Japanese trading house Mitsui & Co Ltd said on Friday it may book an impairment loss of 50 billion to 70 billion yen ($458 million to $642 million) in the year ending March 31 due to falling commodity prices and coronavirus impact.
Mitsui in a statement said it is likely to book an impairment loss on its stakes in the Eagle Ford shale oil and gas project in the United States and the Tempa Rossa oil field in Italy among other oil and gas projects due to plunging oil prices.
International benchmark oil prices have more than halved since the start of the year as the rapid spread of the coronavirus interrupts business activity, choking supply chains, while a crude glut swelled after the collapse earlier this month of an output deal between the Organization of Petroleum Exporting Countries and Russia (OPEC+).
Mitsui also said it may book an impairment loss on fixed assets as well as an appraisal loss on shareholdings to reflect slumping stock markets.
“The environment for our trading operations is deteriorating due to slower manufacturing activity amid weakening demand, disorder of distribution and impact on procurement of raw materials, but we have not recognised any events that could have a significant impact on our earnings this year,” it said.
In early February, Mitsui forecast 450 billion yen in net profit for the current financial year.
The company said it will maintain its dividend forecast of 40 yen per share for the second half of the year.
The announcement comes two days after peer Marubeni Corp forecast a record net loss of 190 billion yen for the current year as the coronavirus outbreak drives an unprecedented oil price slide and falls in other commodity prices.
Published on moneycontrol.com
Mitsui may book up to $642 million impairment loss amid oil slump