| Nomura Holdings Inc. posted a record net loss in the October-December period as the ongoing global financial turmoil and slumping stock markets sent Japan's biggest brokerage deep into the red for the fourth straight quarter. |
Nomura Holdings Inc. posted a record loss in the third quarter, as market turmoil and the heavy burden of its global ambitions dragged Japan's biggest brokerage deeper into the red.
The company on Tuesday booked a loss of 342.9 billion ($3.8 billion) in the October-December period, compared with a net profit of 21.8 billion yen a year earlier. It was Nomura's fourth straight quarter of losses and its worst three-month performance since the company began reporting quarterly results in 2001.
Fallout from the global financial crisis battered nearly all aspects of the company's business.
Stock and bond trading slumped. Its equity holdings plunged in value. Hedging strategies failed. Credit froze. Exposure to Iceland and Bernard Madoff's alleged $50 billion Ponzi scheme surfaced. And it had to begin paying for its acquisition of Lehman Brothers' operations in Asia, Europe and the Middle East., which is expected to incur 2 billion yen in total costs.
Pretax losses for the quarter totaled 399.5 billion yen from a profit of 44.4 billion yen the previous year, while total revenue before interest expenses plunged 99 percent to 2.7 billion yen.
The dismal numbers further darken Nomura's outlook for the full fiscal year through March, with a growing number of analysts predicting the brokerage's worst-ever 12 months on record. The company does not release its own earnings forecasts.
Nomura executives acknowledged it was a rough quarter but insisted that brighter days were ahead.
The company outlined a series of initiatives to help steer it back into the black. It aims to cut group-wide costs by 10 percent next fiscal year through March 2010, expand its client base, and scale down or exit noncore businesses. The company has also decided not to pay fourth-quarter dividends to investors.
"Last quarter was extraordinary for our industry and Nomura was no exception," said President and Chief Executive Kenichi Watanabe in a statement. "However, our financial position remains strong and we are seeing results from the integration of our extensive client platform in Japan with the Lehman franchise internationally."
Standard & Poor's cut Nomura's credit ratings after the company released its results.
The downgrades reflect "larger-than-expected losses by the group as a result of the unprecedented financial turmoil in the third quarter, which highlighted the vulnerability of the group's exposure to extreme market movements," said S&P analyst Yuri Yoshida in Tokyo. "The downgrades also reflect our expectation that the slump in the operating performance of the group could be protracted amid uncertainty over the outlook of the global financial market."
For the nine months ended December, Nomura reported a net loss of 492.4 billion yen on revenue of 518.3 billion yen.
In trading Tuesday, shares of Nomura rose 4.9 percent to 639 yen in line with broader market gains.
By Tomoko A. Hosaka (AP)
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