Eneos reports 78% jump in quarterly profit, but sticks to FY forecast

TOKYO : Japan’s top oil refiner Eneos Holdings reported on Friday a 78 per cent rise in April-June net profit, driving by higher margins in its materials and electricity segments and hefty inventory appraisal gains.
Net profit for the three months, the company’s first quarter, rose to 81.6 billion yen ($555 million) from 45.8 billion yen a year earlier, but the company stuck to its full-year forecast of 210 billion yen.
“Operating profit excluding inventory gains is generally on track to meet our initial forecast of 400 billion,” Soichiro Tanaka, senior vice president, told a news conference.
The refinery run rate, excluding the impact from scheduled maintenance, improved to 81 per cent from 78 per cent a year earlier, as unplanned outages declined due to accelerated inspections and enhanced operational management.
However, the run rate for the July-September quarter will miss the company’s initial target due to unplanned shutdowns in July and August, Tanaka said.
“We had expected Q2’s run rate to beat Q1, but the increase may be smaller than we had anticipated,” he said, without providing a concrete estimate.
Aging equipment was also a factor behind the outages, he said.
Japanese refiners have been reducing oil processing capacity in the past decade to reflect falling local demand due to an aging population and a shift towards more fuel-efficient vehicles.
But with a tourism boom, Japan faces a jet fuel shortage affecting commercial flights, which has hindered the expansion of international flight capacity and the introduction of new routes.
To address the issue, Eneos will consider increasing imports and domestic production of jet fuel as outlined by the public-private council in July, Tanaka said.
Asked if consolidation of refineries will continue, Tanaka said: “Domestic fuels demand will continue falling in the long term, but refinery can be used as carbon-neutral infrastructure and jet fuel demand will likely increase… so we’ll make a comprehensive decision.”
($1 = 147.1500 yen)