In This Article:
Release Date: August 04, 2020
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Marubeni Corp (MARUF) reported a positive free cash flow of JPY 49.3 billion, an increase of JPY 4.1 billion year-on-year.
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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.
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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.
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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.
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The Chemicals segment saw improved profitability in trading petrochemical products, resulting in a profit increase of JPY 2 billion year-on-year.
Negative Points
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Net profit for the first quarter decreased by JPY 7 billion or 11% year-on-year to JPY 58.1 billion.
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Adjusted net profit declined by JPY 11 billion or 16% year-on-year, primarily due to a drop in coal prices.
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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.
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The Metals and Mineral Resources segment experienced an JPY 11 billion year-on-year drop in profit due to lower coal prices.
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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.