Sumitomo Metal Mining recorded a ¥42.6bn impairment loss at Coral Bay Nickel Corporation, its Philippine nickel smelting subsidiary, in the six months to September 2026. The charge is confined to one business: group pretax profit for the period still rose 91.9% to ¥149.4bn.
What was written down
The company's impairment notice says the loss of ¥42,553mn goes into cost of sales and belongs to the smelting segment. It follows a change in the estimate for Coral Bay's asset retirement obligation, the cost of restoring the site under local mining law. Sumitomo Metal Mining says it now expects Coral Bay's production to end within the period of its next medium-term plan, fiscal 2028 to 2030. In the half-year it reviewed its approach to restoration duties, including dismantling equipment after production stops.
That review raised the obligation by ¥41.0bn and, by the company's own account, cut smelting-segment pretax profit for the half-year by ¥41.6bn. The higher obligation also added to the carrying value of Coral Bay's fixed assets. Citing weak nickel and cobalt prices, rising production costs and declining ore quality, the company then wrote ¥42.0bn of carrying value down to recoverable amount, measured by value in use.
The notice names weak nickel and cobalt prices as a reason. Separately, the earnings release puts the average nickel price for the half-year at $7.88 a pound, against $6.85 a year earlier. It says nickel rose on Indonesian ore-quota cuts and a sulphur price spike, then fell on speculation that Indonesia would review its policy.
A diversified group around one loss
Group sales rose 34.8% to ¥1.06tn and profit attributable to owners of the parent rose 67.0% to ¥90.1bn. The company credits steady mine operations, higher average copper and gold prices and a weaker yen. The smelting segment swung to a ¥1.4bn pretax loss from a ¥4.0bn profit a year earlier, and the company says the Coral Bay charge was the main reason. The resources segment earned ¥149.7bn and the materials segment ¥16.4bn.
The full-year guide
The company also cut its guidance for the year to March 2027, saying it took the impairment into account. Pretax profit is now forecast at ¥260bn, down from ¥324bn in the August forecast, and profit attributable to owners of the parent at ¥161bn, down from ¥216bn. Sales guidance rose to ¥2.135tn from ¥2.065tn. The smelting segment is now forecast to lose ¥23bn for the year, against a profit of ¥63bn in the earlier guide.
The interim results are not subject to review by an auditor. The notice does not say how much of the written-down asset value relates to the restoration obligation as opposed to the plant itself. The impairment is an accounting charge, and the cash-flow statement adds back ¥42.6bn of impairment within operating cash flow of ¥127.7bn.