Mitsubishi Corp forecasts a £2.14 billion hit to full-year profit due to COVID-19
- Mitsubishi Corp forecasts a £2.14 billion hit to full-year profit due to COVID-19.
- The largest Japanese trading company reports a 77% decline in Q1 net profit.
- CFO Masu says there are no plans of expanding stake in Mitsubishi Motors.
Mitsubishi Corp (TYO: 8058) said on Thursday that it faced novel challenges in its fiscal first quarter due to the Coronavirus pandemic that disrupted businesses from across the globe. As a result, its net profit in Q1 saw a massive 77% decline. For the full year, Mitsubishi now forecasts a £2.14 billion hit to its profit due to COVID-19.
Shares of the company ended almost flat on Thursday. It opened at £16.62 per share and closed at £16.57 per share after touching an intraday high of £16.80 per share. On a year to date basis, Mitsubishi Corp. is currently a little under 20% down in the stock market. The stock had recently plunged to £15.13 per share in late July. Learn more about why do prices rise and fall in the stock market.
Mitsubishi forecasts a 70% decline in annual profit from its metals business
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Mitsubishi reported £260 million of net profit in the first quarter as compared to £1.15 billion in the same quarter last year. The company blamed the ongoing health crisis for £710 million of decline in its net profit in Q1.
The largest Japanese trading company also anticipates a 70% decline in annual profit generated from its metals business. Its auto segment, including Mitsubishi Motors, it added, will also remain in loss this year.
According to Chiyoda City-based firm, its full-year profit is expected to tank 63% this year to £1.43 billion. Mitsubishi had registered £3.82 billion of annual profit last year. The Japanese company reaffirmed its forecast of 96 pence of annual dividend per share on Thursday.
CFO Masu says there are no plans of expanding stake in Mitsubishi Motors
In its report on Thursday, Mitsubishi also highlighted that its resources and automobile segments are likely to see £860 million of loss each in fiscal 2020. Mitsubishi Motors announced plans of considering car production in Myanmar last week.
In July, Mitsubishi Motors revealed to have concluded the second year in a row with loss. Its sales this year were particularly under pressure due to the Coronavirus pandemic. As per CFO Masu of Mitsubishi Corp, however, the company is not considering offering financial aid or expanding stake in its affiliate.
But Masu hinted at plans of helping a few of the other subsidiaries in the upcoming months but refrained from naming the companies. Mitsubishi Motor’s competitor, Nissan, said in May that it will reduce production capacity by 20%.
At the time of writing, Mitsubishi Corp is valued at £25 billion and has a price to earnings ratio of 6.68.