Japan’s Idemitsu ups profit forecast, to split shares

(Reuters) -Japan’s second-biggest oil refiner, Idemitsu Kosan, on Tuesday raised its full-year net profit forecast as higher oil prices along with a weaker yen boosted inventory valuation, also announcing a share split to attract more investors.

Idemitsu increased its net profit forecast for the year through March 2024 by 80% to 180 billion yen ($1.2 billion), following upwards profit revisions last week by peers Eneos and Cosmo Energy Holdings.

“We’ve lifted our annual profit forecast as we expect stable refinery operations in and after the second quarter and continued strong export margins,” Chief Executive Officer Shunichi Kito told a news conference.

To attract more retail investors, Idemitsu said it would split each common share into five shares, effective on Jan. 1.

The refiner also raised its annual dividend forecast to 160 yen per share from 120 yen, and made the 160 yen the minimum level on annual dividend for the following two years.

“Our previous policy was to keep a stable dividend, but we have decided to set a minimum level on dividend to clearly show our commitment (to shareholder returns) by cutting off the retreat,” Kito said.

Idemitsu’s half-year net profit to Sept. 30 was down 41% to 165 billion yen on weaker oil and coal prices compared to the same period a year ago.

Asked about the Nghi Son Refinery and Petrochemical in Vietnam, Kito said the refinery was running at above 100% capacity utilisation rate after completing maintenance in October.

Vietnam’s largest refinery is likely to become profitable on operating income basis this year, but not on net income basis, Idemitsu said.

“Still, the interest burden is very heavy,” Kito said.

“Discussions are underway among sponsors on measures to counter rising interest rates,” he said without elaborating.

Nghi Son is 35.1% owned by Idemitsu, 35.1% by Kuwait Petroleum, 25.1% by Vietnam’s state oil firm PetroVietnam and 4.7% by Mitsui Chemicals.

($1 = 151.6700 yen)

(Reporting by Katya Golubkova and Yuka Obayashi; Editing by Tom Hogue)