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Trading giant Mitsubishi projects first net loss since founding

Kyodo, Bloomberg

Mitsubishi Corp., the nation’s largest trading house, expects a net loss of ¥150 billion in fiscal 2015 — its first loss since it was established in 1954 and a setback from the ¥400.5 billion in net income logged the previous year.

The Tokyo-based trader also expects to book an impairment charge of ¥430 billion on its commodities business for the 12 months ending March 31, according to a regulatory statement.

Sogo shosha, as general trading houses like Mitsubishi, Mitsui & Co. and Sumitomo Corp. are called, invested in metals and energy only to see prices fall, resulting in writedowns that squeezed profits.

In February, Mitsubishi projected a ¥300 billion group net profit for the current business year. Mitsubishi may become the latest Japanese trading house struggling under the rout in commodities markets amid growth concerns about emerging economies. Trading houses rely heavily on resource-related businesses for profits.

Mitsui said Wednesday it will likely fall into the red for the fiscal year for the first time since its establishment in 1947. It expects a ¥70 billion group net loss due to impairment losses on overseas projects dealing with copper, coal, oil and LNG, rather than an earlier projected profit of ¥190 billion. In fiscal 2014, Mitsui posted a group net profit of ¥306.49 billion.