World News

Trading house Mitsubishi voices concern over coronavirus impact

By Yuka Obayashi

TOKYO (Reuters) – Japan’s Mitsubishi Corp <8058.T> is watching developments from the coronavirus outbreak for effects on the global economy and prices of natural resources, its finance chief said after the trading house reported a drop in net profit

The death toll from the outbreak 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 cruise ship quarantined in Japan.

“In the short term, any impact on our business in China will be limited as our business in China is relatively small,” CFO Kazuyuki Masu told a news conference.

“But we need to closely watch the development as the spreading outbreak will affect economic activities and natural resource markets.”

Masu added that that the company expects changes in commodity prices to have an impact on its earnings over the long term.

Mitsubishi reported a 15.6% drop in net profit for the first nine months of its financial year to 373.3 billion yen ($3.4 billion), hit by a hefty trading loss at its Singapore-based crude oil and fuel business and lower coking coal prices.

The company in September that a trader at Petro-Diamond Singapore had lost $320 million through unauthorized transactions in crude oil derivatives and said in November that it would shut the business.

Weaker chemical markets and a downsizing of its oil trading operation in Singapore before transferring the business back to Tokyo also weighed on profits in its oil and chemical operations, Masu said.

Weakness in the spot liquefied natural gas (LNG) market, meanwhile, reduced its LNG earnings by 7.9 billion yen ($72 million). Asian LNG spot prices dropped to multi-year lows last month.

Mitsubishi stuck to its annual net profit forecast of 520 billion yen for the year to March 31, representing a year-on-year decline of 12%.

(Reporting by Yuka Obayashi; Editing by Tom Hogue and David Goodman)