Idemitsu Kosan revises its net profit forecast to $1.7 B
Idemitsu Kosan Co, Japan's second-biggest oil refiner, revised its full fiscal year net profit forecast down by 32% to 220 billion yen ($1.7 billion) on Tuesday, expecting lower oil prices and a stronger yen to hit earnings.
The revision follows a similar step by Japan's top refiner Eneos Holdings Inc, which last week slashed its full-year net profit forecast down by 58% to 140 billion yen, as weaker oil prices and the firmer yen are set to hit inventory valuation.
Idemitsu said its inventory valuation was expected to decrease on an assumption of Dubai oil prices at $80 per barrel and the yen at 130 to the U.S. dollar, a change from $90 per barrel and 145 yen to the dollar previously.
"We have revised our forecasts to reflect the recent decline in crude oil prices and the currency correction," the company's executive officer, Yoshitaka Onuma, told a news conference.
"The outlook of the business environment is uncertain due to mixed factors such as concerns of an economic slowdown caused by global inflation and expectations of recovery in demand thanks to relaxation of China's zero-COVID-19 policy," he said.
Net profit in April-December increased 25% to 250 billion yen, supported by higher coal prices and gains from asset disposal. Improved operating earnings from its Nghi Son Refinery and Petrochemical in Vietnam due to stronger export margins also lent support, Onuma said.
The company also said it would spend 60 billion yen to buy back 9.7% of its shares, and will cancel them by March-end 2024 "to increase mid- to long-term shareholder value".
In January, Vietnam asked Japan for support to "restructure stakes" at Nghi Son, Vietnam's largest oil refinery, but an Idemitsu spokesperson said there was no consideration of a change in the equity structure of the refinery, in which it owns 35.1% stake.
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