World News

Marubeni cuts annual profit forecast, warns virus may hit global economy

TOKYO (Reuters) – Japanese trading house Marubeni Corp <8002.T> on Wednesday cut its full-year net profit forecast by 17% due to a one-off loss on its energy assets and lower profits from U.S. agri-business in the wake of a prolonged U.S.-Sino trade war.

For the year to March 31, Marubeni now expects a net profit of 200 billion yen ($1.83 billion), down from its previous estimate of 240 billion yen.

The company booked about 19 billion yen in impairment losses on its stakes in oil and gas assets in Mexican Gulf in the April-December period to reflect lower long-term estimates of energy prices, its chief financial officer said.

Smaller profit contribution from its agri-business due to bad weather in the United States and the prolonged U.S.-China trade dispute also dented its earnings outlook.

“U.S. export of grains such as soybeans to China has fallen amid the Sino-U.S. trade war and oversupply in the United States led to lower grain prices there, squeezing our margins,” Chief Financial Officer Nobuhiro Yabe told an earnings news conference.

Marubeni sees limited direct impact on its businesses from the coronavirus outbreak in China, but its spread may weigh on the global economy, commodities and the company’s earnings if it lasts long, Yabe said.

The death toll from the coronavirus epidemic in China passed 490 on Wednesday, as two U.S. airlines suspended flights to Hong Kong following the first fatality there and 10 cases were confirmed on a quarantined Japanese cruise ship.

(Reporting by Yuka Obayashi; Editing by Tom Hogue and Subhranshu Sahu)