Marubeni Corporation of Japan, the 80 per cent owner of Jamaica Public Service Company Limited, has announced plans to sell portions of its foreign owned power assets within a year.

But the company, asked for comment at the top of the week, has so far kept silent on whether those plans include Jamaica or any of its Caribbean operations.

Marubeni, which announced the plan in Japan, suggested it was more inclined to equity equity partners, thereby diluting its ownership of the assets, over outright sale.

Its divestment plan targets those businesses that it said were under-performing.

Operating profit

Wire reports suggest that the Philippines operation which Marubeni paid Mirant Corporation US$3.4 billion to acquire in 2006, was likely to be on the list, given that its operating profit is expected to fall US$2 billion below the company's US$15 billion.

The company has announced no targets for Jamaica, but JPS, though it is by far the stock market's most lucrative company with turnover of $54 billion last year, up 12 per cent year on year, has been hit hard by Hurricane Dean and maintenance problems.

Last year, the company made a loss of $402 million to completely erase a near $2 billion of profit in 2006, and a weaker capital base.

Marubeni has depended on its power generation businesses around the globe to generate most of its profits, which analysts forecast will contribute yen20 billion or 10 per cent to the Japanese corporation's total profit by 2010.

The company also expects profits from non-resource businesses, such as food, power, machinery and infrastructure, to support its earnings this business year, which president Teruo Asada is reported to have said would push net profits to a six-year record of yen165 billion.

For instance, Marubeni plans to invest in upstream operations like food terminals, silos, elevators and consider increasing linkages with grain traders, according to Asada, and invest in rare energy sources like uranium and tungsten.

Asada is hoping in the meantime to break even on two Chilean copper projects, recently acquired for US$1.3 billion, with copper prices at US$3,800 per tonne.

john.myers@gleanerjm.com

Taken from the Financial Gleaner, Friday May 16, 2008.