Mitsui & Co., the nation¡¯s second-biggest trading house, has lowered its full-year forecast 21 percent amid a collapse in commodity prices.
The company expects a profit of ?190 billion in the financial year to March, down from its previous forecast of ?240 billion, according to a statement Thursday. It cited the drop in iron ore, oil and natural gas prices as the reasons behind the revision.
¡°The downturn in iron ore prices will drag out considerably,¡± Mitsui Chief Financial Officer Keigo Matsubara said Thursday. ¡°It will likely continue until about 2020 due to a delay in China¡¯s economic recovery.¡±
Ore with 62 percent content delivered to Qingdao has dropped 28 percent since last year, according to Metal Bulletin Ltd. Mitsui¡¯s net income was ?3.8 billion for the quarter ended Dec. 31, down from ?31.8 billion a year ago, according to calculations based on nine-month results. That was the lowest quarterly profit since 2009.
The global commodity slump is squeezing the balance sheets of Japan¡¯s general trading companies, which invested in metals and energy only to see prices fall. A wave of writedowns is forecast, with Sumitomo Corp. saying last month it expects a ?77 billion charge on its Madagascan nickel project. The Bloomberg Commodity Index, a measure of returns from 22 constituents, has tumbled 40 percent over the last two years.
Rivals Mitsubishi Corp. and Itochu Corp. maintained full-year profit forecasts.
Mitsubishi will review its assets as low prices have forced it to cut its price outlook on commodities, CFO Shuma Uchino said during a briefing in Tokyo on Tuesday. Mitsubishi will proceed with cost reduction measures for its Australian coal business, he said.
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