Mitsui Mining & Smelting Forecasts Net Loss in F2009

Mitsui Mining & Smelting announced on Thursday the firm forecasts consolidated net loss at 5.1 billion yen for a full fiscal year from April 2009 to March 2010 (fiscal 2009). This is the first case in late 15 years that the firm posts consolidated net loss for 2 years in a row. The loss is expected to shrink from 67.3 billion yen in fiscal 2008 thanks to smaller asset impairment loss, less inventory evaluation loss and lower tax. Meanwhile, the firm plans to post restructuring expenses along staff downsizing. The firm estimates its consolidated net sales would lower by 25% year-on-year in fiscal 2009 while operating loss and recurring loss could turn into black.

The firm sets a prerequisite for an account in fiscal 2009 including currency exchange rate at 95 yen per US dollar, zinc market price at US$ 1,400 per tonne and lead market price at US$ 1,200 per tonne. Currency exchange rate was cheaper by average about 5 yen in fiscal 2008. Averaged zinc price was US$ 1,560 and lead price was US$ 1,655 in fiscal 2008.

The revenue is estimated to decrease by about 20% year-on-year for the mining & fundamental materials division in fiscal 2009 due to lower metal prices. The unit is expected to post operating loss in fiscal 2009 while the loss would minimize thanks to higher utilization rate of recycling materials, better margins, lower energy costs such for cokes and less inventory evaluation loss.

The operating loss of the intermediate materials division is expected to turn into black in fiscal 2009. The operating loss was 12.9 billion yen in fiscal 2008. The firm expects for 5.1-billion-yen operating profit in fiscal 2009, mainly generated from optimization in TAB business.

As to the environmental business unit, the firm forecasts lower revenue in fiscal 2009 than in fiscal 2008 because of lead market price decline. However, the firm aims to regain operating profit for the unit with expansion of metal recycling volume and decrease of inventory evaluation loss.