Marubeni Halves Profit Outlook

Firm will consolidate divisions, boost oversight to manage risk.

By Mari Saito

TOKYO, Jan 26 (Reuters) - Japanese trading house Marubeni Corp halved its annual profit forecast on Monday after plunging oil, copper and coal prices weighed on its resource assets and it booked an impairment charge for its grains unit Gavilon.

Like international oil majors and mining companies, Japan's trading companies have been caught flat-footed by the rout in commodities, with oil down as much as 60 percent and copper falling about 25 percent since the middle of last year.

The trading house said it would consolidate business divisions and strengthen oversight to catch risks early, but would continue to seek out investment opportunities.

"We did not expect (crude oil prices) would fall below $45. There is no mistake that this was quite different from our earlier outlook," Marubeni President Fumiya Kokubu told reporters at a hastily called news conference on Monday.

Kokubu and Marubeni's chairman, Teruo Asada, will take a 50 percent pay cut in February and March, while the salaries of all senior executives will be cut by 30 percent for the year that starts in April.

Marubeni said it will take a charge of about 95 billion yen for losses on investments in oil and gas assets, including 60 billion yen for North Sea projects. It is taking a 10 billion yen impairment charge on its Chilean copper business.

The trading house is now forecasting a net profit of 110 billion yen ($935 million) for the year ending on March 31, compared with a prior forecast of 220 billion yen that it reaffirmed in November.

The company also said it would book a goodwill impairment loss of about 50 billion yen related to its acquisition of U.S.-based grain merchant unit Gavilon LLC. Gavilon's performance is expected to fall short of business plans, Marubeni said.

The company is the second of Japan's major trading houses to drastically cut its earnings outlook for the year to March. Sumitomo Corp (SUMA.BE) in September slashed its profit forecast after booking losses of 270 billion yen, mostly in the energy sector.

In a three-year management plan announced in May 2013, Marubeni had aimed to boost its net profit to the 250 billion to 300 billion yen range by the 2015/16 fiscal year, but Kokubu said that objective now looked difficult if resource prices remained at current levels.

Shares in Marubeni ended down 4.7 percent on Monday, compared with a 0.3 percent slide on Tokyo's benchmark Nikkei .