Trading Giant Marubeni Warns of Record Loss on $3.3 Billion Charge

One of Japan’s leading general trading companies, Marubeni, predicted today that it’s heading for the biggest ever annual loss due to $3.3 billion in impairment charges in its energy and grain operations.

The company forecasts a net loss of 190 billion yen ($1.7 billion) in the year ending March 31. Just last month, Marubeni said it was expecting a profit of 200 billion yen.

As a consequence of the rapid spread of COVID-19, oil and gas companies cut spending plans as supply chains are choked.

Marubeni said in a statement that 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.

The company stated that 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 US and the North Sea.

Biggest loss since 1950

President Masumi Kakinoki said at a briefing in Tokyo that the expected loss will be the biggest since Marubeni was listed in 1950.

The firm considers the balance of its resource assets to make up for the losses, Kakinoki adds.

As prices plunged due to the pandemic, the one-time charges include 145 billion yen in losses related to its oil and gas operations.

Marubeni furthermore expects an 80-billion-yen impairment loss on its US grain business Gavilon and a 60-billion-yen impairment on its Chilean copper mining business.