Sumitomo Corporation - SMBC Aviation Capital announces insurance settlement
October 03, 2023 at 08:53 am EDT
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Sumitomo Corporation (Head Office: Chiyoda-ku, Tokyo; Director, President and Chief Executive Officer: Masayuki Hyodo; hereinafter 'the Company'), hereby announce that on October 2, 2023, SMBC Aviation Capital Limited (CEO: Peter Barrett, hereinafter 'SMBC Aviation Capital'), a subsidiary of Sumitomo Mitsui Finance and Leasing Co., Ltd. (Head office: Chiyoda-ku, Tokyo; President: Masaki Tachibana hereinafter 'SMFL') has received cash insurance settlement proceeds totaling approximately US$710 million in respect of its aircraft previously leased to Aeroflot Russian Airlines (hereinafter 'Aeroflot').
Sumitomo Corporation partly owns SMFL.
The amount represents a settlement of SMBC Aviation Capital's insurance claims under Aeroflot's insurance and reinsurance policies relating to 16 aircraft. The insurance settlement and receipt of the settlement proceeds from Limited Liability Company 'Insurance Company NSK', a Russian insurance company, were carried out in full compliance with all applicable laws, sanctions and regulations.
SMBC Aviation Capital will continue to actively pursue its litigation in the Irish courts under its own insurance policies. SMBC Aviation Capital will also continue its efforts to seek to mitigate its losses in respect of its aircraft that were previously leased to other Russian airlines.
The Company posted losses related to these aircraft in the fiscal year 2022. Due to the receipt of the insurance settlement, the Company expects to recognize a profit on its share of the insurance proceeds received (approximately 30 billion yen after tax effect considerations) in its consolidated financial results for the third quarter of the fiscal year 2024. This profit was not included in the consolidated earnings forecast for the full fiscal year 2024 announced on August 3, 2023. Adjusted consolidated earnings forecast for the fiscal year 2024 will be announced together with the Company's second quarter results after a careful examination of other relevant factors.
Sumitomo Corporation is a diversified group organized around 7 areas of activity:
- retail distribution of consumer goods (24.4% of net sales): food products, apparel and accessories, pharmaceuticals, building materials, household and decorative items, etc. The group is also developing a real estate business;
- trading of hydrocarbon, mining, chemicals and electronics products (24%): oil, natural gas, copper, gold, silver, zinc, lead, nickel, coal, iron ore, resins, pesticides, petrochemical products, etc.;
- trading of steel products and non ferrous metals (20%): flat and long steel products, tubular products, aluminum products, titanium, etc.;
- distribution of transportation and construction systems and equipments (15.1%): spatial equipments, landing fields, forest machines, motorcycles, mining operating vehicles, etc.;
- telecommunications and multimedia products and services supplies (8.8%): TV wiring, data communication solutions, film distribution services, mobile telephony, Internet access and computing services;
- development and implementation of civil engineering infrastructures (7.6%): power plants, wastewater treatment units, industrial plants, telecommunications centers, etc. The group is also providing logistics services;
- other (0.1%).
SUMITOMO CORPORATION 
