Supporting Material for 1 st Quarter Results 2017

Transcription

1 Supporting Material for 1 st Quarter Results th May 217 1

2 Notes This document contains forward-looking statements concerning the results of operations and businesses of. Forward-looking statements are statements of future expectations that are based on management s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. 2

3 1Q 217 Overview Jan-Mar Jan-Mar 217 Yen Billion Oil Business operating income (CCS*) Energy Solutions Business operating incom CCS* operating income Ordinary income CCS* ordinary income Net income attributable to owners of the parent CCS* net income attributable to owners of the parent Net income attributable to owners of the parent per share, yen per share Financial Result Highlights CCS ordinary income was 15.6 billion yen, increased YonY. Ordinary income significantly increased due to the inventory valuation gains caused by the crude oil price increase. Oil Business CCS operating profit largely improved YonY. Energy Solutions Business deficit expanded YonY. Highlights (Oil) Domestic fuel margins improved YonY due to stable crude oil prices, while petrochemical margins remained healthy. Total sales volume of 4 major fuels, such as gasoline and diesel oil, decreased YonY mainly because the calendar this year lacked one day compared to last year. Group refinery utilization continued above the industry. Highlights (Energy Solutions) (Note) Others and adjustment are included in the Oil Business. * CCS: Current Cost of Supply (Solar) Domestic marketing focus strengthened in line with the new business strategy. Continuous panel price fall expanded the losses YonY. (Power) Operating income slightly decreased YonY mainly because of a time lag deferring fuel cost transfer to power prices despite the crude oil price increase. 3

4 Business Environment - Crude Oil and Foreign Exchange Dubai crude oil Exchange rate (USD) Crude oil CIF Japan USD/bbl Yen/USD Yen/L Q 2Q 3Q 4Q 1Q Q 2Q 3Q 4Q 1Q Q 2Q 3Q 4Q 1Q Source: Trade Statistics of Japan 4

5 /L Margin Environment - Oil Business (Jan-Mar) 1Q Japanese refining margins 2Q 3Q 4Q 1Q 217 Gasoline Kerosene Diesel oil USD/ton Asia Far East petrochemicals margins 1Q 2Q 3Q 4Q 4Q Mixed Xylene Benzene Propylene Domestic spot prices minus crude oil CIF Spot prices minus Dubai spot price Although domestic fuel margins faltered over January to February due to demand slow down caused by unstable weather conditions, the margins recovered in March and the quarterly average margins ended up with a reasonable level. Petrochemical margins as a whole remained in good stability. Margins of mixed xylene, our main product, have been gradually declining but still at a healthy level. 5

6 Highlights of Financial Results (Jan-Mar) Crude oil price & exchange rate Highlights of financial results (million yen) 217 Jan-Mar Jan-Mar Changes Dubai crude oil price (USD/bbl) Exchange Rate (\/USD) Jan-Mar Jan-Mar Sales 432,785 53, , % Operating income -8,137 22, ,78 - Non-Operating income -67 1, ,186 - Ordinary income -8,87 24, ,967 - Inventory valuation -18,22 8, ,488 - CCS ordinary income 9,214 15, , % Extraordinary income 2,671-1,67-3,739 - Net income attributable to owners of the parent -6,942 14, ,36 - CCS net income attributable to owners of the parent 5,121 8,24 + 3, % Notes CCS ordinary income(ordinary income on Current Cost of Supply basis): Ordinary income based on costs excluding inventory valuation effects. Changes vs. 6

7 Sales Information by Business Segment (Jan-Mar) (million yen) Operating income (million yen) 217 Jan-Mar Jan-Mar 217 Jan-Mar Jan-Mar Oil Business -8,78 25, ,526 - Inventory valuation -18,22 8, ,488 - Oil Business CCS OP 9,943 16, , % Energy Solutions Business ,89-2,67 - Others % Adjustment Total Operating Income -8,137 22, ,78 - Total CCS operating incom 9,885 14, , % Oil Business: Manufacturing and sales of oil products, such as gasoline, naphtha, kerosene, diesel oil, fuel oil, lubricants, LPG, bitumen, and chemicals Energy Solutions Business: Manufacturing and sales of solar modules and electricity Changes vs. Oil Business 392, , , % Energy Solutions Business 37,972 22, , % Others 1,98 1, % Total sales 432,785 53, , % Changes vs. Others: Leasing and administration of properties, construction works, sale and lease of auto accessories, etc. 7

8 Earnings Performance (Jan-Mar) Oil Business Quarterly operating income 6 Billion yen Energy Solutions Business Quarterly operating income Q 2Q 3Q 4Q 1Q 217 OP in 1Q on CCS basis improved both YonY and QonQ. As much as or more than 1 billion yen of profits have been secured for six quarters in a row. Petrochemicals maximally produced and continued highly profitable. Positive inventory valuation effects due to the crude oil price increase in 1Q. OP in 1Q improved QonQ, but losses grew YonY. Solar Business profit improved QonQ. Though focusing more on the domestic sales based on the new business strategy, continuous selling price fall expanded losses. Electric Power Business slightly decreased in profit both YonY and QonQ because of the time lag when transferring fuel costs to power prices according to the crude oil price movement. 8

9 Ordinary Income 1Q vs. 1Q 217 (Unit: Billion Yen) Ordinary income **Stock Effect etc **Stock Effect etc. CCS Ordinary income Ordinary Income *CCS Ordinary Income Nonope. Petrochemicals Oil Products Subsidiaries Refinery Solar cost and Business M&A Power Business Others etc. *CCS Ordinary Income Ordinary Income 1Q 1Q 217 * CCS: Current Cost of Supply ** Including the effect of Lower of cost or market value method for Oil 9

10 Oil Business Operational Performance (Jan-Mar) Refinery utilization % 11 Domestic sales volume growth YonY (4 products total*) 1 9 Source of Industry: Petroleum Association of Japan 8 1Q 215 2Q 215 3Q 4Q Showa Shell 1Q 2Q 3Q Industry 4Q * 4 products: Gasoline, Kerosene, Gas oil, A-type fuel oil Source of Industry: Statistics by METI Industry in 1Q217 is based on flash report. 1Q 217 Utilization of group refineries maintained above the industry level as there was no planned maintenance and stable operations continued. Total sales volume of higher value-added 4 products, such as gasoline, kerosene, and diesel oil, decreased YonY mainly because the calendar this year lacked one day compared to last year. Max production for highly profitable petrochemicals continued, including the TDP* at Yokkaichi Refinery which came on line last June. Export volume, mainly focused on gasoline, declined YonY due to product stockpiling required for the coming refinery maintenance in 2Q. *TDP: Toluene Disproportionation Process unit to produce mixed xylene and benzene. 1

11 Crude Oil Refined and Sales Volume (Jan-Mar) Crude oil refined & utilization rate 217 Jan-Mar Jan-Mar Changes Crude oil refined (thousand KL) 6,9 5,989-2 Refinery utilization rate 93.3% 94.1% +.8% Sales volume by products (Thousand KL) Jan-Mar 217 Jan-Mar vs. Gasoline 2,78 1, % Jet Fuel % Kerosines 1,185 1, % Diesel Oil 1,316 1, % Fuel Oil A % Fuel Oil C % Chemicals*(thousand MT) % Others % Total Domestic sales 6,771 6,637-2.% Export % Grand Total 7,381 7,24-4.8% [Note] The numbers of crude oil refined and utilization rate based on Keihin, Yokkaichi, and Yamaguchi Refineries *Chemicals: Mixed Xylene, Benzene, Propylene 11

12 MW 4 Solar Business Operational Performance (Jan-Mar) Quarterly panel shipment volume Panel allocation by region/usage Q 2Q 3Q 4Q Overall panel shipment volume largely decreased YonY as shifting more to the domestic sales based on the new business strategy. Marginal overseas sales restricted to the minimum requirement. Our domestic sales progressed in line with plan despite the continuously declining domestic demand. However, our domestic sales volume decreased YonY mainly due to shipment delay for large orders. Miyazaki Plant in March started production of SmaCIS, new strategic product for residential application, which will come on sales in July. Kunitomi Plant tried production of new high-efficiency panels, which will enter the market within 2H217, while continuing commercial production of existent panels. Tohoku Plant has started activities to examine technologies for the new solar panel, while continuing existent panel productions. The world record efficiency in thin-film arena achieved at 19.2% with a 3 cm2 submodule in February. *BOT:Abbreviation for Build, Own, Transfer. It aims to develop solar power plants and finally sell them to third-party customers. 12

13 Forecast of Full Year Results for 217 No change has been made to the forecast published on 14 th Feb. million yen 217 Results Forecast Net sales 1,726,75 2,8, Operating income 46,41 63, Inventory valuation 11,223 2, CCS operating income 35,187 43, - Oil Business 42,619 43, - Energy Solutions Business -9,173 Billion yen Operating Income by segment Oil Business inventory valuation Oil Business CCS operating Income Operating income 46.4 Operating income Others and adjustment* 1,742 - Ordinary income 47,84 68, CCS ordinary income 36,617 48, Net income attributable to owners of the parent 16,919 43, *217 forecast for Others and adjustment is included in the Oil Business. <Key factors for forecast> Oil Business: -1-2 Energy Solutions Business Result 217 Forecast * Others and adjustment is included in the Oil Business. *OP for ES Business is forecast to be zero in 217. Expect the inventory valuation gains remain on the annual basis, assuming stable CIF Japan crude oil prices. Expect reasonable domestic fuel margins due to stable demand and effects from refining capacity cut-down by 2 nd Kodokaho. Energy Solutions Business: Solar Business: Expect new business strategy progresses in line with plan, assuming panel selling prices decrease within expectation. Electric Power Business: Expect steady profits, based on stable and efficient power plant operations at a high utilization. 13

14 Base Assumptions and Sensitivity Analysis Crude oil price & exchange rate (Full year average) Forecast Forecast in Feb in May Dubai crude oil price (USD/bbl) Exchange rate (Yen/USD) Inventory valuation sensitivity (Only for April to December, 217) Unit Impact to inventory valuation (billion yen) Dubai crude oil price 1 USD/bbl 1.3 Exchange rate 1 Yen/USD.6 * The impact would change by the timing of crude oil price fluctuation and inventory volume. * Sensitivity for Lower of Costs or Markets not included. 14

15 Execution of agreement regarding the enhancement and promotion of the business collaboration with Idemitsu Kosan Co.,Ltd 12 th May 217 Please find the press release letter dated on 9 th May 217 in our web site for more details. 15

16 Objectives of The Alliance, etc. Objectives of the Alliance Considering business environmental change and interest of stakeholders regarding both companies, Aiming at the business integration as we have been seeking, Until the integration happens, the both companies as equal business partners aim to capture synergy effects as soon as possible to enhance their corporate values. Further, aim to promote interaction and harmonization between personnel from both companies beyond corporate boundaries. Name of the Alliance (Alliance mark) Brighter Energy Alliance Make continuous efforts for self-evolution and boldly strive for upcoming innovations, anticipating changes in the business environment, as an alliance with leading competitiveness in Asia. Date of the Alliance beginning Gradually starting from 9 th May 217 昭和シェル石油株式会社 16

17 Details of the Alliance (1) (1)Realizing synergies from the integration in the domestic oil business We will realize synergies through the following collaborative activities prior to the integration. Optimization of crude oil purchase and transport Optimization of production planning Exchange of finished products and semi-products for optimal production Efficiency improvement in logistics network (Lorry/Barge) Reduction in refinery cost Implementation of best practice to save energy and improve refinery margins Cost reduction in manufacturing by joint procurement (2)Synergy target We aim to capture the following synergy effects as one of steps for the business integration*. Target: More than 25 billion of annual synergies within 3 years from April 217 Section Expected effect Purchase of crude oil Supply Manufacturing/ Procurement Logistics/ Sales Administrative sectors Total 1 bil. 12 bil. 7 bil. 4 bil. 1 bil. > 25 bil. *5 billion yen of annual synergies within 5 years expected when the business integration happens. 昭和シェル石油株式会社 17

18 Details of the Alliance (2) (3)Alignment of business strategies in overlapping business areas We mutually align strategies prior to the business integration. Business areas which will overlap after the integration (Crude oil purchase, refining, supply, logistics, sales, corporate sector). Discuss plans to become further competitive and efficient through customer value enhancement. Sales of products will continue to be operated on each company basis in principle for the time being. (4)Considering strategies for the Alliance Group and the New Company Establish Strategic Top-Level Meetings comprised of the top management of the companies. Plan initiatives which can contribute to enhancing business efficiency and competitiveness, mid- to longterm management strategies, business plans, investment plans, and other initiatives. (5)Promotion of harmonization between personnel of the companies Harmonize their personnel by exploring culture, codes of conduct, and working style for the New Company, resuming the workshops at each level of their personnel. (6)New service development from the perspective of customers Establish a task team to develop new products or services from a new perspective. (7)Further promotion of social contribution activities Expand activities through collaboration to contribute to the community and develop the next generation. (8)Promotion of initiatives to realize a low-carbon society Develop new measures to reduce CO2, drawing upon on the various renewable energy businesses of the companies. 昭和シェル石油株式会社 18

19 Data Book 19

20 Billion yen Quarterly Trend of Ordinary Income Ordinary Income CCS Ordinary Income -3 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q

21 Billion yen Quarterly Trend of Operating Income by Business Segment Oil Business CCS operating income Energy Solutions Business operating income Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q

22 (USD/bbl) Crude Oil Price (Platt s Dubai) 22

23 (JPY/USD) Exchange Rates (JPY/USD TTM) 23

24 国内マーケットの状況 Domestic Market (1) : 1( Regular ガソリン Gasoline ) Crude & Product price /L Spread /L Regular-Gasoline (Domestic Spot Price) 3 Crude CIF Spread (Domestic spot price-cif) CIF of April, 217 is provisional. 5 24

25 Domestic Market (2) : Diesel Oil Crude & Product price /L Spread /L Diesel-Oil (Domestic Spot Price) Crude CIF Spread (Domestic spot price-cif) CIF of April, 217 is provisional

26 Domestic Market (3) : Kerosene Crude & Product price /L Spread /L Kerosene (Domestic Spot Price) Crude CIF Spread (Domestic spot price-cif) CIF of April, 217 is provisional. 5 26

27 Global Market (1) : Gasoline Unleaded $/bbl Spread $/ bbl Gasoline Unleaded (92RON Asian Spot Price) 5 4 Dubai Spread (Spot price Dubai)

28 Global Market (2) : Diesel Oil $/bbl Spread $/ bbl 6 8 Diesel Oil (Asian Spot Price) Dubai Spread (Spot price Dubai)

29 $/MT Global Market (3) : Mixed Xylene Spread $/MT 1, ,5 9 Mixed Xylene (Asian Spot Price) 1, 6 Dubai Spread (Spot price Dubai)

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