for pipes at power plants and heat exchangers for ships has decreased. However, demand fortitanium metals for aircraft to be used for jet engine parts and the like has been steady.Consequently, the sales volume for this fiscal year has increased. Because inventoryadjustment <strong>of</strong> aircraft parts and decrease in demand for the products for the general industrialsector are expected in the future, in the second half <strong>of</strong> this fiscal year, we made a reduction inproduction <strong>of</strong> approximately 10% on average (compared with capacity) at the ChigasakiPlant.C. Promotion <strong>of</strong> CSR ActivitiesAs the JX Group, we are actively developing corporate social responsibility (CSR) activities, bymaintaining a Group Mission Statement that “JX Group will contribute to the development <strong>of</strong> asustainable economy and society through innovation in the areas <strong>of</strong> energy, resources, andmaterials,” in order to gain credibility as a good corporate citizen widely from society, andsetting (i) compliance, (ii) social contribution, and (iii) environment & safety as the three (3)pillars <strong>of</strong> our CSR activities. During this fiscal year, we made efforts to strengthen thefoundation for the compliance system by voluntarily implementing compliance status checks atoperating sites all over Japan, improving the JX Group’s whistleblowing system, and the like.In addition, we have continued to provide next-generation development assistance through“JX-ENEOS Children’s Story Fund,” volunteer activities supporting reconstruction from theGreat East Japan Earthquake disaster, and the like. Further, in order to prevent the occurrence<strong>of</strong> industrial accidents, we established the JX Group Education Center for Monitoring PhysicalThreats, and thereby further improved the entire Group’s safety management system.D. Summary <strong>of</strong> Consolidated Business ResultsAs a result <strong>of</strong> the above, regarding the consolidated business results for this fiscal year, net saleswas 11,219.5 billion yen (a 4.6% increase from the previous fiscal year), while operating incomewas 251.5 billion yen (a 23.3% decrease from the previous fiscal year), ordinary income was328.3 billion yen (a 19.5% decrease from the previous fiscal year), and net income <strong>of</strong> 159.5billion yen (a 6.5% decrease from the previous fiscal year). <strong>Ordinary</strong> income excludinginventory valuation factors was 271.0 billion yen (a 7.0% decrease from the previous fiscalyear).E. Achievement <strong>of</strong> the First Medium-Term Management Plan (from FY2010 to FY2012)<strong>The</strong> JX Group set numerical targets for the consolidated business results and financial index forthis fiscal year which is the final fiscal year in the First Medium-Term Management Plan, andhas been executing a variety <strong>of</strong> measures in order to achieve the targets. As a result, theordinary income exceeded the target <strong>of</strong> 300.0 billion yen, due to the improved pr<strong>of</strong>itability bymanagement integration synergies and increased efficiency <strong>of</strong> refineries, as well as due to thefurther improvement <strong>of</strong> the domestic petroleum product market. On the other hand, the ROE *1underachieved its target, as a result <strong>of</strong> recording special losses, including impairment losses forunused land, and business restructuring costs for streamlining non-pr<strong>of</strong>itable operations. <strong>The</strong>26
net D/E ratio *2 also underachieved its target, due to an increase <strong>of</strong> operating funds resulting fromearthquake reconstruction costs, and ever lingering high crude oil and copper prices.*1 ROE (return on equity) = net income ÷ shareholders’ equity*2 Net D/E (debt equity) ratio = (interest-bearing debts - cash and deposits) ÷shareholders’ equity(Targets <strong>of</strong> Consolidated Business Results and Financial Index for this Fiscal Year under theFirst Medium-Term Management Plan, and Performance)TargetPerformance<strong>Ordinary</strong> income 300.0 billion yen or more 328.3 billion yenROE 10.0% or higher 8.7%Net D/E ratio 1.00 times or lower 1.18 times27
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