Nomura Posts $7.3 Bil. Loss on Stock Slump, Lehman Cost

 

Nomura Holdings Inc., Japan’s top brokerage, suffered one of the largest annual losses in Japanese corporate history, hit by slumping stock markets and the cost of acquiring part of collapsed investment bank Lehman Brothers.

Tokyo-based Nomura said Friday its net loss for the fiscal year ended March 31 swelled to 709.4 billion yen ($7.3 billion) from 67.8 billion yen the year before.

The broker’s loss, along with electronics maker Hitachi’s projected red ink of about 700 billion yen, are among the worst ever recorded in Japan as the world’s second-largest economy withers in the face of a collapse in global demand. Hitachi reports earnings May 12.

Shinko Research Institute Co. has said the only annual loss surpassing such dismal numbers in Japanese corporate history is the 834.6 billion yen loss reported by telecommunications giant Nippon Telegraph and Telephone Corp. for the fiscal year ending March 2002.

The last time Nomura had such massive red ink was in fiscal 1998, when it racked up a 397.5 billion yen loss.

For the fourth fiscal quarter, ending March 31, Nomura posted a net loss of 217.1 billion yen — ballooning from a 153.9 billion yen loss a year earlier. Quarterly sales more than quadrupled to 99.2 billion yen from 21.5 billion yen the previous year.

Among the main causes of the annual loss was 230 billion yen in expenses for acquiring operations in Europe, Asia and the Middle East from Lehman Brothers, the storied U.S. investment bank that collapsed last year.

Trading losses amid a global stock market plunge and losses related to real-estate assets also added to the red ink, according to Nomura.

Standard & Poor’s said Friday the ratings on Nomura were unaffected by the losses, which were within expectations.

“The challenge for Nomura is to reduce expenses, which ballooned due to the acquisition of the business units of Lehman Brothers, to an adequate level in this severe business environment as a substantial recovery in earnings is unlikely,” the ratings agency said.

Nomura shored up its capital base by issuing common stock worth 300 billion yen, which supports its credit quality, S&P said.

Nomura President and Chief Executive Kenichi Watanabe said Nomura remained on a sound footing with a “solid capital base,” despite the losses.

“We are now focusing on returning to profitability,” Watanabe said.

Nomura’s retail operation expanded during the fiscal year, adding more than 600,000 accounts, it said.

Nomura said Friday it had reduced the number of global employees by more than 2,100 from its peak numbers in October to about 25,600 people.

Nomura shares gained 1.2 percent to 605 yen. Earnings were released after trading ended on the Tokyo Stock Exchange.

4/24/2009 5:16 AM YURI KAGEYAMA AP Business Writer TOKYO