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Press Release

Announcement on the 6th Medium Term Management Plan (FY2018-2022)

March 20, 2018
Cosmo Energy Holdings Co., Ltd.

Cosmo Energy Group announces the 6th Medium Term Management Plan(FY2018-2022).

1. Fundamental Policy
(1) Long term goals

We will continue to increase the competitiveness in our core business on petroleum which has potential for further growth up to around the year 2030.
Furthermore, our focus will also expand towards non-fossil fuels such as petrochemicals and renewable energy with aim to develop them into our new core businesses.

(2) Fundamental Policies of the medium term management plan

We aim to achieve our profit target and innovate our business structure through the following fundamental policies under our slogan of “Oil & New”.

① Secure profitability to enable reinvestment
  • Firm a system of safe, stable operation in oil refining business
  • Take action ahead of the IMO regulations ➡ Transform to bottomless refineries and increase profitable products*
    * Aim to raise the competitiveness of refineries that supply only relatively high added value petroleum products.
  • Strengthen the “Vehicle life” business
  • Achieve synergy with the petrochemical business
  • Steadily recover the investment in Hail Oil Field
② Explore growth driver toward the future
  • Strengthen petrochemical business and increase its product-line
  • Early development of offshore wind power
  • Explore new businesses for future growth in domestic and overseas market(Asia / Abu Dhabi)
③ Improve financial condition
  • Increase shareholders'equity
  • Strengthen cash management
  • Careful selection of investments with an eye on long-term environment
④ Strengthen Group management foundation
  • Implement CSR management
  • Increase productivity through work-style and operational innovation
2. Management Goals (FY2022)
(1) Management Goals (FY2022) and precondition

Increase earning power and improve the financial positon to achieve a goal of equity capital and DER of 1.0-1.5 times that can withstand changes in the market environment at an early stage.

FY2022
Dubai crude oil price 70USD/B
JPY/USD exchange rate 110
Ordinary income (excluding impact of inventory valuation) Over 120.0 billion yen
Income taxes Over 50.0 billion yen
Net worth
(Net worth ratio)
Over 400.0 billion yen
(Over 40%)
Net Debt Equity Ratio * 1.0-1.5 times
ROE Over 10%
* 50% of original amount of Hybrid Load regarded as Equity is counted as Equity by the assessment of Japan Credit Agency, Ltd.
(50% of 60 billion yen Hybrid Loan started on 1st April 2015 is included into Equity)
(2) Profit Plan

Ordinary income is expected to be 129.0 billion yen in FY2022 despite an increase of 80.0 billion yen from FY2017, taking into account the assumptions such as crude oil prices.

Unit:billion yen
FY2022 Ratio
Oil Refining and Sales 44 34%
Oil E&P 64 50%
Petrochemical 12 9%
Renewable energy etc. 9 7%
Ordinary income exc. inventory valuation 129 100%
(3) Business Strategy and Value of Improvement

An increase of 80.0 billion yen was achieved, largely through changes such as increasing profitable products composition in oil refining and sales and production of the Hail Oil Field.

Unit:billion yen
Main Items Improvement
Oil Refining and Sales Utilizing Chiba Refinery Pipeline
Safe and stable operation, Improve utilization rate,Synergy creation with petrochemical
Response to IMO
Expansion of vehicle life business
42
Oil E&P Stable production in existing and Hail oil fields 35
Petrochemical Enhance competitiveness of basic petrochemical product,Pursue synergy with refinery 1
Cash Flow 8*
Renewable energy Expand onshore wind firms(Power generation capacity 230,000kW → 400,000kW)
Develop offshore wind firms and start offshore wind power site project
2
Total 80
*CF base(= Ordinary income + Increase in depreciation) :8
(4) Investment Plan
  • Strategic investment: Actively use approx. 40% of the total investment for an increase in competitiveness and growth investment.
    Oil refining and sales: Increase coker unit capacity
    Petrochemicals: Increase added value of basic products
    Wind power generation: Develop offshore wind power sites
    New business: Discover businesses that will lead the next growth stage
  • Reduce cash-out using sale and leaseback, etc
Unit:billion yen
FY2018-FY2022
Oil Refining and Sales 145
Oil E&P 62
Petrochemical 92
Renewable energy (Wind power generation) 93
New strategy/IT 44
Other 12
Sales and leaseback etc. -88
Net Investment value 360
(5) Cash Balance and Use of Funds(FY2018-FY2022)

Carry out growth investment and shareholder returns while considering balance with the financial positon.

Unit:billion yen
FY2018-FY2022
Incoming cash 535 Net profit 225 Depreciation etc. 310
Outgoing cash 360
Free cash flow 175 Decrease in debt with interest/Dividend
3. Overview of Consolidated Medium-Term CSR Management Plan
  • Develop a medium-term CSR management plan for activities that contribute to the sustainable development of society and the Cosmo Energy Group.
  • Promote activities based on the perspective of ESG throughout the supply chains, including group companies and business partners.
E:Promoting environmental measures

Reduction of greenhouse gas emissions

  • 2022 targets CO2 emissions Down16% [from FY2013]
  • 2030 targets CO2 emissions Down26% [from FY2013]

Reduction of pollutants

Resource circulation

S:Enhancing human rights & social contribution measures

Occupational safety & health

Diversity

Human resources development

Customer satisfaction

G:Ensuring safety measures/Strengthening corporate governance structure
  • Safe operations and stable supply
  • Improvement of quality assurance system
  • Thorough implementation of risk management and compliance system
  • Development of CSR procurement policy
  • Responses to ESG evaluation (improvement of information disclosure
4. Shareholder Return Policy
With the principle of stable dividend payment, aim for further returns to shareholders while considering the balance between achievement toward management goals and growth investment.

The 6th Consolidated Medium-Term Management Plan (PDF/1.38MB)

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