I would like to express my sincere gratitude for your continued support. The following is an overview of the financial results for the fiscal year ended September 30, 2016, announced on November 4 and the financial results forecasts for the fiscal year ending March 31, 2017.
I will begin with an explanation of our earnings for the six-month period ended September 30, 2016. Consolidated net profit totaled 80.5 billion yen during the period. Although this result represents a year-on-year decline of 20.7 billion yen, it also indicates that we have reached 62% of the 130 billion-yen consolidated net profit forecast for the full year that we set at the beginning of the year. In other words, we believe that this result shows that we passed the halfway mark at a steady pace as we set forth toward the full-year target.
I will now explain our financial results.
Total equity at the end of September 2016 increased 115.3 billion from the previous fiscal year to 1,530.5 billion yen mainly due to progress in accumulating earnings and fund-raising through hybrid financing (perpetual subordinated loan)* activities. The impact of these factors eclipsed the repercussions of the decline in part of our equity (decreased foreign currency translation adjustments) owing to the yen appreciation. (*Such loans are classified as other equity instruments for the purpose of the Company’s consolidated financial statements in accordance with IFRS).
Meanwhile, net interest-bearing debt decreased 416.4 billion yen from the previous fiscal year to 2,346.1 billion yen primarily due to the decline in the foreign currency-denominated loan balance stemming from the currency translation impact. Accordingly, the net debt-to-equity ratio fell 0.42 points from the previous fiscal year to 1.53 times. Although the Company’s balance sheet at the six-month period ended September 30, 2016 improved dramatically, we will keep a tight rein on our activities as we continue to work to strengthen our financial condition.
The Company applies a basic policy to determine dividends based on the principle of linking them to the Company’s business results for each term. In accordance with the policy of maintaining a consolidated dividend payout ratio of 25% or higher, we have set our interim dividend in the fiscal year ending March 30, 2017 at 9.50 yen per share as planned. We began paying our interim dividend on December 2.
Regarding retained earnings (internal reserves) after payment of our dividends, Marubeni utilizes internal reserves to improve the financial base and strengthen the earnings base to raise our corporate value.
Our business environment remains hard to predict in view of the protracted stagnation in the price of many commodities. Under these circumstances, we will leave unchanged our initial consolidated net profit forecast of 130.0 billion yen after factoring in the deterioration in prices and verifying our financial results forecasts. Marubeni will steadily raise the level of our earnings power to build a sturdy foundation able to withstand a potential further deterioration of the environment.
Moreover, regarding the outlook of the net debt-to-equity ratio, we will lower it to roughly 1.4 times in view of the favorable impact of our hybrid financing. Marubeni aims to further improve our financial base by maximizing free cash flow and reinforcing our earnings foundation.
I request the continued support in the coming years.
Fumiya Kokubu, President & CEO