May 7, 2020 / 4:15 AM / a month ago

Japan's Marubeni predicts return to profit after record loss

TOKYO (Reuters) - Marubeni Corp (8002.T) said on Thursday it expects a net profit of 100 billion yen ($942 million) in the financial year through next March, a turnaround from a record loss of 197.5 billion yen posted this year due to the coronavirus crisis and a slump in oil prices.

FILE PHOTO: The logo of Marubeni Corp is seen at the company headquarters in Tokyo, Japan, May 10, 2016. REUTERS/Toru Hanai

The forecast is based on an assumption that the pandemic will peak in April-September, and that it might take some time for the global economy to recover, Marubeni Chief Executive Officer Masumi Kakinoki said.

“We face the worst risk mode since the World War as the pandemic is stopping people’s movements worldwide,” Kakinoki told an online conference.

“It’s difficult to see a V-shaped recovery in the global economy...we’d expect a L-shaped turnaround, with a slow recovery continuing in 2021,” he said, adding the pandemic will likely cut its profit by 105 billion yen this year.

Marubeni, which trades everything from oil to corn, had booked a record net loss for the year ended March 31, against a net profit of 230.9 billion yen a year earlier, as slumping oil and commodity prices forced it to book an impairment loss of 422 billion yen.

The one-off loss included 131 billion yen on its oil and gas assets in the U.S. Mexican Gulf and North Sea, 98 billion yen on the U.S. grain business including struggling commodities trader Gavilon, and 60 billion yen on its copper assets in Chile.

It also posted a 39 billion yen impairment loss on a U.S. aircraft lessor Aircastle, in which Marubeni has just raised its stake, as it expects weak demand in the industry to continue for a few years.

To restore its financial health, Marubeni plans to cut fresh investments to 150 billion yen this year from 212 billion yen last year while it prioritise debt repayment.

“We will also review our existing investment plans as the future picture has changed due to the pandemic,” Kakinoki said.

In March, Marubeni warned of a net loss of 190 billion yen for the year just ended, as the COVID-19 pandemic drove an unprecedented oil price slide and drop in other commodities.

International benchmark oil prices LCOc1 have more than halved so far this year, while copper prices on the London Metal Exchange (LME)CMCU3 lost about 16% and S&P GSCI grains index .SPGSGR dropped 12%.

The major benchmark commodity index, the Thomson Reuters Core Commodity Index .TRCCRB, plunged 35% so far this year, hitting its lowest since at least 1994 last month.

Reporting by Yuka Obayashil, Editing by Sherry Jacob-Phillips and Kim Coghill

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below