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Japan traders' results a mixed bag as commodity rally offsets virus hit

Japan traders' results a mixed bag as commodity rally offsets virus hit

05/11/2021 01:54
Japan traders' results a mixed bag as commodity rally offsets virus hit

By Yuka Obayashi

- Japan's giant trading houses reported mixed annual results, with Marubeni Corp 8002.T swinging to a better than expected profit and Sumitomo Corp 8053.T posting a record net loss amid the COVID-19 pandemic and strong bulk commodity prices.

Sweeping global lockdowns killed off global air travel in the year ended March 31, suspended mining and energy projects and cut consumer spending on clothes and restaurants, hurting revenues for the trading companies whose portfolios span the gamut of raw material markets among others.

Some firms, however, benefited from a rally in iron ore and copper which both scaled record highs this year amid tight supplies and a robust demand outlook. Soaring grain prices, mainly corn, also lent support. nL1N2MU0A3nL1N2MX08BnL1N2ML0AF

Sumitomo reported the worst performance among the top-five Japanese trading companies, clocking its biggest loss as the pandemic suspended its Ambatovy nickel project in Madagascar for one year, causing a hefty writedown. nL4N2LR0FLnL1N2HS0PA

Mitsubishi Corp's 8058.T net profit slumped by 68% as lower coking coal prices and an impairment on its convenience store unit Lawson Inc 2651.T eroded earnings.

"We had a very difficult year as our mainstay businesses were deeply affected by the pandemic," CEO Takehiko Kakiuchi said.

Mitsui & Co 8031.T and Itochu Corp 8001.T reported smaller falls in profits - 14% and 20%, respectively - while Marubeni booked a profit that exceeded its guidance and returned the firm to profitability from a loss the previous year.

The shares of the five firms have all gained this year, with Marubeni's handily outpacing others with a 43% rise.


Soaring iron ore prices helped Mitsui, Itochu and Marubeni offset weak sales of oil, aircraft and train leasing, apparel and food service items, with stronger grain prices also bolstering Marubeni's results as profit of its U.S. grain trading unit Gavilon surged.

Forecasts for this year were also mixed, with Itochu and Mitsui predicting a 37% increase in net profit to a record 550 billion yen ($5.1 billion) and 460 billion yen, respectively, while Mitsubishi's profit outlook was for a smaller 380 billion.

Sumitomo forecast a quick turnaround to a 230 billion yen profit from a 153 billion yen loss a year earlier, while Marubeni's guidance of 230 billion yen represented a mere 2% rise despite robust commodity prices.

"We've made a conservative forecast...as grain prices are not likely to continue their rally like last year," Marubeni CEO Masumi Kakinoki said. nL1N2MT0J2

($1 = 108.9400 yen)


Japan trading houses shareshttps://tmsnrt.rs/3uEdLaG

(Reporting by Yuka Obayashi; Editing by Muralikumar Anantharaman)

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