Annual Report 2012
Transcrição
Annual Report 2012
W Building, 1-8-15 Konan, Minato-ku, Tokyo 108-8005 http://www.tonengeneral.co.jp Printed in November 2013 The TonenGeneral Group works around the clock to guarantee a safe, stable supply of energy throughout Japan The Great East Japan Earthquake underscored the vital importance of maintaining a stable supply of energy. The TonenGeneral Group works 24 hours a day, 365 days a year to safely and efficiently produce and deliver petroleum and petrochemical products to its customers. TonenGeneral Group 2013 CONTENTS About the TonenGeneral Group 2 4 6 8 10 12 14 15 16 Message from the President Our Mission Our 120-year History Business Overview Refining and Manufacturing Fuels Marketing Lubricants and Specialties Chemical Overview of Main Group Companies Annual Report 2012 18 21 22 24 25 Financial Report Corporate Governance Environment Safety and Health With Our Stakeholders TonenGeneral Sekiyu’s Kawasaki Refinery and Tonen Chemical’s Kawasaki Plant, two of the Group’s major production facilities, are located adjacent to the Tama River, opposite Haneda Airport. This location is home to the highest-capacity refineries in Japan. TonenGeneral Group 2013 1 Message from the President Bringing the best to Japan The new TonenGeneral Group was created in June 2012 through a business alliance that united production and sales, centered on TonenGeneral Sekiyu. The shift signifies a reorganization under Japanese ownership of the ExxonMobil Japan Group, which was created in 2000 by combining the former Esso Sekiyu, Mobil Sekiyu, Tonen, Tonen Chemical and General Sekiyu. Over a history spanning 120 years we have cultivated the world’s most advanced technology and expertise. Today we are an integrated production and sales company owned primarily by Japanese shareholders and striving to fully apply the technology and expertise gained over the years to serve our customers in Japan. TonenGeneral Group petroleum products are produced at refineries in Japan that boast world-class energy efficiency, and are sold under the trusted brands of Esso, Mobil and General. In our marketing segment, we lead the industry in expanding our network of self-service stations. Our Express brand in particular offers the quickest, easiest refueling service with the cleanest, most comfortable facilities, and the number of alliance sites we have rolled out with Seven-Eleven convenience stores has continued to increase. In our lubricants segment, Mobil 1 motor 2 TonenGeneral Group 2013 oil contributes to energy conservation in Japan by helping to improve automotive fuel efficiency. In our chemical segment, we produce competitive products at our facilities, which have been integrated with refineries to enhance efficiency. Energy is an integral aspect of our social infrastructure and we bear the social responsibility of maintaining a safe, stable supply of high-quality products. Moreover, we recognize that reducing energy costs in Japan by supplying reasonably priced products is just as foundational to our social contribution as ensuring a stable supply. How we do business is just as important as the business itself. The pre-eminent concern of the TonenGeneral Group is maintaining the safety, security and health of our employees and contractors, our customers, and the general public as well as protecting the environment. For this reason we have introduced and effectively deployed the Operations Integrity Management System (OIMS), a disciplined management framework, throughout our organization. We also uphold the value of maintaining high ethical standards beyond basic compliance and promote thorough understanding among our employees of the principle that adhering to our standards of corporate ethics is About the TonenGeneral Group Message from the President Takashi Hirose, President, EMG Marketing G.K.; Representative Director and Vice President, TonenGeneral Sekiyu K.K. more important than obtaining business results. To become Japan’s premier petroleum and petrochemical company, we are dedicated to the mission of maintaining a stable supply of high-quality products, offering high-valueadded services and making meaningful contributions to our customers, shareholders, employees and local communities. Our employees stand at the front line of undertaking this mission. The TonenGeneral Group is an efficient team of select employees that attracts highly skilled human resources. Our essential goal is to contribute to society through our business by offering an environment in which competent personnel can fully demonstrate their abilities. We look forward to your continued patronage of the TonenGeneral Group. Jun Mutoh TonenGeneral Sekiyu K.K. Representative Director, President TonenGeneral Group 2013 3 Our Mission Fulfilling our mission more effectively through a new management structure The new TonenGeneral Group was created in June 2012 through a business alliance that united production and sales, centered on TonenGeneral Sekiyu. With safe operations as a foundational management principle, we will leverage our accumulated strengths, including superior efficiency and the power of the Esso, Mobil and General brands, to make meaningful contributions to society. We have defined our mission as follows: Mission of the TonenGeneral Group As a premier energy company with a long history in Japan, the TonenGeneral Group will: 4 ● Maintain a stable supply of high-quality petroleum and petrochemical products ● Respond swiftly to the ever-changing business environment and customer needs while offering high-value-added services ● Make meaningful contributions to our customers, employees, shareholders, local communities, and greater society TonenGeneral Group 2013 About the TonenGeneral Group Our Mission Crude oil from the Middle East and East Africa is delivered to Group refineries on 300,000 ton-class tankers under long-term charter contracts. ●Main consolidated/affiliated companies TGSH Godo Kaisha 100% 100% 75% Consolidated subsidiary 100% Equity method affiliate 25% General shareholders TonenGeneral Kaiun Yugen Kaisha Tonen Chemical Corporation NUC Corporation Approx. 78%* 100% TonenGeneral Sekiyu K.K. ExxonMobil Chuo Sekiyu Hanbai K.K. 99% Approx. 22%* EMG Marketing Godo Kaisha 50% Kyokuto Petroleum Industries, Ltd. 1% 35% Shimizu LNG Co., Ltd. * Ratio of voting shares TonenGeneral Group 2013 5 Our 120-year History After 120 years of business in Japan, we have achieved optimal efficiency under a new management structure. The TonenGeneral Group comprises three lineages beginning in 1893. Here is a summary of our 120 years of history. Corporate Story 1 Our three lineages Standard Oil Company of New York (Socony) opened its first Japanese branch in Yokohama in 1893 to import and sell kerosene at a time when kerosene lamps were still used for lighting. Vacuum Oil Company also opened a branch in Yokohama that same year. Vacuum Oil’s high-grade lubricants and technical services were factors in bringing Japan’s textile spinning industry to world prominence. This was the origin of our petroleum product sales under the Esso and Mobil brands. The second line stems from Toa Nenryo Kogyo K.K., established in 1939 through joint capital investment to manufacture aviation gasoline and aviation lubricants, then regarded as high-tech products. Toa Nenryo Kogyo, an oil refining company, founded Tonen Sekiyu Kagaku in 1960 to expand its business into the petrochemical industry during the high-growth period of the Japanese economy. The third line originated with General Bussan, which was formed from the fuel business of Mitsui & Co. when it became independent after the dissolution of the zaibatsu conglomerates in 1947. The company later became involved in petroleum refining and the sale of petroleum products under the General brand. Ⅰ Ⅱ Prewar Ⅲ World War II and postwar 1893 1961 Vacuum Oil (U.S.) Japan branch 1932 Socony-Vacuum (U.S.) Japan branch Mobil Sekiyu K.K. 1934 Stanvac (U.S.) Japan branch Socony (U.S.) Japan branch 1939 Esso Standard Sekiyu K.K. Esso Sekiyu K.K. 1949 Toa Nenryo Kogyo K.K. (changed to Tonen K.K. in 1989) Partnership between Toa Nenryo Kogyo and Stanvac 1947 General Bussan With the dissolution of zaibatsu groups in Japan, the fuel division of Mitsui & Co., Ltd. became independent as General Bussan (later General Sekiyu K.K.) and was certified as a motouri. TonenGeneral Group 2013 Esso Sekiyu and Mobil Sekiyu were established with the dissolution of Stanvac. 1982 Toa Nenryo Kogyo was founded jointly by eight Japanese petroleum companies in 1939 to produce aviation gasoline and lubricants. 6 Japan's era of rapid growth 1960 Tonen Sekiyu Kagaku (now Tonen Chemical Corporation) 1958 General Sekiyu Toa Nenryo Kogyo formed a partnership with Stanvac to introduce Standard Oil technology. Stanvac acquired 51% of Toa’s shares (later reduced to 50%). 1963 Kyokuto Petroleum Industries K.K. (now Kyokuto Petroleum Industries, Ltd.) In 1963, Mobil Sekiyu and Mitsui Oil invested equally in the establishment of Kyokuto Petroleum Industries, a petroleum refining specialist. About the TonenGeneral Group Our 120-year History Corporate Story 2 Corporate Story 3 Establishment of the ExxonMobil Japan Group A company owned primarily by Japanese shareholders with integrated production and sales operations These three lineages merged into one as the ExxonMobil Japan Group in July 2000. The capital structure, however, remained divided, with ExxonMobil Yugen Kaisha wholly owned by ExxonMobil and ExxonMobil Yugen Kaisha possessing 50.02% of shares in TonenGeneral Sekiyu, which is listed on the First Section of the Tokyo Stock Exchange. In June 2012, the TonenGeneral Group was created with TonenGeneral Sekiyu at its center, effectively integrating production and sales. What had been a global organization divided vertically by function and operation was transformed into an integrated, self-sufficient organization within Japan. This evolution also means the Group has shifted to primarily Japanese ownership after having been foreign-owned for the majority of its existence, with a new management structure conducive to the achievement of optimal efficiency. Ⅳ Ⅴ Restructuring of the ExxonMobil Japan Group 2002 With the merger of Exxon and Mobil in 1999, the Japanese companies they had invested in were also restructured. ExxonMobil Yugen Kaisha Establishment of the new TonenGeneral Group 2012 Integrated management as the TonenGeneral Group with TonenGeneral Sekiyu’s acquisition of 99% of EMG Marketing Godo Kaisha shares. EMG Marketing Godo Kaisha ExxonMobil Yugen Kaisha became EMG Marketing Godo Kaisha. 2000 TonenGeneral Sekiyu K.K. Tonen and General Sekiyu merged to become TonenGeneral Sekiyu. TonenGeneral Group TonenGeneral Group 2013 7 Business Overview Streamlined supply chain, from crude oil import to product sales The TonenGeneral Group imports the optimal mix of crude oils and feedstocks from around the world. We efficiently produce a wide range of petroleum and petrochemical products at oil refineries in Japan and export some of these products overseas. We also demonstrate our comprehensive strengths as a Group through the systematic integration of operations from import, refining and manufacturing to distribution, sales and export. Applying the world’s most advanced technologies and expertise to all of our business activities, we bring the best to Japanese consumers. Supply chain 8 Crude oil transport Refining and manufacturing Crude oil used by the Group is transported safely and efficiently to our four refineries in Japan from many regions, including the Middle East, Russia and West Africa. Our refineries and chemical plant produce LPG, gasoline, naphtha, kerosene, diesel oil, lubricants and other petroleum products, as well as chemical products, at low cost using advanced production systems and rigorous quality control with safety as our highest priority. TonenGeneral Group 2013 Distribution Sales Petroleum and petrochemical products produced at our refineries are transported to various regions and distributed to customers. We are committed to safe and efficient operations. Our service stations make full use of ExxonMobil’s expertise. They provide fuels, lubricants, petrochemical products and services of the highest global standards to meet the needs of our customers. About the TonenGeneral Group Business Overview A tank truck loaded with petroleum products leaves the Sakai Refinery. Technology, research and engineering Engineering operations performed by our Manufacturing Research and Engineering division The TonenGeneral Research Center specializes in research and development for lubricants and fuels The Group regards engineering as essential to becoming Japan’s premier petroleum and petrochemical company. Our team of specialists in process engineering, equipment, systems and project-related technical fields utilize the latest information on domestic and global technology as well as technological support from ExxonMobil in continuous efforts to ensure the safe, highperformance and highefficiency operation of our facilities. Since its establishment more than 70 years ago, our laboratory has developed a number of advanced, high-performance lubricant products. Particularly with regard to passenger vehicle lubricants, through joint research with auto manufacturers we have developed products that can improve fuel efficiency, reliability and ease of use, and contribute to the development of environmental technologies for automobiles. TonenGeneral Group 2013 9 Refining and Manufacturing Production system with a premium on safety The fundamental role of our production operation is to manufacture petroleum and petrochemical products at low cost from the world’s optimum crude oil and feedstocks at our four refineries and lube oil blending plant in Japan. With safety as our pre-eminent concern, we continue to pursue greater added value as we carry out our crude procurement and product export operations. We also place great importance on environmental protection efforts, particularly our measures to mitigate climate change. Kawasaki Refinery One of Japan’s largest integrated refinery and chemical plants ● Refineries and terminals Shiogama Terminal Fushiki Terminal Kyokuto Petroleum Chiba Refinery Sakai Refinery Hiroshima Terminal Fukuoka Terminal Kawasaki Refinery Tsurumi Lube Oil Blending Plant Shimizu Terminal Nagoya Terminal Wakayama Refinery Komatsushima Terminal Miyazaki Terminal 10 Takamatsu Terminal TonenGeneral Group 2013 The Kawasaki Refinery is located on the Keihin oceanfront, a convenient land and sea transport site adjacent to the Tokyo metropolitan area, Japan’s largest consumer market. This is our largest refinery and has one of the highest refining capacities in the country. It also has the largest FCC (fluid catalytic cracker) in Japan and the only H-Oil (heavy oil cracking/desulfurization unit) in the country. The refinery is situated on the same site as the Tonen Chemical Corporation plant, enabling mutual product supply, sharing of facilities and organizational integration for a highly efficient production system. About the TonenGeneral Group Refining and Manufacturing The Wakayama Refinery surrounded by the sea and greenery Sakai Refinery Largest, highly energy-efficient production and shipping base in western Japan Wakayama Refinery Integrated production center provides flexible support for global and domestic needs The Sakai Refinery is located in the Sakai-Senboku coastal industrial area in Osaka, the largest consumer market in western Japan. In addition to refining, this integrated site also manufactures chemical products such as paraxylene and propylene, and boasts one of the best energy efficiency ratings in the country. The refinery also generates synergies in the supply of products, feedstocks and utilities using pipelines connected with refineries of other companies in the same industrial complex. The land shipping terminal, the largest of its kind in the Kansai area, has introduced Japan’s first bottom-loading system for better environmental protection, improved safety and faster loading. The Wakayama Refinery is located in a quiet residential district adjacent to the rich fishing waters of the Kii Channel in a region known for its production of Arida tangerines. In these surroundings, the refinery maintains the world’s highest level of operational safety with the utmost attention to environmental protection. The refinery, which has a long history, is an integrated production center for a number of petroleum products including gasoline, lubricants and aromatics in addition to specialty products such as aviation and automotive test fuels. Taking advantage of its large number of tanks and marine shipping facilities around an ideally situated harbor, the refinery significantly contributes to the domestic energy supply while responding flexibly to export needs. Tsurumi Lube Oil Blending Plant Chiba Refinery (Kyokuto Petroleum Industries) Manufacturing and shipping base for lubricants Built in 1925 in Yokohama, this lube plant is within the greater Tokyo metropolitan area, Japan’s largest consumer market. The plant specializes in lubricants for passenger vehicles, marine vessels and industrial use and carries out integrated operations from manufacturing to delivery. Mobil 1, a synthetic motor oil, is one of the key products shipped from this plant. Joint venture with Mitsui Oil This refinery is located in an industrial complex in Japan’s Keiyo region. Kyokuto Petroleum Industries, Ltd. was established with equal investment by the TonenGeneral Group and Mitsui Oil. Petroleum products manufactured at the refinery are sold to customers under the TonenGeneral Group’s Esso, Mobil and General brands and Mitsui Oil’s Mitsui brand. TonenGeneral Group 2013 11 Fuels Marketing Our trusted brands: Esso, Mobil and General The TonenGeneral Group’s business is supported by its trusted brands. We offer a wide range of services that provide flexible support for society’s needs and supply a variety of reliable products including fuels, LPG, lubricants and chemicals. One of the Group’s strengths is adopting the world’s best practices with a customer-oriented approach. 12 TonenGeneral Group 2013 About the TonenGeneral Group Retail The TonenGeneral Group carries out the same initiatives nationwide for the Esso, Mobil and General brands to provide customers with a stable supply of quality petroleum products at reasonable prices. We lead the industry in the expansion of self-service stations and we are working to enhance customer convenience through innovative offerings under the Express brand. We continue to operate our service stations with attention to environmental and safety considerations while accurately responding to customers’ ever-changing expectations. Fuels Marketing Express self-service stations Our Express self-service stations operate under the concept of the quickest, easiest service in the cleanest, most comfortable facilities. For the further evolution of our brand value, we boost the tangible and intangible aspects of our services by enhancing sales promotion programs, improving customer service and ensuring clean environments at our service stations. Industrial and Wholesales International Sales In our Industrial and Wholesales segment, we provide a stable supply of industrial fuels, LPG and other products at competitive prices. We maintain solid partnerships of trust with our dealers to continue adding value that is unique and matches their respective sales strategies. Our International Sales division sells aviation fuel and marine fuel to provide a stable supply of high-quality products to international and domestic airlines, shipping companies, trading companies and public authorities at major locations in Japan (aviation fuel to Narita, Haneda, Kansai and Naha airports; marine fuel to Tokyo Bay and Osaka Bay). TonenGeneral Group 2013 13 Lubricants and Specialties About the TonenGeneral Group Lubricants and Specialties Consolidation of world-class technologies In our Lubricants and Specialties segment, we sell automotive lubricants with world-class brand power earned through support of Formula One and other initiatives. Other products include industrial lubricants recommended by major international machinery manufacturers, aviation and marine lubricants supported by a reliable technical support system, and base oil and specialty products manufactured and sold in cooperation with our refineries. Our Mobil 1 automotive lubricant is used as a factory fill oil by leading international auto manufacturers. High-grade oils The Group offers an extensive line of oils, including the synthetic motor oil Mobil 1, to meet the needs of our customers in automotive, industrial, aviation and marine applications. 14 Automotive lubricants Industrial lubricants Mobil-brand automotive lubricants protect engines effectively to help vehicles achieve the best performance under all conditions. We are especially proud of Mobil 1, a synthetic engine oil that delivers world-class performance. We are also involved in the joint development of next-generation products with major Japanese auto manufacturers to supply high-quality oils to better meet the needs of customers. Mobil-brand industrial lubricants incorporate leading lubricant technology, and our vast expertise and experience have been used extensively to make significant contributions in areas such as improving equipment productivity and conserving energy. These efforts have resulted in the creation of the synthetic lubricant Mobil SHC featuring leading-edge technology. Aviation and marine lubricants Base oils and specialties We supply a wide variety of aviation lubricants and a range of technical support, earning us the trust of customers all over the world. With regard to marine lubricants, we supply quality products and services to meet the needs of our customers, including synthetic oils that help reduce the total cost of vessel operation. The Group serves international marine customers in Japan through a strategic alliance with ExxonMobil. Through our strategic partnership with ExxonMobil, we produce high-value-added specialty products using an advanced quality control system. We work together with Group refineries to ship wax products nationwide while seeking to expand exports to global markets. In addition, we export base oils mainly to Asia via ExxonMobil’s distribution channels. TonenGeneral Group 2013 Chemical About the TonenGeneral Group Chemical Competitive product range through integrated operations with refining Quality chemicals are indispensable for end products used in every aspect of our lives, from automotive products to cosmetics. We contribute to society by providing a stable supply of quality chemicals not only to the domestic market but also to the rapidly growing Asian market. Hydrogenated petroleum resin Basic chemicals Specialty chemicals With our competitive edge based on synergies with our refineries, we provide both the domestic and regional markets with a stable supply of olefins (ethylene, propylene, butadiene, etc.), which are the building blocks of chemical materials used in aircraft and automobile parts, electric and electronic components, food packaging and household items, along with aromatics (paraxylene, ortho-xylene, benzene, etc.) used as components in polyester fiber, plastic bottles and nylon fiber. Methyl ethyl ketone, a highly soluble and functional chemical, is used for a number of applications in diverse fields, ranging from solvents for paint and printing ink and resin treatment for electronic components to film molding for optical panels and chemical process solvents. Hydrocarbon solvent, which is manufactured in our petroleum refining facilities, is added to car paint, agricultural chemicals, metalworking oil and other products. These types of specialty chemicals work behind the scenes to enhance the convenience of our lives. Petroleum resins Polyethylene resin We manufacture and sell both hydrogenated and nonhydrogenated petroleum resins. Our products, with excellent cold resistance, heat stability, adhesiveness, transparency and gas barrier properties, demonstrate high functionality that meets the needs of our customers. Our products are used for a wide range of applications including industrial adhesives, high-performance tapes, fuel-efficient tires and disposable diapers. NUC Corporation, a fully-owned subsidiary of the TonenGeneral Group, is a specialized manufacturer of polyethylene resin with an unrivaled capability for consistently developing superior-grade products used in power cable insulation. NUC enjoys the solid trust of power cable manufacturers in Japan and overseas. In its performance material business, NUC develops and sells LDPE, L-LDPE, EVA and EEA products used in films and other applications. TonenGeneral Group 2013 15 Overview of Main Group Companies About the TonenGeneral Group TonenGeneral Sekiyu K.K. Business Transport of crude oil and petroleum products; manufacturing, processing and sales of petroleum products and petrochemical products Head office W Building, 1-8-15 Konan, Minato-ku, Tokyo, 108-8005 Japan Phone: (81) 3-5495-6000 Established July 26, 1947 Paid-in capital 35.1 billion yen Listed exchange Tokyo Stock Exchange (security code: 5012) Shareholders ExxonMobil: 22%; Other general shareholders: 78% (ratio of voting shares) Number of shareholders 49,794 (as of December 31, 2012) Number of employees 1,617 (as of December 31, 2012) Fiscal year end December 31 EMG Marketing Godo Kaisha Business Sales of petroleum and petrochemical products, overall management operations Head office W Building, 1-8-15 Konan, Minato-ku, Tokyo, 108-8005 Japan Phone: (81) 3-5495-6000 Established December 11, 1961 Paid-in capital 50 billion yen Ownership TonenGeneral Sekiyu K.K.: 99%; ExxonMobil: 1% Number of employees 645 (as of December 31, 2012) Fiscal year end December 31 Tonen Chemical Corporation 16 Business Manufacturing, processing and sales of petrochemical products Head office W Building, 1-8-15 Konan, Minato-ku, Tokyo, 108-8005 Japan Phone: (81) 3-5495-6000 Established December 24, 1960 Paid-in capital 1 billion yen Ownership TonenGeneral Sekiyu K.K.: 25%; TGSH Godo Kaisha (100% owned subsidiary of TonenGeneral Sekiyu K.K.): 75% Number of employees 393 (as of December 31, 2012) Fiscal year end December 31 TonenGeneral Group 2013 Overview of Main Group Companies Annual Report 2012 Employee Forum (dialog between employees and management, including the president) TonenGeneral Group 2013 17 Annual Report 2012 Financial Report Major financial indicators ● Net sales ● Operating income (loss) (Billion yen) 3,500 3,000 2,805 2,500 ● Net income (loss) (Million yen) 250,000 (Million yen) 150,000 200,000 120,000 150,000 90,000 100,000 60,000 2,000 1,500 50,000 1,000 30,000 27,298 500 0 0 0 -50,000 -30,000 2008 2009 2010 2011 2012 (Year) ● Net D/E ratio 2008 2009 2010 2011 2012 (Year) ● Return on average capital employed (Times) 1.2 1.1 1.0 0.8 0.6 0.4 30 150 80 20 100 60 12 -0.2 -10 -50 2011 2012 (Year) 2008 2009 2010 2011 2012 (Year) Net income before interest and after tax / (average total net assets + average net debt) TonenGeneral Group 2013 (Year) 120 100 122.4 40 20 0 2008 2009 2010 120 100 18 2012 200 0 2010 2011 40 0 2009 2010 (Yen/share) 250 0 2008 2009 ● Net income per common share 50 Net debt (excluding effect of cash and loan receivables) / total net assets excluding minority interests 2008 (%) 50 10 0.2 54,770 80 60 2011 2012 (Year) Financial Report Corporate Governance Environment Safety and Health With Our Stakeholders Management indicators by business segment (Million yen) Major data Production volume Segment Oil* (1,000 kl) 1 Chemical*2 (1,000 tonnes) Oil*1 Chemical* 2 Sales amount Other*3 Total Oil*1 Chemical* 2 Operating profit Other* 3 2008 2009 2011 2012 28,665 30,143 29,188 26,871 27,534 2,485 2,625 2,584 2,529 2,769 2,917,761 1,917,453 2,178,937 2,425,189 2,533,844 353,320 193,518 219,780 251,925 271,085 1,347 781 — — — 3,272,429 2,111,753 2,398,718 2,677,115 2,804,929 107,650 -38,414 31,518 211,971 34,369 13,917 3,821 2,010 4,399 1,391 174 33 — — — — — — — -8,462 121,742 -34,559 33,528 216,191 27,298 Adjustment*4 Total 2010 *1 Gasoline, naphtha, jet fuel, kerosene, diesel fuel, fuel oils, lubricants, LPG, etc. *2 Ethylene, propylene, benzene, toluene, paraxylene, etc. *3 Construction management included in oil segment from 2010 *4 Goodwill amortization TonenGeneral Group 2013 19 Annual Report 2012 Medium term management plan To achieve our mission of becoming Japan’s premier petroleum and petrochemical company, we will maximize synergy capture and strengthen our core business in the short term, while seeking to expand investment in core businesses and evaluate opportunities in growth areas in the mid to long term. Crude procurement / marine transport Refining / manufacturing Develop attractive growth options Flawless operations Financial discipline Management base Motivated workforce Strong brands Ethical conduct Strengthen core business • Low margins • Demand drop faster than expected Logistics Risks Marketing / sales ● Operating income projection Core business (Billion yen) 1,000 Synergy capture Growth options Growth options ● Collaboration and alliances in domestic market 800 150 150 600 ● Related energy businesses ● Overseas opportunities 80 Synergy capture 400 520 200 0 520 550 620 ● Maximize synergy capture (15 billion yen) by 2015 Core business management ’01–’12 Average* 2013 2013 –2014 Strengthen core business 2015 2017 2015 –2017 Strategic and growth investment ● Improve profitability to offset negative impact from declining demand • Refining capacity aligned with market • Marketing plans to better serve customers • Focus on costs and efficiency * To enable comparison, the operating income of EMG Marketing G.K., acquired in 2012, was added to the average income for 2001–2012; the figure does not include goodwill amortization or inventory effects for the change in the inventory valuation method in 2012. 20 TonenGeneral Group 2013 Financial Report Corporate Governance Environment Safety and Health With Our Stakeholders Corporate Governance TonenGeneral Sekiyu K.K. is the only listed company in the TonenGeneral Group. The company uses a system of audit and supervisory board members and appoints outside directors. Under this system, three statutory auditors, including two outside members, carry out audits to determine the status of our operations and also monitor their execution, and an outside director applies his or her expertise from an objective standpoint to contribute to decision-making by the Board of Directors. The Executive Committee expeditiously makes decisions regarding business operations, under authority delegated by the Board of Directors. To further our efforts as a good corporate citizen under the management of the Executive Committee, we have established a CSR Promotion Council, under which several committees promote CSR-related activities. The CSR Promotion Council is responsible for formulating CSR policies and action plans for the entire Group, providing guidance and advice to each committee, monitoring external evaluations, publishing CSR reports and setting disclosure policies for CSR-related information. ● Corporate governance system General Meeting of Shareholders Election / dismissal Election / dismissal Audit Board of Directors BOD Affairs Committee Board of Statutory Auditors Election / dismissal Cooperation Accounting Auditor Executive Committee Accounting audit CSR Promotion Council • Product Quality Committee • Corporate Ethics Committee • Risk Management Committee • SSH&E Committee • Human Rights Promotion and Human • Disclosure Committee Resource Development Committee • Contribution Committee Cooperation Management and supervision Audit Divisions responsible for executing operations Audit Department Internal audit Cooperation TonenGeneral Group 2013 21 Annual Report 2012 Environment Environmental initiatives Basic philosophy The TonenGeneral Group maintains a high level of responsibility for the environmental impact of all of its operations and strives to continuously improve its environmental performance while satisfying all environment-related legal requirements. ● Environment Policy It is the TonenGeneral Group’s policy to conduct its business in a manner that is compatible with the balanced environmental and economic needs of the communities in which it operates. The TonenGeneral Group is committed to continuous efforts to improve environmental performance throughout its operations. Accordingly, the TonenGeneral Group’s policy is to: ● Comply with all applicable environmental laws and regulations and apply responsible standards where laws and regulations do not exist; ● Encourage concern and respect for the environment, emphasize the responsibility of every employee in environmental performance, and foster appropriate operating practices and training; ● Work with government and industry groups to foster timely development of effective environmental laws and regulations based on sound science and considering risks, costs, and benefits, including effects on energy and product supply; ● Manage its business with the goal of preventing incidents and of controlling emissions and waste to below harmful levels; design, operate, and maintain facilities to this end; ● Respond quickly and effectively to incidents resulting from its operations, in cooperation with industry organizations and authorized government agencies; ● Conduct and support research to improve understanding of the impact of its business on the environment, to improve methods of environmental protection, and to enhance its capability to make operations and products compatible with the environment; ● Communicate with the public on environmental matters and share its experience with others to facilitate improvements in industry performance; ● Undertake appropriate reviews and evaluations of its operations to measure progress and to foster compliance with this policy. 22 TonenGeneral Group 2013 Financial Report Corporate Governance Environment Safety and Health With Our Stakeholders A view of Wakayama Refinery from Jinoshima beach. Response to climate change risks Energy conservation at refineries The Group has consistently led the industry in energy conservation activities by implementing advanced initiatives at its refineries and petrochemical plant. As a result, we have continuously maintained our refinery energy consumption unit*1 at the best levels in the industry. Furthermore, under its system of disclosing energy benchmarks based on the Law Concerning the ● CO ₂ emissions*2 ● Change in refinery energy consumption unit*1 (Kl) 12 TonenGeneral Sekiyu Rational Use of Energy (Energy Conservation Law), the Agency for Natural Resources and Energy released the names of companies that had achieved the targets for energy benchmarks on its official website on September 30, 2013. TonenGeneral Sekiyu K.K. was the only company recognized under the petroleum refiner category and Tonen Chemical Corporation was the only petrochemical base products manufacturer that was listed. Industry average (1,000 tonnes) 6,000 5,000 4,800 10.19 4,600 4,400 4,500 2011 2012 4,000 10 8.58 8.56 3,000 8.64 9.07 2,000 8 6 7.78 7.68 7.63 2010 2011 2012 1,000 0 1990 (Year) *1 Refinery energy consumption unit = oil equivalent energy volume used (kl) per CDU equivalent throughput (1,000 kl) 2009 2010 (Year) *2 CO₂ emissions attributable to the combined total energy usage of three companies – TonenGeneral Sekiyu K.K., Tonen Chemical Corporation and EMG Marketing Godo Kaisha – reported in accordance with the revised Energy Conservation Law TonenGeneral Group 2013 23 Annual Report 2012 Safety initiatives Initiatives to ensure absolute safety We rigorously pursue safe operations through our OIMS (Operations Integrity Management System) and LPS (Loss Prevention System). The systematic framework of the LPS is used to focus on employee behavior in order to discover and eliminate causes for incidents as well as near misses. The system is also used to identify unsafe behavior that may be behind incidents, with the overall goal of making improvements to prevent injuries. ● Loss Prevention System (LPS) ● Lost-time injury rate (per 1 million hours) (Number) 1.0 1 Major incidents Petroleum and coal industries in Japan (data from the Ministry of Health, Labor and Welfare) 0.8 10 Minor incidents TonenGeneral Sekiyu (3 refineries + terminals) 600 “Hiyari-Hatto” close calls and near misses 0.6 0.4 0.2 Unsafe actions, Unsafe deviations from procedures, facilities assumptions, carelessness 0.0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 (Year) Safety and Health Health initiatives TonenGeneral Group health policy The TonenGeneral Group believes that healthy workers constitute the foundation of corporate development and has established a Health Policy to identify and assess health risks, implement measures to mitigate risks, and monitor the health of employees in regard to business activities that could affect them or contractors and the general public. To enforce the Health Policy, the Group established the Medicine and Occupational Health Department as an independent entity that manages workplace health. This department is particularly focused on industrial hygiene and has been promoting activities in this area. Promotion of voluntary and comprehensive occupational health management We have assigned industrial hygienists to our Medicine and Occupational Health Department in addition to industrial physicians and nurses. These hygienists closely collaborate in their respective fields of expertise to undertake industrial hygiene activities that cover the three occupational health management functions designated by the government: work management, work environment management and health management. Contribution to society The Group proactively shares information to facilitate the sustainable development of industrial hygiene across Japan in addition to maintaining and improving the health of its employees. We have offered presentations on our voluntary risk assessment initiatives at academic conferences and received a Good Practice Award at a meeting of the Japan Society for Occupational Health in 2013 in recognition of our efforts to present high-quality, practical case studies for educating industrial hygienists. 24 TonenGeneral Group 2013 Financial Report Corporate Governance Environment Safety and Health With Our Stakeholders Takashi Hirose, President of EMG Marketing Godo Kaisha and Representative Director and Vice President of TonenGeneral Sekiyu K.K. at the 2013 Grand Dealer Meeting With Our Stakeholders Relationship with employees Basic approach The TonenGeneral Group considers its employees to be valuable assets and therefore supports them in achieving their full potential. Our human resources policies encourage the hiring of capable personnel and the development of competent leaders by providing a diverse range of job experiences and ample opportunities for education. The Standards of Business Conduct, which sets out the Group’s basic policies, clearly defines the relationship between the company and employees as follows: The company derives its competitive edge from the qualities of its employees. To bolster this competitiveness, we endeavor to hire and retain the most capable personnel, offer training, and develop the abilities of our employees to maximize their opportunities for success. We will maintain a safe working environment enriched by diversity and characterized by open discussion, mutual trust and fair treatment. ● Number of employees 2010 Number of employees 2,178 2011 2,171 2012 2,805 * * When EMG Marketing Godo Kaisha became a new consolidated company of TonenGeneral Sekiyu K.K., the number of employees increased by 634 compared to the end of the previous fiscal year. ● Annual paid vacation (average) 2010 Paid vacation of fered (days) 2011 22.9 2012 22.9 23.0 Paid vacation taken (days) 21.8 21.8 21.0 Ratio of paid vacation taken (%) 95.0 95.0 91.4 ● Overtime (hours/month/person) 2010 TonenGeneral Group average overtime 2011 19.5 2012 19.2 20.0 ● Total annual actual working hours 2010 TonenGeneral Group average total annual actual working hours 1,863 (hours) 2011 1,862 2012 1,882 TonenGeneral Group 2013 25 Annual Report 2012 Relationship with customers The TonenGeneral Group supplies a wide range of reliable products, including fuels, LP gas, lubricants and petrochemical products. Our Customer Relations and Product Quality Policy, specified in our Standards of Business Conduct, is shown at right. Provide high-quality products that meet or exceed equipment specifications and consumer needs under all reasonable circumstances. ● Furnish services that reliably meet responsible standards of performance, efficiency, and courtesy. ● Furnish accurate and sufficient information about our products and services, including details of guarantees and warranties, so that customers can make informed purchasing decisions. ● Require truth in advertising and other communications. ● Actively encourage wholesalers, dealers, and service stations to adhere to equivalent standards when supplying Group products to customers. Relationship with shareholders Business partners Returns to shareholders Relationship with business partners We will continue to maintain a high level of competitiveness and capital efficiency as well as a strong focus on our shareholders. Our basic policy on returns to shareholders remains unchanged. In addition, we intend to provide stable dividends to shareholders from a long-term perspective even though our annual earnings fluctuate. We require business partners to comply with the law and acknowledge and conform to the high ethical standards expected by the Group. Moreover, the same thorough compliance expected from our own employees is required from business partners. We specifically emphasize reliability of compliance in terms of safety, health, the environment, information management and observance of prevailing laws. We incorporate into our business agreements clauses from our Standards of Business Conduct that pertain to legal compliance, safety and health in addition to price, quality, delivery, technological capability and supply stability. ● Annual dividends 2008 2009 2010 2011 2012 Dividend per share (yen) 38.0 38.0 38.0 38.0 38.0 Dividend yield* (%) 4.2 4.9 4.3 4.5 5.1 * Dividend per share divided by the year-end share price 26 ● TonenGeneral Group 2013 Financial Report Corporate Governance Environment Safety and Health With Our Stakeholders Contributions to local communities The TonenGeneral Group believes that one of its primary duties is to contribute to the development and vitalization of the communities in which we operate. We are strengthening our connections to communities through social contribution and cultural activities in diverse areas, including environmental conservation, health and welfare, community interaction, education, and the arts and culture. Kawasaki Refinery Head office Children’s Culture Award and Music Awards Charity Run Sakai Refinery Invitation to a Sakai City Opera dress rehearsal MUZA Kawasaki Lunch time/Night Concerts Kawasaki International Eco-Tech Fair Wakayama Refinery Phoenix Tennis School Tangerine orchard patrols Jinoshima beach cleanup TonenGeneral Group 2013 27