Annual Report 2013

Review of Operations: Petroleum BusinessSTRATEGIESWith the full-scale resumption of operations at the Chiba Refi nery, the Petroleum Business will striveto return to profi tability by overhauling its export structure and optimizing petroleum product profi tmargins by responding fl exibly to supply-demand conditions.FY2012 PERFORMANCEOverall demand for petroleum products in Japan exceeded the previous period in FY2012. Despite stagnantdemand for gasoline and kerosene, this overall increase was largely attributable to the upswing in heavy fueloil C used for electric power generation refl ecting the shutdown of operations at nuclear power stationsresulting in improved operating ratios at thermal power generation plants. From the Company’s perspective,demand in Japan decreased 1.5% during the period under review as effects were felt from the shutdown ofthe Chiba Refi nery, despite increased sales of heavy fuel oil C.FY2012 RESULTS (Billions of yen)Results Year-on-Year ChangeNet sales ?3,116.2 Up ?60.6Operating income (loss) ?(10.1) Down ?22.9Ordinary income (loss) ?(23.7) Down ?31.7Impact of inventory valuation ?15.3 Down ?9.9FY2013 PROJECTION (Announced in May 2013) (Billions of yen)Projections Year-on-Year ChangeNet sales ?3,460.0 Up ?343.8Operating income ?11.5 Up ?21.6Ordinary income ?3.0 Up ?26.7Impact of inventory valuation ?0.0 Down ?15.3