Japan Trading Giant Tumbles After Warning of Record Loss

(Bloomberg) -- Marubeni Corp., one of Japan’s top five general trading houses, plunged the most in nine years after it warned it’s heading for the biggest ever annual loss due to $3.3 billion in impairment charges.

The company said Wednesday it expects a net loss of 190 billion yen ($1.7 billion) in the year ending March 31. Just last month, it forecast a profit of 200 billion. Shares dropped as much as 15% Thursday, the most since March 2011.

Marubeni’s revision comes after a slump in oil prices amid the coronavirus pandemic prompted a broad review of its assets. The company said it would keep its annual dividend payment at a minimum of 35 yen, but it won’t conduct share buybacks due to the deterioration in its financial base.

While investors were already aware of the charges in oil and gas, impairments in non-resources were greater than anticipated and didn’t appear to be in the price, Akira Morimoto, a senior analyst at SMBC Nikko Securities Inc., said in a report. “These impairment charges should have been a wake-up call for the firm to boost corporate value, so it’s unfortunate that no such action was taken.”

The expected loss will be the biggest since Marubeni was listed in 1950, President Masumi Kakinoki said at a briefing in Tokyo Wednesday. The company wants to consider the balance of its resource assets, he said.

The one-time charges include 145 billion yen in losses related to its oil and gas operations as prices plunged due to the virus. The company said it expects a 80-billion-yen impairment loss on its U.S. grain business Gavilon and a 60 billion yen impairment on its Chilean copper mining business.

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