09 01-12 showa shell-results_q1_1

Supporting Material for Second Quarter Results 2012

Showa Shell Sekiyu K.K.1

31 July 2012

Showa Shell Sekiyu K.K.

This document contains forward-looking statements concerning the

results of operations and businesses of Showa Shell Sekiyu K.K..

Forward-looking statements are statements of future expectations that are

Notes


based on management’s current expectations and assumptions and

involve known and unknown risks and uncertainties that could cause

actual results, performance or events to differ materially from those

expressed or implied in these statements.

Highlights of Financial Results, Jan-Jun 2012� Crude Oil Price & Exchange Rate

2011 2011 Results 2012 ResultsResults Jan - Jun Jan - Jun

Dubai crude oil price （USD/bbl） 106.3 105.8 111.3

（\/USD） 79.8 82.0 79.8

（\/EUR） 111.1 115.0 103.5 Exchange Rate

� Highlights of Financial Results 2011 Results 2012 Results

Jan - Jun Jan - Jun

Sales 1,380,935 1,310,887 -70,048 -5.1%

Changes vs. 2011 (％) (million yen)


Sales 1,380,935 1,310,887 -70,048 -5.1%

Operating income 67,642 -10,875 -78,517 -

Non-Operating income 1,176 -1,626 -2,803 -

Ordinary income 68,818 -12,501 -81,320 -

　　※Inventory valuation 38,491 -6,287 -44,779 -

　　※CCS ordinary income 30,326 -6,214 -36,540 -

Extraordinary income 2,800 1,109 -1,691 -60.4%

Net income 37,244 -12,590 -49,835 -

【【【【Notes】】】】CCS ordinary income（（（（ordinary income on Current Cost of Supply basis））））

：：：：Ordinary income based on the cost excluding inventory valuation effects.

Oil Energy Solution

Business Business

Sales 1,276,871 29,416 4,599 - 1,310,887

Operating Income 470 -12,041 722 -25 -10,875

(million yen) Others ConsolidatedAdjustment

� Jan-Jun 2012

� Jan-Jun 2011Oil Energy Solution

Information by Business Segment, Jan-Jun 2012


Oil Energy Solution

Business Business

Sales 1,355,252 20,913 4,769 - 1,380,935

Operating Income 77,572 -10,811 888 -8 67,642


・Oil Business： manufacturing and sales of oil products, such as gasoline, naphtha, kerosene, diesel oil, fuel oil, lubricants, LPG, bitumen,and chemicals

・Energy Solution Business： manufacturing and sales of solar cell modules and electricity

・Others： Leasing and administration of properties, construction works, sale and lease of auto accessories, etc.

Key Points of Financial Results (Jan-Jun)� Consolidated sales during this six-month period (Jan-Jun) in 2012 amounted to 1,310.8

billion yen (5.1% down vs. Jan-Jun 2011) and ordinary income was ▲12.5 billion yen

(down by 81.3 billion yen vs. Jan-Jun 2011). Consolidated CCS ordinary income,

excluding inventory valuation impact, was ▲6.2 billion yen (down by 36.5 billion yen

vs. Jan-Jun 2011)

� Oil Business

✔Sales was 1,276.8 billion yen (5.8% down vs Jan-Jun 2011) and operating income

marked 0.4 billion yen (down by 77.1billion yen).


marked 0.4 billion yen (down by 77.1billion yen).

✔Compared with Jan-Jun 2011, overall oil product margins decreased and CCS operating

income of the oil business was down from Jan-Jun 2011.

� Energy Solution Business

✔Sales was 29.4 billion yen (40.7% up vs Jan-Jun 2011) and operating income marked

the deficit of ▲12 billion yen (down by 1.2 billion yen).

✔As to Solar Business, a major part of Energy Solution Business, business expansion and

cost reduction have progressed. The business still bore the operating loss resulted from

ongoing fierce market competition, the performance, however, improved from the

previous quarter.

Business Overview (2Q, Apr-Jun)� Oil Business

✔Total domestic sales volume declined year on year. This is mainly because the previous year’s

figures contained emergent supply after the Great East Japan Earthquake in 2Q 2011. Without

the emergent supply, sales volume in 2Q 2012 is as good as 2Q 2011. Export volume

decreased due to the closure of Ohgimachi Factory in September 2011.

✔Oil product margins decreased year on year, as it was difficult to reflect crude oil costs to the

product sales prices when the crude oil prices and product prices sharply fell at the same time.

✔Temporary costs caused by technical glitch at some group refineries pushed the profit down.


Temporary costs caused by technical glitch at some group refineries pushed the profit down.

� Energy Solution Business (Solar Business)

✔In the Third Miyazaki Plant(Kunitomi Plant), the flagship factory, maintenance to improve its

performance was conducted in response to the sharply rising domestic demand in 2H.

✔Cost reductions for parts/materials procurement, etc. were continuously implemented.

✔Module sales expanded in both domestic and overseas year on year, but some initially planned

sales are slipped into 3Q or 4Q since the Feed-in Tariff Scheme for Renewable Energy was

resolved far behind schedule. Demand hike is largely expected.

✔Module prices were still in declining trend, but the pace slowed down compared with 2011.

Ordinary Profit 2011/Jan-Jun vs. 2012/Jan-Jun

(Unit: Billion Yen)

30.368.8

+38.5

WAV*CCS

▲▲▲▲35.4

**StockEffectetc. Oil

Business

▲▲▲▲36.5

Ordinary profit ▲▲▲▲81.3


2011 2012* CCS: Current Cost of Supply

** Including the effect of Lower of cost or market value method

▲▲▲▲6.2

+0.7▲▲▲▲0.1 ▲▲▲▲2.8

WAV*CCS▲▲▲▲1.2

+2.3

▲▲▲▲6.3

▲▲▲▲12.5

Refinery cost

and M&A

OilBusiness

Subsidiaries

Energy SolutionBusiness

Othersetc. Non-ope.

**StockEffectetc.

Crude oil refined and Sales volume

2011 2011Results 2012ResultsResults Jan-Jun Jan-Jun

Crude oil refined （thousand KL） 26,212 13,810 10,342

Refinery utilization rate （％） 93.2% 93.2% 90.5%

2011 ResultsJan-Jun Jan-Jun

Gasoline 4,515 4,267 - 5.5%

vs. 2011 (%) （thousand KL） 2012 Results

� Crude oil refined & Utilization rate

� Sales volume by products


Gasoline 4,515 4,267 - 5.5%

Jet Fuel 1,000 1,103 + 10.3%

Kerosines 1,669 1,537 - 7.9%

Diesel Oil 2,490 2,391 - 4.0%

Fuel Oil A 854 842 - 1.5%

Fuel Oil C 806 971 + 20.4%

Others 2,139 1,989 - 7.0%

Export 1,888 261 - 86.2%

Total 15,361 13,360 - 13.0%

Forecast full year results for 2012

� Forecast of consolidated full year results 2012

2011Results Announced in Feb Announced in Jul

Dubai crude oil price （$/B） 106.3 110 108 -2

（Yen/$） 79.8 77 80 3

（Yen/EUR） 111.1 100 102 2Exchange rate

Changes2012

� Crude oil price & Exchange rate


2011Results Announced in Feb Announced in Jul

Net sales 2,771,418 2,630,000 2,620,000 -10,000

Operating income 60,288 31,000 8,000 -23,000

Ordinary income 61,807 30,000 5,000 -25,000

　　※Inventory valuation 31,787 0 -5,000 -5,000

　　※CCS ordinary income 30,020 30,000 10,000 -20,000

Net income 23,110 11,000 -4,000 -15,000

million yen Changes2012

Data Book


Data Book

13.7

7.8

18.7

39.2

29.5

14.1

7.2

12.7 10.4

18.8

11.5

10

20

30

40

50

Ordinary Income

CCS Ordinary Income

Quarterly trend of Ordinary incomeBillion yen


7.8

1.8

-3.4 -3.5

-26.6

7.2

3.8 7.1

-7.4

4.1

-10.3

-30

-20

-10

0

10

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q

2010 2011 2012

11

Highlights of Financial Results, Apr-Jun 2012� Crude Oil Price & Exchange Rate

2011 2011 Results 2012 ResultsResults Apr - Jun Apr - Jun

Dubai crude oil price （USD/bbl） 106.3 110.6 106.2

（\/USD） 79.8 81.7 80.2

（\/EUR） 111.1 117.4 102.8 Exchange Rate

� Highlights of Financial Results 2011 Results 2012 Results

Apr - Jun Apr - Jun

Sales 689,689 610,162 -79,527 -11.5%

Changes vs. 2011 (％) (million yen)


Sales 689,689 610,162 -79,527 -11.5%

Operating income 28,772 -25,032 -53,804

Non-Operating income 789 -1,652 -2,442

Ordinary income 29,561 -26,685 -56,247

　　※Inventory valuation 18,052 -16,320 -34,372

　　※CCS ordinary income 11,509 -10,365 -21,874

Extraordinary income 1,282 288 -994 -77.5%

Net income 16,771 -18,881 -35,652

【【【【Notes】】】】CCS ordinary income（（（（ordinary income on Current Cost of Supply basis））））

：：：：Ordinary income based on the cost excluding inventory valuation effects.

Oil Energy Solution

Business Business

Sales 592,054 15,671 2,436 - 610,162

Operating Income -20,706 -4,648 334 -12 -25,032


� Apr-Jun 2012

� Apr-Jun 2011Oil Energy Solution

Information by Business Segment, Apr-Jun 2012


Oil Energy Solution

Business Business

Sales 676,075 11,425 2,187 - 689,689

Operating Income 33,679 -5,193 293 -7 28,772


・Oil Business： manufacturing and sales of oil products, such as gasoline, naphtha, kerosene, diesel oil, fuel oil, lubricants, LPG, bitumen,and chemicals

・Energy Solution Business： manufacturing and sales of solar cell modules and electricity

・Others： Leasing and administration of properties, construction works, sale and lease of auto accessories, etc.

Crude oil refined and Sales volume

2011 2011Results 2012ResultsResults Apr-Jun Apr-Jun

Crude oil refined （thousand KL） 26,212 6,625 4,657

Refinery utilization rate （％） 93.2% 88.9% 81.5%

2011 ResultsApr-Jun Apr-Jun

Gasoline 2,270 2,110 - 7.1%

vs. 2011 (%) （thousand KL） 2012 Results

� Crude oil refined & Utilization rate

� Sales volume by products


Gasoline 2,270 2,110 - 7.1%

Jet Fuel 521 569 + 9.0%

Kerosines 401 312 - 22.3%

Diesel Oil 1,263 1,176 - 6.9%

Fuel Oil A 342 310 - 9.3%

Fuel Oil C 450 488 + 8.5%

Others 1,012 876 - 13.4%

Export 935 51 - 94.6%

Total 7,194 5,891 - 18.1%

(USD/bbl)

Crude oil price (Platt’s Dubai)

78.1

84.4

100.9110.6

107.1 106.5

116.5

106.2

90

100

110

120

130


76.078.1

73.9

30

40

50

60

70

80

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6

2010 Average78.1 USD/bbl

2012 1H Average111.3 USD/bbl

2011 Average106.3 USD/bbl

(JPY/USD)

Exchange rates (JPY/USD TTM)

90.7

92.0

85.9

90

95

100

2012 1H Average79.8 JPY/USD


82.7 82.381.7

77.977.4

79.4

80.2

70

75

80

85

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6

2010 Average87.8 JPY/USD

2011 Average79.8 JPY/USD

(JPY/EUR)

Exchange rates (JPY/EUR TTM)

125.5

117.0 117.4120

125

130

135

140

2012 1H Average103.5 JPY/EUR


110.7 112.2 112.7110.2

104.3 104.1102.8

90

95

100

105

110

115

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6

2010 Average116.3 JPY/EUR

2011 Average111.1 JPY/EUR

25

30

35

40

60

80

100

国内国内国内国内マーケットのマーケットのマーケットのマーケットの状況状況状況状況①①①①（（（（ガソリンガソリンガソリンガソリン））））

Regular-Gasoline (Domestic Spot Price)

Crude & Product price ￥￥￥￥/L Spread￥￥￥￥/L

2010 2011 2012

Domestic Market (1) : Regular Gasoline


9.2 12.2 13.0 12.3

12.8

11.0 13.5

10.5

11.6

7.3

0

5

10

15

20

0

20

40

1 2 3 4 5 6 7 8 9101112 1 2 3 4 5 6 7 8 9101112 1 2 3 4 5 618

Crude JCC

Spread （（（（Spot price-CIF））））

25

30

35

40

60

80

100

Domestic Market (2) : Diesel Oil

Spread￥￥￥￥/L

2010 2011

Diesel-Oil (Domestic Spot Price)

2012

Crude & Product price ￥￥￥￥/L


9.6 11.3

13.9 13.4

15.4 13.0

10.8 11.0 12.9

8.5

0

5

10

15

20

0

20

40

1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 619

Crude JCC

Spread （（（（Spot price-CIF））））

18.2 19.5

17.6 17.816.4

15.4

20

30

100

150

Global Market (1) : Diesel Oil

$/bbl Spread＄＄＄＄/ bbl

Diesel-Oil (Asian Spot Price)

2011

Dubai

20122010


8.9

11.3 12.4 13.0

15.4

0

10

0

50

1 2 3 4 5 6 7 8 9101112 1 2 3 4 5 6 7 8 9101112 1 2 3 4 5 620

Spread （（（（Spot price – Dubai））））

522

498

600

700

800

900

1000

900

1200

1500

Global Market (2) : Mixed Xylene

2010

$/MT Spread$/MT

2011

Mixed Xylene (Asian Spot Price)

2012

Dubai


356

288 271

401 359

427 444

498

382

0

100

200

300

400

500

0

300

600

1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 621

Spread （（（（Spot price – Dubai））））

2Q 2012 -Topics-Showa Shell signed MOU for new paraxylene(PX) project with GS Caltex and Taiyo Oil 【【【【Apr】】】】

The three companies agreed to cooperate in materializing the new PX project for capacity increase of an annual production from 1.35 million ton to 2.35 million ton at PX plant of GS Caltex in Korea. By completion of this capacity addition, this plant becomes the world’s largest plant at a single site. PX is a basic raw material of polyester, and the demand is expected to further rise in Asia, especially in China and India. Through this cooperation, we aim to enhance our competitiveness in oil business.

Solar Frontier supplied CIS thin-film panels to overseas solar power plant 【【【【Apr-May】】】】

◇Solar Frontier supplied 3.8 MW of CIS thin-film solar panels to the Mill Creek Solar Farm of Public Service Electric and Gas Company in Burlington County, New Jersey.◇Solar Frontier supplied 28.8 MW of CIS thin-film solar panels to solar power plant of BELECRTIC, the world’s leading solar system integrator. Solar Frontier


CIS thin-film solar panels are set to be installed on roofs of Lawson convenience-stores 【【【【Jun】】】】

Lawson Inc. announced to install solar power generation systems on the 2,000 rooftops of its convenience stores. Solar Frontier was selected as one of the suppliers. 22

Solar Power Plant of Belectric

plant of BELECRTIC, the world’s leading solar system integrator. Solar Frontier and BELECTRIC strengthened business relationship in the development, construction, and marketing of solar power generation systems, through the creation of a new joint venture company, PV CIStems GmbH.

◇Showa Shell Group participated in the joint project of introducing solar power generation system to the refinery-related facilities by TAKREER (Abu Dhabi national oil refining company), and Japan Cooperation Center, Petroleum. Solar Frontier supplied CIS thin-film solar panel.

◇Solar Frontier supplied CIS thin-film solar panels to the solar power plant of 1.5MW in Arizona through leading Arizona electric service provider, Wilson Electric.
