March 26, 2020 / 10:20 AM / 5 days ago

UPDATE 2-JXTG cuts FY outlook to $2.7 bln loss due to slumping oil prices, pandemic

* Expects Y300 bln loss vs Y155 bln profit in prior forecast

* To book Y250 bln appraisal loss on oil and products inventories

* Sees Y90 bln impairment loss on upstream oil and gas assets (Adds detail and stock price)

By Yuka Obayashi

TOKYO, March 26 (Reuters) - JXTG Holdings, Japan’s biggest oil refiner, on Thursday warned of a record full-year net loss of 300 billion yen ($2.7 billion) as plunging oil prices cut its inventory values and the coronavirus outbreak reduced demand for oil products.

The company, which is also a copper miner and smelter, had previously expected 155 billion yen in net profit for the fiscal year ending on March 31.

The warning comes as oil and gas companies are cutting spending plans as tough coronavirus containment measures curb travel, slashing fuel consumption, and as a crude oil glut swells after the collapse of an OPEC+ output deal.

“We are cutting our forecast due to falling prices in oil and copper amid the spreading coronavirus outbreak and lower demand and margins of our oil and petrochemical products at home and abroad,” the company said in a statement.

The company plans to book a 250 billion yen appraisal loss on its oil and oil products inventories, 180 billion yen bigger than it had anticipated in November, it said.

Its operating profit, excluding the appraisal loss, is also expected to deteriorate by 310 billion yen from its previous forecast to 40 billion yen.

The company’s margin has fallen by 130 billion yen from its earlier estimate as the pandemic slowed economic activity, including that of airlines and shippers, leading to dwindling demand for oil and petrochemical products and hammering their prices.

JXTG will also book an impairment loss of 90 billion yen on its stake in oil and natural gas development projects to reflect tanking oil prices. International benchmark oil prices have more than halved since the beginning of the year.

As a result, its operating profit in the energy segment, excluding inventory impact, will be nil, against its earlier forecast of a 195 billion yen profit, while the oil and gas development segment will see an operating loss of 50 billion yen, against its prior estimate of a 55 billion yen profit.

The profit estimate at its metal unit was also cut by 10 billion yen to 40 billion yen. Copper prices on the London Metal Exchange (LME) have lost about 21% this year.

Despite its forecast for the first net loss since posting 278.5 billion yen in the year that ended on March 2016, the company kept its annual dividend forecast of 22 yen per share.

Shares in JXTG fell only 0.4% to finish at 385.0 yen after the news, against a 1.8% drop in the broader TOPIX index . ($1 = 110.7800 yen) (Reporting by Yuka Obayashi Editing by Tom Hogue and Shailesh Kuber)

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