- Mitsubishi CFO says price of coking coal bottomed out
- Mitsubishi maintains year-end net profit forecast of Y330
billion
- Firm's metals unit drags down bottom line
- Marubeni says Gavilon deal still awaiting Chinese approval
- Marubeni expects Chinese clearance on Gavilon by end of fiscal
2013
TOKYO--Mitsubishi Corp. (8058.TO) said Friday that it thinks the
steep fall in coking coal prices thumping its metals business may
be finally bottoming out, but at the same time is not hopeful
prices will recover to the high levels of decade-long commodities
boom era anytime soon.
"It appears the prices have bottomed out," Mitsubishi Chief
Financial Officer Ryoichi Ueda said. He said the company expects
the market price of coking coal to improve from $170 per metric
ton, the average level during the October-December period. But he
thinks it would be a "difficult call" for the price to return to
the highs of 2011 when the average price hit $315 that autumn.
The slumping prices again took a bite out of the giant trading
company's bottom line in the third quarter, but solid results
delivered by its energy segment lent some cover to what used to be
one of its most lucrative businesses.
Mitsubishi, with wide-ranging businesses that include Chilean
copper mines, a gas development project in Russia and tie ups with
major convenience store chains, reported a net profit of Y93.2
billion ($1.02 billion), for the latest quarter, compared with
Y123.6 billion in the same period a year ago. The company didn't
provide a revenue figure for the period.
Its metals business was hit the hardest. Led by lower sales at
its Australian coking coal joint venture, BHP Billiton Mitsubishi
Alliance--the company's investment darling until last year-- net
profit for the segment plunged 85% to Y21.4 billion compared with
the same nine-month period the previous year. Mr. Ueda said that
while production is getting back on track, halted by rolling labor
disputes last year, the business's outlook beyond the rest of the
fiscal year will depend most on the extent of cost cuts.
Mitsubishi, and Japan's four other major trading houses, were
hit hard in the first half of the fiscal year due to falling prices
of iron ore and coal following a slowdown in demand in China.
Mitsubishi is especially vulnerable to price fluctuations with more
than half its net profit derived from its natural resources
operations.
Mitsubishi maintained its year-end net profit forecast Y330
billion. In October, Mitsubishi slashed its outlook for the year by
a third from its initial record forecast of Y500 billion.
Also on Friday, rival trading house Marubeni Corp. (8002.TO),
reported a bump in net profit in the three-month period to
December. Net profit rose 23.29% to Y47.1 billion in the quarter.
Revenue inched down 0.7% to Y121.7 billion. While Marubeni is not
as exposed to natural resources as Mitsubishi, the company said it
suffered heavy losses in its mainstay grain trading business due to
poor sales because of wheat and corn crop failures in the U.S. As a
result, net profit in its food segment fell Y11 billion to Y3.9
billion. Marubeni cut its year-end net profit forecast for the food
materials segment for the second time to Y9.5 billion, down 57.7%
from its original outlook. The grain trading business is expected
to account for about 84.2% of that net profit.
Marubeni said it will maintain its year-end net profit outlook
of Y200 billion.
Separately, Marubeni said its $5.6 billion acquisition of U.S.
grain merchant Gavilon has yet to be approved by Chinese
regulators, delaying the closing by about four months from its
expected schedule. The company said it expects to get China's sign
off by the end of this fiscal year on March 31. Having already
received approval from European and U.S. anti-competition
authorities in 2012, closing the deal hinges on clearance from
China. When finalized, the purchase will catapult Marubeni to the
top ranks of the global grain trading business as it seeks to feed
growing demand from China.
Write to Yoree Koh at yoree.koh@wsj.com
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