TOKYO, Feb 9 (Reuters) - Japanese oil refiner Idemitsu Kosan Co lifted its annual earnings forecast on Tuesday, predicting a profit instead of a loss, as higher oil prices helped reduce its appraisal loss on its inventories while fuel demand has picked up.
Like its rivals, the refiner has suffered a plunge in fuel consumption due to the COVID-19 pandemic, but demand has been steadily recovering, except for jet fuel, Yoshitaka Onuma, general manager of Idemitsu’ finance department, said.
“Sales of main fuels has been improving as cold weather also boosted demand for kerosene,” Onuma told a news conference.
Idemitsu now expects a net profit of 15 billion yen ($143 million) in the year ending March 31 compared with an earlier estimate of a 20 billion yen loss.
Stronger oil prices are expected to slash its inventory loss for the year to 10 billion yen from its November estimate of 50 billion yen.
Oil prices have risen more than 60% since the start of November due to optimism around coronavirus vaccine distributions as well as production cuts from OPEC+ members.
To reflect rising fuel demand, Idemitsu plans to run its refineries at 90% of capacity in January-March, bringing its annual run rate to about 80%.
Idemitsu launched a tender offer in December to buy all the shares of its affiliate Toa Oil Co Ltd at 2,450 yen each in a deal worth 15 billion yen.
In January, it extended the offer until Feb. 15 as U.S. investment fund Cornwall Capital Management has been building up a stake.
“The share price in Toa is above our tender offer now, but we have no plan to change our offer which we believe is reasonable,” Onuma said, adding that Idemitsu and Cornwall Capital had made no contact over the tender offer.
$1 = 104.6000 yen Reporting by Yuka Obayashi; Editing by Edmund Blair