By Yuka Obayashi and Osamu Tsukimori
TOKYO (Reuters) – Japanese trading firm Mitsubishi Corp said on Thursday it would post its first ever annual loss in the year to March 31, totalling 150 billion yen ($ 1.33 billion), hurt by massive writedowns from a slump in commodities.
Japanese trading firms, like major international oil and mining companies, have been caught off-guard by steep falls in the prices of goods from oil to iron ore as China’s economic growth has slowed.
Local rival, Mitsui & Co Ltd, on Wednesday predicted the firm would post its first net loss since it was established in 1947 after the slide in energy and metal prices forced it book 260 billion yen in writedowns.
Trading house Sumitomo Corp last month more than halved its net profit forecast for this year due to 170 billion yen in writedowns on resource assets. Marubeni has written down 73 billion yen on metals and energy assets for the April-December period.
Mitsubishi’s group net loss is now forecast at 150 billion yen, against its earlier estimate of a profit of 300 billion yen, as the company plans to book an impairment loss totalling 430 billion yen.
That will mark its first consolidated net loss since it was established in 1954, a spokesman said.
Mitsubishi’s impairment losses include a 280 billion yen writedown on its stake in Chilean copper company Anglo American Sur and 40 billion yen on the Browse liquefied natural gas (LNG) project in Australia.
Its partner Woodside Petroleum and other stakeholders on Wednesday shelved plans to build the $ 30 billion Browse floating LNG project in the face of global oversupply, spelling the end of an era of mega LNG projects.
“We had expected Mitsubishi and Mitsui would book an impairment loss, but the size of the losses were bigger than we had anticipated,” Nomura Securities analyst Yasuhiro Narita said.
“Trading firms will need to focus more on the areas where each of them has a strength,” he said.
Analysts have said hefty losses from weak markets may further deter Japanese trading houses from investing in energy and metals projects.
Mitsubishi’s loss was flagged by the Nikkei business daily earlier on Thursday, which said the trading house is likely to post a net loss of about 100 billion yen for the current year.
Shares in Mitsubishi fell 4.1 percent to close at 1,920.0 yen before the announcement. Shares in Mitsui, which announced its revision after the market closed the previous day, lost 7.5 percent to end at 1,299.5 yen, underperforming the Nikkei index which slid 0.6 percent.
($ 1 = 112.9400 yen)
(Reporting by Osamu Tsukimori and Yuka Obayashi; Editing by Stephen Coates and Joseph Radford)
