Sojitz Corp.

S&P Global Ratings acknowledges a high degree of uncertainty about the evolution of the coronavirus pandemic. The consensus among health experts is that the pandemic may now be at, or near, its peak in some regions but will remain a threat until a vaccine or effective treatment is widely available, which may not occur until the second half of 2021. We are using this assumption in assessing the economic and credit implications associated with the pandemic (see our research here: www.spglobal.com/ratings). As the situation evolves, we will update our assumptions and estimates accordingly. The stable outlook reflects our expectation that the company's return on risk-weighted assets (RORA; the ratio of pretax net income to risk assets reflecting required capital levels

...Deteriorating conditions amid the COVID-19 pandemic will likely put considerable pressure on Sojitz's profits in the short term. Japan-based general trading and investment company's (GTIC) company Sojitz Corp.'s automotive-related, iron and steel, and chemical businesses have been affected by falling market prices. The pandemic has also severely depressed consumption in Japan, pushing down the company's earnings in the retail and lifestyle business. We expect its net profit to fall to about Ñ30 billion in fiscal 2020 (ending March 31, 2021), from Ñ60.8 billion in fiscal 2019. Given its prudent business and risk management policies, we see a limited possibility of net profit deteriorating any further than the expected Ñ30 billion in fiscal 2020. We base this view on Sojitz's limited exposure to resource price volatility. Additionally, its investment portfolio is well-diversified and has few investments that bear a risk of large impairment losses. We expect the company's profit to improve...

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