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Edited Transcript of 8002.T earnings conference call or presentation 2-Aug-19 10:59am GMT

Q1 2020 Marubeni Corp Earnings Presentation

Tokyo Aug 9, 2019 (Thomson StreetEvents) -- Edited Transcript of Marubeni Corp earnings conference call or presentation Friday, August 2, 2019 at 10:59:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Nobuhiro Yabe

Marubeni Corporation - Senior Managing Executive Officer, CFO, COO of IR & Credit Ratings and Director

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Presentation

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Nobuhiro Yabe, Marubeni Corporation - Senior Managing Executive Officer, CFO, COO of IR & Credit Ratings and Director [1]

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[Interpreted] Now I will begin my presentation on the financial results for the first quarter of fiscal year ending in March 2020.

First, net profit declined JPY 21.7 billion or 25% year-on-year to JPY 65.2 billion. Adjusted net profit, which is net profit minus onetime factors declined JPY 6 billion or 8% year-on-year to JPY 70 billion. The JPY 6 billion decrease in adjusted net profit is broken down to minus JPY 11 billion of non-resources and plus JPY 4 billion of resources. I will give segment breakdown and a variance later in my presentation.

On the other hand, the JPY 16 billion deterioration in onetime factors is attributable to the absence of gain from sale of domestic power generation business booked in the previous year and an impairment loss of JPY 9 billion recognized this year, owing to the revision of the plan for one of the development blocks in the Gulf of Mexico, the United States.

Let me move on to the cash flow on Page 5. As for core operating cash flow, despite the increase of cash flow resulting from the revised IFRS lease accounting standards, core operating cash flow decreased JPY 2.9 billion year-on-year to an inflow of JPY 95.4 billion, mainly due to a decline in operating profit. Free cash flow after delivery of shareholder returns was an outflow of JPY 45.2 billion. As a result, net D/E ratio rose 0.05 points to 0.95x.

Let me move on to Page 8, profit by segment. Net profit is shown at the top and adjusted net profit at the bottom. I will focus on the adjusted net profit of those segments that showed major changes.

Forest product is down JPY 1 billion to JPY 3 billion due to the decreased profit of pulp business amid the falling market prices as well as decrease in equity earnings due to the consolidation of one of the equity method companies.

The Food segment is up JPY 2 billion to JPY 7 billion on the back of the rebound from the trading loss incurred in the previous year in grain trading.

The Agri business is down JPY 2 billion to JPY 15 billion due to the impact of the U.S.-China trade friction and adverse weather in the United States, [experienced] mainly by Helena and Gavilon.

Next, Chemicals is down JPY 2 billion to JPY 2 billion due to the decreased profit in Aroma trading amid price fluctuation.

Power business is down JPY 6 billion to JPY 5 billion due to the decrease in profit associated with the sale of project assets in the previous year. In addition, last year, there were fee revenues received upon the closure of new projects. But this year, we had very little fee revenues.

Lastly, Metals & Mineral Resources, it is up JPY 5 billion to JPY 18 billion driven mainly by the higher profit of the iron ore business, which benefited from rising prices.

This concludes my remarks. Thank you very much for your kind attention.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]