By Katya Golubkova and Yuka Obayashi
TOKYO (Reuters) -Japanese trading houses Mitsubishi, Marubeni and Sumitomo on Thursday lifted full-year profit and dividend forecasts as weaker yen and non-resource businesses are set to support operations after a drop in half-year results.
Trading houses’ profits have fallen from last year’s peaks, when commodity prices skyrocketed after Russia’s invasion of Ukraine disrupted supply chains.
However, their diversified business models, which involve trading and investing in a wide range of products or projects – from fishes to automobiles to power stations – have limited the fall in profits.
Mitsubishi and Marubeni, in which U.S.
billionaire investor Warren Buffett has a stake, raised profit forecasts for the year ending in March 2024 to 950 billion yen ($6.31 billion) and 450 billion yen, respectively, from 920 billion yen and 420 billion yen.
The Japanese yen has lost around 20% against the greenback this year, helping exporters and holders of overseas assets but hitting households’ incomes and forcing the government to spend billions to cushion the economic blow from rising inflation, including on subsidies to curb gasoline and electricity bills.
“We’ve upgraded guidance as we were able to confirm the resilience of healthy profit levels going forward with solid performance in natural gas, automobile, industrial materials and consumer industries segments,” Mitsubishi CEO Katsuya Nakanishi told a news conference.
Mitsubishi lifted its annual dividend by 10 yen to 210 yen per share while Marubeni raised the dividend promise by 5 yen to 83 yen per share, following a similar hike by their peer Mitsui on Tuesday.
Sumitomo, also co-owned by Buffett, raised its full-year profit estimate by 20 billion yen to 500 billion yen and annual dividend outlook by 5 yen to 125 yen per share.
To boost liquidity and broaden the shareholder base, Mitsubishi said it would split each ordinary share into three shares at the end of December.
Separately, Marubeni will buy back up to 1.2% of its shares worth 20 billion yen to boost returns for shareholders.
“In light of solid first-half results, we’ve decided to spend 70 billion yen more than planed this year on fresh investment on growth segments and capex,” Marubeni CFO Takayuki Furuya said.
Japanese trading houses give investors access to a “well diversified business portfolio that is not exposed to any single industry or geography,” Jefferies analysts said in a note this week.
For the six months through Sept.
30, Mitsubishi reported a 35% drop in net profit to 466 billion yen.
Marubeni’s profit fell 20% to 251.3 billion yen and Sumitomo’s profit was down 19% to 284.9 billion yen, as weaker commodity prices hit revenues.
($1 = 150.3100 yen)
(Reporting by Katya Golubkova and Yuka Obayashi; Editing by Christian Schmollinger, Rashmi Aich and Mrigank Dhaniwala)
