Japan’s Sumitomo Corp on Tuesday raised its net profit forecast by 6% for the fiscal year through March as stronger earnings in overseas power generation and higher aluminum prices offset a loss in its nickel project in Madagascar.
The trading house now predicts a net profit of 560 billion yen ($3.61 billion) for the current year, up from previous guidance of 530 billion yen, despite a 6 billion yen loss from its Ambatovy nickel project due to the unrecoverable shareholder loans.
Net profit for April-December rose 3% from the same period a year earlier to 416.5 billion yen.
Sumitomo has been struggling to stabilize production and improve profitability at the Ambatovy project, launched in 2005. It wrote down the project’s book value to zero in the fiscal year ended March 31, 2024, incurring an 89 billion yen impairment loss.
But it warned at the time that further losses could arise if additional funding is required to sustain operations, potentially leading to another impairment if deemed unrecoverable.
Sumitomo owns a 54.17% stake in the project companies – Ambatovy Minerals, a mining company, and Dynatec Madagascar, a refining company – with the remaining stake held by Korea Mine Rehabilitation and Mineral Resources.
The Ambatovy project companies have completed their debt restructuring under a London court in December, resulting in the elimination of lender debt.
Sumitomo is still considering all options for Ambatovy, including a possible sale, a company spokesperson said.
From April to December, Ambatovy produced about 20,000 metric tons of nickel, Sumitomo said, but did not disclose output plans, stating it will assess production plans after a detailed inspection of the pipeline damaged in September.
($1 = 155.1800 yen)
(By Yuka Obayashi and Katya Golubkova; Editing by Christopher Cushing)
