current weak petrochemical margins Lower petroleum product sales due to Effects of COVID-19 in the second half of the year

  • Due to the above, the full year forecast remains unchanged

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3

Business Environment

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4

Crude Oil, Copper (LME), FX

Business Environment

Dubai Crude Oil

Copper (LME)

Exchange Rate

$/bbl

2019

2020

70

50

30

10

April

October

¢/lb

2019

2020

300

270

240

210

April

October

Yen/$

2019

2020

115

110

105

100

April

October

  • Decreased due to the impact of COVID-19 (vs 1Q19)
  • Subsequently rebounded due mainly to resumption of economic activities and production cuts by OPEC+
  • Declined momentarily due to COVID-19, then rebounded significantly with expectation of demand recovery in China and supply concerns due to COVID-19 situation in producing countries
  • COVID-19and uncertainty about the future of US-China relations led to the appreciation of the yen against the dollar

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5

Petroleum Products and Paraxylene Margins

Business Environment

Gasoline, Kerosene, Diesel Fuel

and Fuel Oil A Margins

yen/L

20

15

Annual

average

10

5

Bar graph = Quarterly average

0

Apr. 2019

October

Apr. 2020

Margin = Spot Price - All Japan Crude CIF (including petroleum tax and interest)

Paraxylene Margin

Paraxylene Margin (vs. Crude Oil)

$/tonParaxylene Margin (vs. Naphtha)

Annual Average Paraxylene Margin (vs. Crude Oil)

500

400

Annual

average

300

200

100

Bar graph =

Quarterly average of

PX Margin (vs. Crude Oil)

0

Apr. 2019

October

Apr. 2020

If ACP is undecided, average price of spot market is used.

  • Declined significantly from March to April, but rebounded due to time lag and other effects
  • Increased temporarily due to reduction of PX production by various companies, but demand from derivative manufacturers has not recovered and margin has remained at a low level

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Financial Results for FY2020 1Q

Financial Results for 1Q20 vs 1Q19

(April 1 - June 30, 2020)

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Overview of 1Q20 Financial Results vs 1Q19

Financial Results for 1Q20

1Q19

1Q20

Changes

（Actual）

（Actual）

■ Index

Crude Oil (Dubai)

($/B)

67

31

-36

-54%

Copper

(¢/lb)

277

242

-35

-13%

Exchange Rate

(/$)

110

108

-2

-2%

  • Profit and Loss Statement

Net Sales

(JPY billion)

2,514.8

1,546.2

-968.6

-39%

Operating Income

(JPY billion)

49.3

21.0

-28.3

-57%

Inventory Valuation

(JPY billion)

-19.7

-62.2

-42.5

-

Operating Income

(JPY billion)

69.0

83.2

+14.2

+21%

Excl. Inventory Valuation

Net Income

(JPY billion)

22.6

3.5

-19.1

-85%

Profit attributable to owners

(JPY billion)

17.4

-4.9

-22.3

-

of the parent

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Changes in Operating Income by Segment vs 1Q19

Financial Results for 1Q20

1Q19

1Q20

Changes

(JPY billion)

（Actual）

（Actual）

Total Operating Income

49.3

21.0

-28.3

-57%

Excl. Inventory valuation

69.0

83.2

+14.2

+21%

Energy

13.0

-18.4

-31.4

-

Inventory Valuation

-18.7

-62.2

-43.5

-

Excl. Inventory Valuation

31.7

43.8

+12.1

+38%

Petroleum Products

7.3

33.5

+26.2

+359%

Petrochemicals

1.7

-2.7

-4.4

-

S

Electric Power

3.1

6.2

+3.1

+100%

19.6

6.8

e

Materials

-12.8

-65%

g

Oil and Natural Gas E&P

13.2

0.7

-12.5

-95%

m

e

Metals

15.3

19.2

+3.9

+25%

n

Inventory Valuation

-1.0

0.0

+1.0

-

t

Excl. Inventory Valuation

16.3

19.2

+2.9

+18%

s

Functional Matls, Thin Fin Matls

5.1

8.5

+3.4

+67%

and others

Mineral Resources

3.9

7.0

+3.1

+79%

Smelting and Recycling

6.0

6.8

+0.8

+13%

Non-allocated corporate expenses

1.3

-3.1

-4.4

-

and others

Other

7.8

19.5

+11.7

+150%

NIPPO (JGAAP) Ordinary income

5.2

12.9

+7.7

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Changes in Operating Income vs 1Q19 - Energy Segment -

Financial Results for 1Q20

1Q19

Energy +12.1 (31.7 → 43.8)

1Q20

Operating Income

Operating Income

Excl. inventory valuation

Petroleum Products

Petrochemicals

Electric power

Materials

Excl. inventory valuation

(Actual)

+26.2 (7.3→ 33.5)

-4.4 (1.7→ -2.7)

+3.1 (3.1→ 6.2)

-12.8 (19.6→ 6.8)

(Actual)

(JPY Billion)

Despite the decrease in petroleum product sales volume due to the impact of

COVID-19, profits have increased due to strong domestic petroleum product margins

resulting from time lag and other effects

60.0

+26.2

+3.1

-4.4

40.0

-12.8

Impact Amount（JPY billion）

Sales Volume

.-4.5

43.8

20.0

31.7

Margins

+0.1

Impact Amount（JPY billion）

Sales Volume

.-18.2

Margins+44.4

0.0

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Changes in Operating Income vs 1Q19 - Oil and Natural Gas E&P Segment -

Financial Results for 1Q20

1Q19

1Q20

Operating Income

Oil and Natural Gas E&P -12.5 (13.2 → 0.7)

Operating Income

(Actual)

(Actual)

(JPY Billion)

Sales volume increased with start of production at Mariner Oil Field and Culzean Gas Field, however, profit decreased due to lower resource prices, etc.

20.0

Sales Volume (1,000 B/D)

1Q19

1Q20

+2.4

Total

99

120

Sales volume

Oil

35

44

Gas

64

76

Crude oil price ($/B)

10.0

1Q19

1Q20

Brent

69

33

Dubai

67

31

13.2

Crude oil price

-10.5

0.7

0.0

Expense and other

-4.4

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Changes in Operating Income vs 1Q19 - Metals Segment -

Financial Results for 1Q20

1Q19

Metals

+ 2.9 (16.3→ 19.2)

1Q20

Operating Income

Non-allocated

Operating Income

Excl. inventoryvaluation

Excl. inventoryvaluation

Functional Matls, Thin Film Matls and others

Mineral Resources

Smelting & Recycling

corporate expenses

(Actual)

(Actual)

+3.4(5.1→8.5)

+3.1 (3.9→ 7.0)

+0.8 (6.0→ 6.8)

and others

-4.4 (+1.3→ -3.1)

(JPY Billion)

Profit increased due mainly to sales increase of electronic materials, with increased work-

30.0

from-home and thus data communication

+3.1

+0.8

+1.8

+1.6

20.0

Functional Matls and

Others

Thin Film Matls

-4.4

Caserones production（thousand tons）

19.2

1Q19

1Q20

10.0

40

36

16.3

Copper price（¢/lb）

1Q19

1Q20

Average Copper Price

277

242

Price Range

-23 (294→271)

+56(218→274)

0.0

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Consolidated Balance Sheets / Consolidated Cash Flows

Financial Results for 1Q20

Consolidated Balance Sheets

Consolidated Cash Flows

(JPY Billion)

Net interest bearing debt

is 1,850.3 billion yen

As of March 31, 2020

As of June 30, 2020

Total：8,011.3

Total：7,694.9

Cash and cash

Cash and cash

equivalents

402.0

equivalents

Interest

468.3

Interest

bearing debt

2,300.8

bearing debt

2,318.6

Other debt

Other debt

Other assets

3,002.6

Other assets

2,745.4

7,609.3

7,226.6

396.9

395.0

Total equity

Total equity

attributable to

attributable to

owners of the

owners of the

parent

parent

2,311.0

2,235.9

Non-controlling interests

Lease liability

1Q20

repayment

(JPY billion)

reclassified to

Op. CF

Operating income

83.2

83.2

(Excl. inventory valuation)

Depreciation and amortization

79.7

58.8

Working capital and other

25.9

25.9

Cash flows from operating activities

188.8

167.9

Capital investment

-59.1

-59.1

Asset sales and other

-22.9

-22.9

Cash flows from investing activities

-82.0

-82.0

Free cash flows

106.8

85.9

As of March 31, 2020

As of June 30, 2020

(Actual)

(Actual)

Equity ratio attributable to

28.8%

29.1%

owners of the parent

Net D/E ratio

0.70

0.70

(capital total basis)

Dividends and other

-62.4

-41.5

Net cash flows

44.4

44.4

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Major Topics (from April 2020 to August 2020)

Reference

Implementing Second Medium-Term Management Plan Steadily

ENEOS Holdings / ENEOS

Apr. Started commercial operation of the city gas production and supply facilities of Ogishima City Gas Supply Co

May

Announced "Second Medium-Term Management Plan (FY2020-2022)"

May

Started commercial operation of Muroran biomass power plant

Jun. Participated in the Tokyo Bay Zero Emission Innovation Conference

Jun. Started collaboration with SENSYN ROBOTICS, Inc. to construct drone station

Jun. Started collaboration with CHITOSE BIO EVOLUTION PTE. LTD., to create a bio-based,low-carbon, sustainable society Jun. Decided to invest in Gore Street Energy Storage Fund

Jun. Launched a business capital alliance with Looop Inc Jun. Launched Sustainable Power Supply Fund

Jul. Concluded a basic agreement with Shizuoka Prefecture for the promotion of next-generation energy and community development in the Sodeshi area of Shimizu, Shizuoka City

Jul. Started collaboration with Luup Corporation to promote electric micro mobility in society

JX Nippon Oil & Gas Exploration

Jun. Nakajo Gas Field's coastal forest conservation efforts featured in "Annual Report on Forest and Forestry in Japan" (Forestry Agency)

JX Nippon Mining & Metals

Jun. Completed expansion of facility for raising production capacity of rolled copper foil, high-functionality copper alloy strips and sputtering targets

Jun. Relocated the corporate headquarters as part of efforts to realize the JX Nippon Mining & Metals Corporation Group Long-Term Vision 2040

Jun. Started collaboration with Novel Crystal Technology in the power semiconductor device materials field Jul. Acquired shares of Osaka Alloying Works, Co., Ltd.

Jul. Held location announcement ceremony for logistics base for recycled raw materials in the Ozai West area, Oita port

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Financial Results for FY2020 1Q

Reference

Copyright © ENEOS Holdings, Inc. All Rights Reserved. 15

Key Factors

Reference

FY2019

FY2020

1Q

1H

Full Year

1Q

1H

Full Year

Actual

Actual

Actual

Actual

Forecast

Forecast

110

109

109

108

105

105

All segments

Exchange rate [Yen/$]

Crude oil price (Dubai) [$/bbl]

67

64

60

31

30

30

Energy

Oil and

Sales volume (Crude oil equivalent) [1,000 bbl/day]

99

93

106

120

122

127

Natural Gas

Crude oil price (Brent) [$/bbl]

69

66

62

33

33

33

E&P

277

270

266

242

250

250

Copper price (LME) FY [¢/lb]

Metals

Equity entitled copper mine production * [1,000 tons/period or year]

54

109

213

51

108

222

PPC copper cathode sales [1,000 tons/period or year]

155

318

630

144

307

624

Precision rolled products sales [1,000 tons/month]

3.0

3.1

3.3

3.3

3.7

3.8

*

Companies

Companies

closing in Dec.

closing in Mar.

1Q

Jan. - Mar.

Apr. - Jun.

1H

Jan. - Jun.

Apr. - Sep.

Full

Jan. - Dec.

Apr. - Mar.

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Sensitivity Analysis

Reference

＊Reposting Forecast on May

  • Index (From April 2020)

Exchange Rate: 105 Yen/$

Crude Oil: 30

$/bbl

Copper Price (LME) : 250 ¢/lb

  • Sensitivity analysis

(JPY Billion)

Index

Change

Segment

Impact

Energy (In-house fuel costs rise, margin improvement in

petrochemicals, exchange gain)

+7.5

5 Yen/$

Oil and Natural Gas E&P

0.0

Exchange Rate

Metals (Margin improvement, exchange gain)

+6.5

yen depreciation

Subtotal

+14.0

Inventory valuation

+12.0

Total

+26.0

Energy

-3.5

Crude Oil

Oil and Natural Gas E&P

+9.5

+5$/bbl

Subtotal

+6.0

(Dubai spot)

Inventory valuation

+42.5

Total

+48.5

Copper Price

+10¢/lb

Metals

+7.0

(LME)

Total

+7.0

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Cautionary Statement Regarding Forward-Looking Statements

This notice contains certain forward-looking statements, however, actual results may differ materially from those reflected in any forward-looking statement, due to various factors, including but not limited to, the following:

  1. macroeconomic conditions and changes in the competitive environment in the energy, resources and materials industries;
  2. the spread of the novel coronavirus and the impact of the novel coronavirus on economic activity
  3. changes in laws and regulations; and
  4. risks related to litigation and other legal proceedings.

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Eneos Holdings Inc. published this content on 12 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 August 2020 09:12:15 UTC