JX Holdings Inc., which gets about 85 percent of its revenue from refining, is forecasting that it will swing to an annual loss of ¥275 billion, after the slump in crude oil led to lower prices for gasoline and other petroleum products.
A full-year loss would be the first for the Tokyo-based company since it was formed by the 2010 merger of Nippon Oil Corp. and Nippon Mining Holdings Inc.
JX had expected a profit of ¥105 billion, having made ¥214 billion last year. It also pared its full-year sales target to ¥10.9 trillion from ¥11.7 trillion, according to a statement to the Tokyo Stock Exchange.
While the collapse in the crude price hits the value of refiners' inventories, the industry in Japan has languished for some time. Japan's oil refiners, of which JX is the largest, are under pressure to merge or restructure as the population shrinks and carmakers shift to more energy-efficient vehicles, reducing domestic fuel demand.
Idemitsu Kosan Co., Japan's third-biggest refiner by capacity, and Showa Shell Sekiyu KK, the fifth-ranked, said in December that they've held discussions on a tie-up.
The government is also getting involved. The Ministry of Economy, Trade and Industry said in June that it encourages consolidation. Some analysts have said a reorganization of the industry is unavoidable.
In the nine months to Dec. 31, JX posted an operating loss of ¥205 billion, from a profit of 202 billion a year ago. Sales fell 7.3 percent over the period.
JX's main group companies include an energy business known as JX Nippon Oil & Energy Corp., JX Nippon Oil & Gas Exploration Corp. and a metals business known as JX Nippon Mining & Metals Corp.