ENEOS (5020) Q4 2026 earnings summary

Executive summary

• Addressed a criminal complaint and indictment for suspected Antimonopoly Act violations at a group company, emphasizing strengthened governance and compliance.

• Accelerated group restructuring, including reducing the number of group companies by about 100 and strengthening internal audits and governance.

• Diversified crude oil procurement to mitigate Middle East risks, including sourcing from the U.S. and Azerbaijan, and expanding VLCC fleet.

• Announced acquisition of Chevron's refining and sales businesses in Southeast Asia and Australia for $2.17 billion, aiming to double overseas revenue share by FY 2030.

• Decided to sell additional shares of JX Advanced Metals and conduct a JPY 50 billion share buyback to improve capital efficiency.

Financial highlights

• FY2025 operating profit increased by JPY 94.9 billion year-on-year to JPY 466.6 billion, mainly due to improved inventory valuation and higher oil prices.

• Excluding inventory valuation, FY2025 operating profit rose by JPY 45.1 billion to JPY 474.4 billion.

• FY2026 operating profit forecasted to increase by JPY 143.4 billion year-on-year to JPY 610.0 billion; excluding inventory valuation, up JPY 115.6 billion to JPY 590.0 billion.

• Profit attributable to owners, excluding inventory valuation, projected to rise by JPY 135.8 billion to JPY 415.0 billion in FY2026.

• Free cash flow for FY2025 was JPY 251.1 billion; FY2026 forecast at JPY 281.0 billion.

Outlook and guidance

• FY2026 assumes limited Middle East impact until April–May, with Dubai crude price at $85/bbl from June onward and exchange rate at JPY 155/USD.

• Operating cash flow for FY2026 expected at JPY 615.0 billion; investing cash flow outflow of JPY 381.0 billion.

• Free cash flow projected at JPY 234.0 billion; net D/E ratio expected at 0.39 by March 2027, or 0.48 including planned M&A.

• Additional shareholder returns considered to maintain a total payout ratio of over 50% on a three-year average.

• Targeting refinery utilization rate (excluding periodic repairs) of 90% by FY2027.