May 1, 2020 / 6:26 AM / a month ago

Mitsui sees 54% drop in FY20/21 profit, warns of investment cut

TOKYO (Reuters) - Mitsui & Co (8031.T) on Friday forecast a 54% plunge in net profit for the year to March 2021 as business activity slows amid the global coronavirus pandemic, and warned it may trim or delay some of its energy and resources investment plans.

FILE PHOTO: The logo of Japanese trading company Mitsui & Co. is seen in Tokyo, Japan, January 10, 2018. REUTERS/Toru Hanai

The Japanese trading house forecast a net profit of 180 billion yen ($1.68 billion) for the year to March 31, from 391.5 billion yen in the year just gone, saying the COVID-19 crisis will likely slash around 200 billion yen from its profit.

Slumping commodity prices and dwindling demand in the face of global lockdowns and travel restrictions will erode its energy and metals profits by around 100 billion yen, while its automobiles, steel and chemical segments will be also hit, Chief Executive Officer Tatsuo Yasunaga said.

The guidance was based on an assumption that business activity would start improving from July and return to normal in the October-March period, Yasunaga told an online earnings conference.

“We need to take emergency management measures as our business environment has dramatically changed due to the spread of the coronavirus outbreak,” he said.

“We are reviewing all of our investment plans in energy and resources without any exceptions ... We will investigate to see if there is any room to cut costs and may delay some projects if possible.”

For the year to end-March, Mitsui reported a 5.5% fall in net profit to 391.5 billion yen, missing its February prediction of 450 billion yen as plunging oil prices forced it to book an impairment loss of around 50 billion yen on its oil and gas assets.

Mitsui had warned in March that it may book an impairment loss of 50 billion to 70 billion yen due to falling commodity prices and the impact of the coronavirus.

The company also unveiled a new 3-year business plan, under which it aims to boost its net profit to 400 billion yen in the year to March 2023.

It also aims to halve its greenhouse gas emission by 2030 from 2020, as a step to achieve its long-term goal of zero-emissions in 2050.

Reporting by Yuka Obayashi; Editing by Richard Pullin

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