ENEOS (5020) Status update summary

Revised FY2024 Operating Profit Forecast

• Full-year operating profit forecast lowered to JPY 25 billion, a decrease of JPY 395 billion from the previous forecast, mainly due to inventory valuation losses, goodwill impairment, and profit reclassification related to JXAM.

• Inventory valuation loss from oil price decline accounts for JPY 150 billion of the decrease.

• Goodwill impairment in Petroleum Products, driven by rising interest rates and revised future plans, results in a JPY 160 billion loss.

• Reclassification of JXAM profit leads to a JPY 90 billion decrease.

• Profit attributable to owners of the parent revised to JPY 215 billion, down JPY 5 billion from previous forecast.

Impact of JXAM Share Sale and Accounting Changes

• Sale of 57.6% of JXAM shares changes its status to an equity method affiliate and deconsolidates the Metals Business.

• Gain on sale (JPY 175 billion) and JXAM operating profit (JPY 90 billion) now classified as discontinued operations.

• Operating profit including discontinued operations and excluding inventory valuation is now expected at JPY 440 billion, up JPY 20 billion from the previous forecast.

• Negative time lag from oil price decline impacts results by JPY 20 billion, but underlying margins remain strong.

• Improved margins in petroleum products and early operation of Goi Thermal Power Plant contributed positively.

Financial Position and Balance Sheet Improvements

• Sale of JXAM shares brings JPY 440 billion in cash inflow and improves net D/E ratio by 0.20 points.

• Net D/E ratio expected to improve to 0.40 by March 2025, reflecting asset sales and deconsolidation.

• Derecognition of interest-bearing debt from the Metals Business further strengthens the balance sheet.

• Total equity forecast to decrease to JPY 3,320 billion by March 2025.

• Capital investment revised to JPY 490 billion, with asset sales and other income at JPY 420 billion.