Japan’s trade space Sumitomo Corp predicted on Friday a record loss of 150 billion yen ($1.4 billion) for the year through March due to heavy unique losses, adding a depreciation on its Ambatovy nickel allocation in Madagascar amid the impact of covid-19.
“We have been affected by the coronavirus pandemic, especially in metals, machinery and resources/chemicals,” CHIEF Financial Officer Masaru Shiomi said at a press conference.
“Tough business conditions will likely continue through this year (to March),” he said.
The warning of loss, after a profit of 171 billion yen in the last monetary year, an estimated single loss of 250 billion yen, adding a impairment loss of 55 billion yen in Ambatovy that recorded in the April-June quarter and other potentials. losses in metal products, transportation and structure machinery, he said.
“We plan to accentuate restructuring in unprofitable areas, which can result in unique losses,” Shiomi said, without giving additional details.
Sumitomo suspended Ambatovy and its silver, zinc and lead mine operations in San Cristobal, Bolivia, in March to prevent the spread of coronavirus.
It resumed operations in San Cristobal in May and expects Ambatovy to restart operations in the January-March quarter.
Ambatovy is expected to lose 93.7 billion yen this year.
Sumitomo also warned that there is a threat that commercial space will report an additional loss of Ambatovy if the trading environment deteriorates due to a planned restart delay or if nickel costs fall.
Sumitomo’s stake in Ambatovy is expected to increase to 54.17% in September from the current 47.67%, as Canadian wife Sherritt International restructures her debt.
For the April-June quarter, it reported a net loss of 41.0 billion yen, against a profit of 79.7 billion yen a year earlier.
($1 – 105,5800 yen)
(By Yuka Obayashi; Edited through Simon Cameron-Moore)