Mitsubishi Corp forecasts $2.8bn hit to annual profit from COVID-19

TOKYO: Japanese trading house Mitsubishi Corp said it had a difficult first quarter as net profit plunged 77pc due to the coronavirus pandemic, which it said is likely to wipe 300 billion yen ($2.8 billion) off its full-year profit.

"We had a tough start due to the coronavirus pandemic, which is said to be an unprecedented crisis," Mitsubishi Chief Financial Officer Kazuyuki Masu told a news conference.

Net profit fell to 36.7 billion yen in April-June, from 161.2 billion yen a year earlier, the company said, attributing 100 billion yen of the decline to the impact of the coronavirus and the rest to one-off gains a year earlier among other factors.

The group said it expects its auto business, including the contribution of Mitsubishi Motors, to be in the red for the full year and sees profit at its metals business dropping 70pc.

Mitsubishi forecast that its overall annual profit is set to fall 63pc to 200 billion yen, from 535 billion yen last year.

However, it kept its annual dividend forecast of 134 yen per share.

Around 300 billion yen of the annual decline in profit will be due to the impact of the pandemic, it said, with automobile and resources - which includes metals and liquefied natural gas operations - each losing 120 billion yen.

CFO Masu said Mitsubishi has no plan to boost its stake or provide any financial support to ailing affiliate Mitsubishi Motors, which in July forecast its second straight year of losses, hurt by a plunge in sales due to the pandemic.

The trading house does, however, plan to shore up some other loss-making group companies by the end of March, Masu said, without elaborating.

Mitsubishi follows rivals which have also presented weak outlooks. Mitsui & Co and Itochu Corp kept their May forecasts for 54pc and 20pc declines in annual profit respectively.

Marubeni Corp also stuck to its May estimate of a 100 billion yen profit, a turnaround from a loss of 197.5 billion yen a year earlier, while Sumitomo Corp warned of a record net loss of 150 billion yen.