Release Date: August 04, 2020
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Marubeni Corp (MARUF, Financial) reported a positive free cash flow of JPY 49.3 billion, an increase of JPY 4.1 billion year-on-year.
- The net D/E ratio improved by 0.03 points from the end of the previous fiscal year to 1.13x, indicating a stronger financial position.
- Stable earnings-type businesses, such as IPP with PPA in Power Business, and essential infrastructure businesses maintained their earnings at JPY 32 billion, unchanged year-on-year.
- The Food business, particularly Creekstone Farms in the U.S., increased profit by JPY 4 billion to JPY 11 billion due to maintaining operations amid industry disruptions.
- The Chemicals segment saw improved profitability in trading petrochemical products, resulting in a profit increase of JPY 2 billion year-on-year.
Negative Points
- Net profit for the first quarter decreased by JPY 7 billion or 11% year-on-year to JPY 58.1 billion.
- Adjusted net profit declined by JPY 11 billion or 16% year-on-year, primarily due to a drop in coal prices.
- Businesses affected by COVID-19, such as Transportation and oil and gas E&P, suffered a significant year-on-year drop of JPY 16 billion in adjusted net profit.
- The Metals and Mineral Resources segment experienced an JPY 11 billion year-on-year drop in profit due to lower coal prices.
- Aircastle Limited, a U.S. aircraft leasing business, reported a loss, contributing to a JPY 2.2 billion deficit in income attributable to Marubeni Corp (MARUF).
Q & A Highlights
Q: Can you elaborate on the impact of COVID-19 on Marubeni's various business segments?
A: Takayuki Furuya, Managing Executive Officer and CFO, explained that the stable earnings-type businesses, such as IPP with PPA in Power Business, and essential infrastructure businesses maintained their earnings. However, businesses like Construction, Industrial Machinery & Mobility, and Aerospace & Ship were negatively impacted, resulting in a JPY 16 billion drop in adjusted net profit. The decline in commodity prices also affected the oil, gas, coal, and copper mining businesses.
Q: How did the ICT & Real Estate Business perform in the first quarter?
A: The ICT & Real Estate Business saw a JPY 3 billion increase in profit year-on-year, reaching JPY 6 billion. This was primarily due to progress in the sale of domestic condominiums during the first quarter.
Q: What were the main factors contributing to the decline in the Metals and Mineral Resources segment?
A: The CFO noted that the primary reason for the JPY 11 billion year-on-year drop to JPY 7 billion in this segment was the lower coal prices in the Australian coal business.
Q: Could you provide more details on the performance of the Food business?
A: In the Food business, Creekstone Farms in the U.S. managed to maintain operations amid tight supply and demand, leading to a JPY 4 billion increase in profit, totaling JPY 11 billion.
Q: How did the acquisition of Aircastle Limited affect Marubeni's financial results?
A: The acquisition led to a JPY 2.2 billion deficit attributable to Marubeni, partly due to impairment losses on aircraft. However, these losses were already accounted for in the previous fiscal year's financial statements, minimizing their direct impact on the current results.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
