Mitsui & Co., Ltd. (“Mitsui”) announces the following possible impact on the consolidated financial results for the fiscal year ending March 31, 2020 (from April 1, 2019 to March 31, 2020), arising from a drop in commodity prices and the worldwide outbreak of the novel coronavirus . The impact is an estimate only and is currently under review.
1. Forecast of Consolidated Financial Results for the fiscal year ending March 31, 2020
Mitsui had announced a forecast on profit of JPY 450 billion (Profit attributable to owners of the parent) on February 4, 2020. There is a possibility that Mitsui will record some losses from impairment and others, ranging from a total of approximately JPY 50 billion to JPY 70 billion due to the following factors. However, negative impact on the core operation cash flow for this fiscal year is limited.
(1) Impact due to the drop in commodity prices
The coronavirus outbreak and the failure to agree on the decrease in production among OPEC plus has resulted in a sharp drop in crude oil price. Under this circumstance, we expect some impairment losses of fixed assets in the oil and gas business, mainly for the Eagle Ford shale oil and gas project in the U.S., and the Tempa Rossa oil project in Italy.
Due to the deteriorating business environment and the decline in the value of listed shares held by Mitsui resulting from the turmoil in the global stock market, there exists possibility that we will recognize impairment losses of fixed assets and losses on securities in certain business segments.
Business environment surrounding our trading businesses has deteriorated due to the decline in demand from lower business activities of the global economy, disruption of logistics, impact on the procurement of raw materials, and partial suspension of manufacturing resulting from restrictions on the movement of people. However, we have not recognized any significant effects on our financial results for the current fiscal year.
2. Dividend forecast
Mitsui maintains the year-end dividend forecast for the fiscal year ending March 31, 2020, at 40 yen per share as previously announced on February 4, 2020, at the time of the 3rd quarter results.
In countries and regions affected by the spread of the coronavirus, we place top priority on the safety of our people and have taken measures such as promoting telecommuting to ensure business continuity. The business environment including the commodity price fluctuations and the consequences of the coronavirus are changing day by day, and we will notify you if we observe changes that have a significant impact on our financial performance.