Showa Shell posts net loss due to inventory valuation

Showa Shell Sekiyu K.K. posted a ¥16.2 billion (US$176.46 million) net loss for 2008 compared with a net profit of ¥43.7 billion (US$476 million) in 2007, saying a drop in oil inventory valuation resulting from falling crude oil prices dented its earnings. Many Japanese refiners including Showa Shell revised the book value of their inventories by using monthly average market price changes. This creates a profit or loss every month, and translates into an accumulated paper loss when oil prices continuously fall. Showa Shell said revenue increased 6.2% to ¥3.27 trillion (US$35.62 billion) in 2008 from ¥3.08 trillion (US$33.55 billion) a year earlier. For 2009, the company expects a net profit of ¥9 billion (US$98.03 million) based on expectations that crude oil prices will remain low and the yen strong. (January 30, 2009)