1987 - Year of the shrinking market?
Mamoru Sugiyama, general manager of the accounting department at Nippon Oil, Japan's largest oil refiner and distributor, has an open fund-raising brief.
"In principle, Nippon Oil plans to raise low-cost funds effectively whenever such an opportunity arises, in the Euromarket or in the domestic market,' said Sugiyama. Nippon Oil is in a strong position: the company's net financial balance (financial income less financial cost--zaiteku profits) will hit an all-time record of 15 billion for the current fiscal year to March 1987. In principle, Nippon Oil allocates that financial balance for the payment of its dividends, but 15 billion is two-and-a-half times the amount needed for that purpose.
In the past financial year, Nippon Oil has benefited from declining interest rates on its foreign currency borrowings (Japanese refiners usually borrow US dollars to finance the import of oil and recoup in yen three or four months later) while the outstanding balance of its assets for investments increased by 15.5% to reach 260 billion at the end of September 1986. The importance of zaiteku to the company is reinforced by the fact that its financial balance is three times the size of its operating profits, which have been hard hit by intense competition.