Japan Petroleum Exploration (1662) Q2 2024 earnings summary

Executive summary

• 1H FY3/24 revenue rose 25% YoY to ¥150.7bn and operating profit increased 48% to ¥28.5bn; ordinary profit fell 9% and net income fell 12%.

• Raised FY3/24 forecasts for revenue, operating profit, ordinary profit and net income, citing higher domestic energy prices and increased foreign-exchange gains.

Financial highlights

• 1H net sales were ¥150.7bn, gross profit ¥43.3bn and operating profit ¥28.5bn, up 25%, 27% and 48% YoY, respectively.

• Ordinary profit declined 9% to ¥39.1bn and net income declined 12% to ¥27.8bn, reflecting lower equity-method earnings and foreign-exchange gains.

• 1H operating profit benefited from U.S. tight-oil sales growth and higher domestic natural-gas prices; ordinary profit was lower YoY.

Outlook and guidance

• FY3/24 forecast raised to ¥325.4bn revenue, ¥48.8bn operating profit, ¥57.0bn ordinary profit and ¥45.0bn net income; respective increases vs Aug. 9 guidance were 6%, 25%, 27% and 32%.

• Revised forecast assumes WTI of $77.46/bbl, CIF crude of $84.35/bbl and ¥139.51/$; all are above the Aug. 9 assumptions.

• Annual dividend forecast raised to ¥250/share, split equally between interim and year-end payments; payout policy is a 30% consolidated dividend payout ratio.

• Seagull production start delays and reduced Garraf cargo receipts lower forecast overseas E&P sales vs prior guidance, partly offset by higher prices and foreign-exchange gains.