FY2022 is not a year for a periodic SDM, and we were able to maintain generally stable operations during the period.

 

In the first half of the period, there were no particular troubles affecting the refinery operations, and both the crude throughput and sales volume increased significantly compared to the previous period when a major SDM was conducted. In the second half, while there were times when the CDU utilization rate temporarily declined owing to unplanned repairs on some units, it was maintained at almost 90% on average.

 

In terms of profit and loss, profit attributable to owners of parent for the period resulted in 3.5 billion yen, a decrease of 11.6 billion yen over the previous period. This was due to such factors as a decline in the crude oil prices towards the end of the period, which significantly reduced the inventory valuation’s positive effect on pushing down the cost of sales as compared to the previous period.

The Company formulated the third Medium-Term Business Plan for 4 years from FY2021 to FY2024 in May 2021.

 

Since then, social demand for the achievement of carbon neutrality by 2050 is further growing. Looking at the side of energy security, geopolitical risks presented by the Ukraine crisis have been heightened and significant fluctuations in resource prices and exchange rates are being witnessed. In light of these, transformation of energy supply-demand structure from the fossil fuel-based energy sources is expected to make further progress. In order to expand earnings under these circumstances on a stable basis as well as reduce environmental burdens at the same time, we set it our basic policy to (1) reinforce the base of the oil refining business and (2) strengthen the efforts towards a decarbonized society, and will continue to focus on the following tasks.

 

(1) Reinforce the base of the oil refining business

a) Maintain and enhance operational reliability

We will promote sophistication of facilities operation management and their maintenance by employing drone inspections, and by making the maximum use of digital technologies such as IoT and AI.

 

b) Strengthen cost competitiveness and establish a competitive advantage

We will further strengthen our cost competitiveness by reducing refining costs, improving energy efficiency, optimizing production (including raw material procurement), improving facilities for increased production of high value-added products, and rationalizing overall expenses including head office costs.

 

We will also maximize the introduction and use of digital technologies which are advancing by leaps and bounds, and will promote further innovation in the areas of human resources and organizational structure, which underpin our competitive advantage, by revamping the workflow and realigning organization’s divisions where necessary, optimizing the operation of a new personnel system renewed in FY2019, and strengthening human resource development.

 

(2) Strengthen efforts to realize a decarbonized society

a) Thoroughly reduce the environmental burden of the refinery

Since it is the energy saving that best ensures improvement in profitability as well as reduction in refinery CO2 emissions, we will further deepen and accelerate the efforts to become a low-carbon refinery.

 

In addition to the ongoing initiatives such as the supply of bio-ETBE blended gasoline, we will work on the use of ammonia as boiler fuel, etc., as part of our efforts to supply earth-friendly products and use earth-friendly fuels.

 

During the period, we conducted co-firing tests using ammonia, a by-product of the petroleum refining process, and asphalt pitch in our Sodegaura Refinery’s main boiler (Asphalt Pitch Fueled Boiler Turbine Generator), and collected and analyzed various data with a view to raising the ammonia co-firing rate in the future. We also received independently-certified “low-carbon ammonia” from Saudi Arabia” in April 2023 and used it as fuel for power generation in the said boiler.

 

b) Pursue businesses that contribute to decarbonization

In accordance with the Japanese government’s goal of becoming carbon neutral by 2050, we are working on research and development on the next-generation biofuels and aiming to launch their supply in the mid-2020s.

 

Furthermore, we will actively pursue those decarbonization technology areas where the Refinery’s existing infrastructure and knowledge can be utilized, including CO2-free hydrogen and synthetic fuels, in cooperation with various stakeholders and thereby aim to contribute to a decarbonized society.

 

During the period, we participated in the "Imported Neat SAF Model Demonstration Project" advanced by the Ministry of Land, Infrastructure, Transport and Tourism’s Civil Aviation Bureau in cooperation with ITOCHU Corporation. In this project, ITOCHU imported neat SAF from Neste OYJ for the first time in Japan and we produced SAF by blending the neat SAF with conventional fossil jet fuel at our Sodegaura Refinery’s facility and shipped the SAF to Central Japan International Airport. The SAF shipped from the Refinery was delivered to the Airport and has started to be supplied to flight inspection aircraft owned by the Civil Aviation Bureau of the Ministry of Land, Infrastructure, Transport and Tourism.

 

To contribute to the achievement of carbon neutrality by 2050, we set the environmental targets in the third Medium-Term Business Plan.

 

We have also started working on the calculation of greenhouse gases (GHG) emissions at the consumption stage of petroleum products and others which we supply, in addition to the GHG emitted from our own business. In December 2022, we announced our support for the “GX League Basic Concept” announced by the Ministry of Economy, Trade and Industry.

 

Going forward, we will strive to increase corporate value by continuing to fulfill our social responsibility to provide a stable supply of energy by operating the Sodegaura Refinery in a way that utilizes its location advantage and high heavy oil processing capacity, while at the same time focusing on cultivating new businesses such as businesses that contribute to decarbonization, as stipulated in our new Third Medium-Term Business Plan.

The Company considers the return of profits to shareholders to be one of its important management issues. It has set forth in its Group Management Policy to endeavor to maintain stable dividend payments to our shareholders while taking into consideration the Company’s financial results, cash position, etc., as well as necessary internal reserves for the medium-and long-term business development.

 

In the fiscal year under review, in addition to recording a consolidated net profit for three consecutive fiscal years, the Company also recorded a profit excluding the effect of inventory valuation for the first time in four fiscal years. On the other hand, our financial position is still in the process of recovering. Considering these comprehensively, the Company will pay a year-end dividend of 10 yen per share for the fiscal year ended March 31, 2023, which is the same as for the fiscal year ended March 31, 2022.

 

As for the dividend for the fiscal year ending March 31, 2024, the Company is planning to pay a dividend of 10 yen per share.

We ask for the continued support of our shareholders and investors.

Fuji Oil Company, Ltd.

Representing Director, President