* Forecasts net loss of 85 bln yen for year to March 31
* Says expects 230 bln yen net profit in 2015/16
* To cut resource investment to 10 pct of spending from 40 pct (Adds details of investment plan, President quotes)
By Yuka Obayashi
TOKYO, March 25 (Reuters) - Japan's Sumitomo Corp warned it would post its first annual loss in 16 years in the financial year ending this month, hit by a slump in commodities prices that forced it to cut its investment plans for its energy and metals businesses.
The trading house said on Wednesday that it expected a net loss of 85 billion yen ($711 million) for the current year that ends on March 31, missing its own - already lowered - forecast of a 10 billion yen net profit.
The loss would be the first since the 1998/99 financial year, and the widest since the company was hit by $2.6 billion in losses from illegal copper trades in 1996/97.
But Japan's fifth-largest trading house said it expected to return to profit in the new financial year, on the back of higher income from non-natural resources operations such as car sales and power generation.
Under a new three-year business plan unveiled on Wednesday, Sumitomo forecast 230 billion yen in net profit for 2015/16 and more than 300 billion yen in 2017/18.
"We can achieve a profit of over 300 billion yen in the 2017 business year, helped by growing non-resource businesses, even if energy and metals prices remain at where they are now," Sumitomo President Kuniharu Nakamura told reporters and analysts.
He also said Sumitomo would reduce its investment budget on resources to 10 percent of the company's planned total spending of 1.2 trillion yen over the next three years, down from about 40 percent of total spending over the past two years.
Like global oil majors and miners, Japanese trading firms have been caught out by the commodities rout, which has seen crude oil prices more than half since mid-2014.
Sumitomo had forecast a 250 billion yen net profit for 2014/15, before it started booking impairment losses as commodities slumped. In September, it slashed the estimate to 10 billion yen.
"We didn't expect resources prices to fall this far," said Chief Financial Officer Hiroyuki Inohara, adding oil and iron ore prices are likely to remain under pressure.
The company now expects total impairment losses of 325 billion yen for the year that is about to end, against its previous estimate of 240 billion yen. This includes about 240 billion yen in losses from U.S. shale oil projects and a 65 billion yen loss from a Brazilian iron ore mine.
Inohara said Sumitomo had given up on an earlier target of boosting resource operations to account for a fifth of its overall assets by 2019/20. It now plans to maintain its resources asset level at around 1 trillion yen, or about 10 percent of its total assets, for the next three years.
$1 = 119.7300 yen Editing by Miral Fahmy and Pravin Char