Security Code

5020

August 10, 2023

ENEOS Holdings, Inc.

FY2023 1Q Financial Results

Agenda

Initiatives Aimed at Enhancing Corporate Value

P3

Highlights of Financial Results for FY2023 1Q

P6

Business Environment

P8

Financial Results for FY2023 1Q

P11

Reference

P18

Excerpt from Third Medium-Term Management Plan

P21

2

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3

Initiatives Aimed at Enhancing Corporate Value

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Initiatives Aimed at Enhancing Corporate Value

4

Current Status Analysis (Capital Cost・Profitability)

PBR(X) ＝1

Equity Spread (ROE - Shareholders Capital Cost)

Shareholders Capital Cost - Expected Growth Rate

Average ROE has been around 6% over the past 5 years.

① Our Perceived Cost of Capital

WACC

4%

Disclosed in Third Medium-

Term Management Plan

Shareholders

We recognize at around 8％

Capital Cost

based on CAPM.

Expected

Assumed that expected growth

rate from the market is

Growth Rate

negative.

PBR(X)

②PBR and ROE Trend

1.0

From Dec. 2017 to Feb. 2018,

0.86

and Jun. 2018 to Oct. 2018,

0.87

the PBR exceeded 1x.

Highest price: 901 yen/share (Sep 21, 2018)

0.80

0.8

0.73

0.72

0.69

0.67

0.62

13%

0.58

0.60

12%

12%

9%

0.6

8%

0.52

0.51

6%

6%

0.49

5%

5%

3%

3%

1%

0.4

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

ROE

28%

18%

8％

PBR

Analysis: Factors in PBR falling below 1.0x

  • Historical equity spread performance has been negative.
  • Due to the expected decline in domestic demand for petroleum, which is one of our main businesses, and the uncertainty about what businesses could cover this decline, market expectations

for growth are low.

Including a long-term time horizon.

ROE

ROE((excl. inventory valuation) ※As of the end of the

each fiscal year

Analyzed similar company cases, including overseas companies.

Confirmed improvement measures to exceed PBR of 1.0x:

・Enhancing ROE, including through the withdrawal from low-profit businesses.

・Disclose progress of growth businesses such as biofuels, etc.

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Initiatives Aimed at Enhancing Corporate Value

5

① Improve ROE and achieve a positive equity spread

Continue to achieve results in ① ②

② Accelerate efforts towards achieving energy transition

Profits increased due to improvement in refinery trouble, actual margins, etc.

Operating Income excl. inventory valuation (¥bn)

22/1Q

23/1Q

117.2

+7.

7

124.9

Energy

Energy

39.3

+10

.8

50.1

Targets and initiatives during

Third Medium-Term Management Plan

Elements for improving PBR are included in each measure

of Third Medium-Term Management Plan.

6

10

ROE10％

Net D/E ratio

Fully commit to achieving

7

0.8 or low

Third Medium-Term

3

Free CF

Management Plan

500.0 ¥bn

'22 '23 '24

'25 … '30 '40

Improvement

in ROE

Improvement

Increase in

expected

in PBR

growth rate

Capital cost

reduction

Utilizing debt at a moderate level

Strengthening earning power in existing businesses

Improved refinery efficiency

Mainly from FY2023~

Business process

reengineering

… etc.

Strengthening earning power through investment for growth

Improve electricity

Expand

Increase

New factories

profit through

profit growth

capacity

for advanced

… etc.

Goi Project

in Elastomers

of Tangguh

materials

p.22-24

Growth through the realization of energy transitions

Renewable

SAF

CCS

Hydrogen … etc.

energy

p.25-27

Strengthening the management foundation

Rigorous portfolio management based on ROIC

…etc.

Businesses below WACC ⇨ Initiate radical management improvement within 3 years

p.28-30

Shareholder returns that consider optimal capital structure

and capital cost

p.31

Enhancing dialogue through proactive disclosure to the market and feedback to management.

Moreover・・・

  • The post-IPO portfolio plan will be disclosed at the time of JX Metals IPO.
    Allocation capital raised through IPO: Optimal balance between growth investments and shareholder returns1 with the consideration of an appropriate

D/E ratio.

１These shareholder returns will not be based on the return policy in Third Medium-Term Management Plan.

  • Strive to enhance disclosure of milestones and progress of growth businesses in order to gain market understanding.
  • Towards achieving PBR over 1.0x, we will continue to analyze and discuss regularly at the management level, engaging in dialogues with the market.

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Eneos Holdings Inc. published this content on 10 August 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 August 2023 04:52:00 UTC.