Sumitomo trims annual loss forecast despite one-off charges

TOKYO, Feb 4 (Reuters) - Japanese trading house Sumitomo Corp on Thursday trimmed its annual loss estimate by 20% as a solid recovery in its steel and automobile businesses is seen as offsetting hefty one-off losses triggered by the COVID-19 pandemic.

The company predicts a net loss of 120 billion yen ($1.14 billion) for the year to March 31, against its November estimate of a net loss of 150 billion yen.

For the April-December period, it reported a net loss of 113.7 billion yen as the pandemic undermined demand in broad segments such as metal resources, food and infrastructure.

The pandemic also forced the company to suspend its Ambatovy nickel project in Madagascar, leading to a total impairment loss of 85 billion yen for the nine months.

Sumitomo, which has been struggling to ramp up the nickel project due to technical glitches and other trouble, plans to resume the Ambatovy operation in March, with an estimated annual output of less than 40,000 tonnes in the next financial year, from April.

The company’s overall extraordinary losses have ballooned to 244 billion yen for the nine months.

“The special losses may reach 300 billion yen for the year as we may book more impairment losses and a restructuring charge in the current quarter,” Sumitomo Chief Financial Officer Masaru Shiomi told a news conference.

To take responsibility for the poor performance, Sumitomo will cut the pay of its executives next financial year.

The company sold its stake in a shale oil project in Eagle Ford, in the United States, during the October to December quarter.

“We will no longer invest in U.S. unconventional oil and gas projects,” Shiomi said, but it plans to maintain its stake in upstream oil projects in the North Sea and keep investing in gas projects. ($1 = 105.2200 yen) (Reporting by Yuka Obayashi Editing by Robert Birsel)