Japan Petroleum Exploration (1662) Q4 2023 earnings summary

Executive summary

• FY3/23 net sales rose 35% YoY to ¥336.5B; operating profit reached ¥62.1B and net income attributable to owners of parent was ¥67.4B, versus a ¥31.0B loss in FY3/22.

• Results benefited from higher oil, natural gas and electricity prices, improved LNG procurement margins, and the absence of extraordinary losses tied to Canadian project exits in FY3/22.

Financial highlights

• Gross profit rose 93% YoY to ¥96.1B; operating profit increased 213% to ¥62.1B and ordinary profit increased 90% to ¥83.1B.

• Net income attributable to owners of parent improved by ¥98.4B to ¥67.4B; FY3/22 included substantial extraordinary losses as well as one-time gains and losses related to Canadian interests and asset sales.

• Net sales increased 35% YoY to ¥336.5B, driven in part by higher domestic gas, LNG and electricity sales prices and higher overseas crude oil prices.

Outlook and guidance

• FY3/24 forecast: net sales ¥300.6B, gross profit ¥75.3B, operating profit ¥41.2B, ordinary profit ¥45.5B and net income attributable to owners of parent ¥34.0B.

• Forecasts assume WTI, Brent and crude oil CIF prices of $75/bbl, an exchange rate of ¥125/$ and lower JLC prices; lower oil and gas prices are expected to weigh on results.

• FY3/24 annual dividend forecast is ¥200/share, comprising ¥100 interim and ¥100 year-end; forecast payout ratio is 31.9%.

• FY3/24 E&P sales are forecast at ¥91.7B, supported by higher overseas crude volumes and planned Seagull production; I/U sales are forecast to decline 31% to ¥147.3B.