Annual Report 2013

Ordinaryincome excl.inventoryvaluationimpactSales volumeand marginsSafe operationsat and stablesupply from therefineriesExtensiverationalizationfocusing mainlyon the SupplyDivisionStrengtheningthe retailbusinessYokkaichi REFMX productionunitPetrochemicalBusiness(HCP)Oil Explorationand ProductionBusiness(Hail Oil Field)Contributions fromrenewable energybusinesses(EcoPower) andelimination ofunrealized profitOrdinary incomeexcl. inventoryvaluation impactFY2012Petroleum BusinessFY2017 Consolidated Ordinary Income33.1-9+34+23+7+2 +7+17+2112Regain profitability in the refining &marketing sectorSecure stable income from investments made duringQ.07 the previous medium-term management planProgram 2Q.06Program 1Q.08Program 3 Q.09Program 4 Q.09Program 5Q.09Program 6(Billions of yen)Ordinary income, excluding inventory valuationimpact, up 78.9 billion yen-4Achieving FY2017 Earnings Target from FY2012 Earnings Results“Six Programs”under the Basic PolicyAchieving 112 billion yen in ordinary income for FY2017What measures do you plan to take to achieve your fi scal 2017 profi t and other fi nancial goals?Regain profi tability in the refi ning & marketing sectorProgram 1Further Enhancement of Safe Refi nery Operation andStable Supply+ 34 billion yenProgram 2Extensive Rationalization Focusing Mainly on the SupplyDivision+ 23 billion yenProgram 3Strengthening the Retail Business + 7 billion yenSecure stable income from investments made during the previous mediumtermmanagement planProgram 4Petrochemical Business:Para-xylene (PX) production from new unit at HyundaiCosmo Petrochemical+ 9 billion yenProgram 5Oil Exploration & Production Business:Production from Hail Field by Abu Dhabi Oil Co., Ltd.+ 17 billion yenProgram 6Renewable Energy Businesses:Increase in earnings at EcoPower Co., Ltd.+ 2 billion yenQ.05Details of how we plan to lift ordinary income from the level recorded in fi scal 2012 by ?78.9 billion to ?112 billionin fi scal 2017 are outlined in the diagram below. Our ability to achieve this goal rests on two broad initiatives:regaining profi tability in the refi ning and marketing sector, and securing stable income from investments madeduring the previous medium-term management plan. In specifi c terms, we anticipate reducing the cost of fi ndingalternative supplies by ensuring the complete resumption of operations at the Chiba Refi nery from July 2013. Inaddition to curtailing costs following the closure of the Sakaide Refi nery, we will adhere strictly to a policy of fi xedcost reduction. At the same time, we will increase profi tability particularly in our petrochemical as well as oilexploration and production businesses. A detailed explanation of these six programs is provided in response toquestions six to ten.A.05Note: In addition to the above, other factors that may affect ordinary income for FY2017include an impact of -9 billion yen brought about by changes in sales volume andmargins, and -4 billion yen attributable to the elimination of unrealized profi t.