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UPDATE 4-Japan's Mitsubishi to post first net loss on metals and energy slump

Published 24/03/2016, 10:59 pm
© Reuters.  UPDATE 4-Japan's Mitsubishi to post first net loss on metals and energy slump
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* Expects first net loss since group was established in 1954

* Forecasts Y430 bln in writedowns for 2015/16

* Mitsubishi and Mitsui shares fall sharply (Adds president's comments and details)

By Yuka Obayashi and Osamu Tsukimori

TOKYO, March 24 (Reuters) - Japanese trading company Mitsubishi Corp 8058.T will post its first ever annual loss for the year to March 31, it said on Thursday, hurt by huge writedowns from a slump in commodities.

Along with its domestic rivals and major international oil and mining companies, Mitsubishi Corp has been caught off guard by steep falls in the prices of goods from oil to iron ore as China's economic growth has slowed.

Mitsui & Co Ltd 8031.T on Wednesday predicted its first net loss since after the slide in energy and metal prices forced it to book 260 billion yen ($2.31 billion) in writedowns, Sumitomo Corp 8053.T more than halved its full-year profit forecast last month and Marubeni 8002.T made 73 billion yen of writedowns for the April to December period . Corp's group net loss is now forecast at 150 billion yen, against a previous estimate for a 300 billion yen profit, as it plans to take an impairment loss totalling 430 billion yen, its biggest such loss.

That will mark the first consolidated net loss since the company was established in 1954, a spokesman said.

"The resource prices have fallen more than we had anticipated," President Ken Kobayashi told a news conference. "We've taken losses on all the assets with potential writedown risk as of now."

Accepting responsibility for the results, Kobayashi is taking a 50 percent pay cut while all other executives have had bonuses scrapped, but the company kept to its annual dividend forecast of 50 yen per share.

The 430 billion yen impairment losses include a 280 billion yen writedown on a stake in Chilean copper company Anglo American (LON:AAL) Sur and 40 billion yen on the Browse liquefied natural gas project in Australia. copper losses reflect our revised long-term price estimate to below $3 per pound," Kobayashi said, adding that its assumption for the coming year is set at $2 per pound.

To cope with the commodity downturn, Mitsubishi could opt to sell non-core resource assets such as ferrochrome, aluminium and bauxite, he said.

Nomura Securities analyst Yasuhiro Narita said that writedowns by Mitsubishi and Mitsui had been expected but that the size of the losses were bigger than forecast.

"Trading firms will need to focus more on the areas where each of them has a strength," he said.

Analysts have said that hefty losses from weak markets could deter Japanese trading houses from investing in energy and metals projects.

Shares in Mitsubishi fell 4.1 percent to end at 1,920.0 yen before the announcement. Shares in Mitsui, which unveiled its revision after the market closed on Wednesday, lost 7.5 percent, underperforming a Nikkei index .N225 down 0.6 percent.

($1 = 112.6400 yen)

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