March 25, 2020 / 10:41 AM / 9 days ago

Marubeni predicts $1.7 billion financial year loss as coronavirus hammers commodities

TOKYO (Reuters) - Japanese trading company Marubeni Corp (8002.T) on Wednesday predicted a record net loss of 190 billion yen ($1.7 billion) for the year ending March, as the coronavirus outbreak drives an unprecedented oil price slide and falls in other commodities.

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

The loss forecast, against a previous prediction of a 200 billion yen net profit, comes as oil and gas companies cut spending plans, as the rapid spread of the coronavirus chokes supply chains and a crude glut swells after the collapse of an OPEC+ output deal.

The losses are “due to the deterioration of the global business environment, including a sharp drop in crude oil prices, following the worldwide coronavirus outbreak and other factors,” Marubeni said in a statement.

International benchmark prices LCOc1 have more than halved since the start of the year, falling to around $25 a barrel.

Marubeni said it was booking impairment and one-time losses worth a total of 390 billion yen, notably 145 billion yen for its oil and gas projects in the U.S. Gulf and North Sea.

It also plans to book an impairment loss of 100 billion yen for its U.S. grain business, including an 80 billion loss on its Gavilon unit, and a 60 billion yen loss on its stakes in Chilean copper mines, the company said.

The revised guidance is the first loss since it booked a 116 billion yen loss in the year ended March 2002, a record at the time, Marubeni spokesman Masato Tachibana said.

“Even before the coronavirus outbreak, commodities prices had been under pressure due to the intensified U.S.-China trade war and slower global economy,” he added.

Marubeni said it was keeping its annual dividend forecast of 35 yen per share.

But to reflect the hefty loss, the salary of its president and chairman will be cut by 60%, while other executives’ salaries will be reduced by 50% for the current business year, the spokesman said.

Reporting by Chris Gallagher and Yuka Obayashi; Editing by Himani Sarkar, Edwina Gibbs and Barbara Lewis

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