Mitsubishi sticks to its forecast for record full-year profit
Japan’s biggest trading house, Mitsubishi, on Tuesday posted a 6% rise in its April-December net profit thanks to higher income from energy operations, and stuck to its record profit forecast for the year despite one-off losses.
Mitsubishi’s net profit grew to a record ¥442bn ($4bn) for the nine months to December 31 from ¥416bn a year ago.
The company booked an impairment loss of ¥28bn on its stake in Singapore’s Olam International and ¥31bn on its investment in iron ore mines in Chile in the October-December quarter, but it kept its forecast of a record ¥640bn profit for the year ending March.
“We have paid a premium for Olam as we had expected synergy with our operations, but the outcome has missed our target,” Mitsubishi CFO Kazuyuki Masu told a news conference.
Mitsubishi, which owns a 17.4% stake in Olam, has no plan to trim its stake in the Singaporean commodity trader and plans to seek more synergies in areas such as Africa, Masu said.
Olam said last month that it plans to invest $3.5bn into key growth areas, such as nuts, coffee and cocoa, over the next few years, while exiting four existing businesses to raise funds.
As for the Chilean mines, Mitsubishi took the loss due to an extra environmental cost to build a tailing dam mainly for the Los Colorados mine, which produced 14-million tons of iron ore in 2018, and a repair cost for a broken shiploader at a port.
The port’s loading operation has been stopped since the collapse of the shiploader in November, Masu said.
The mines are 25% owned by Mitsubishi and 75% by Chilean iron ore and steel producer Compañía de Acero del Pacífico.
Mitsubishi’s annual profit prediction missed the ¥655bn mean forecast in a poll of nine analysts, according to Refinitiv.
Its nine-month profit was 69% of its full-year estimate, but Masu said a special gain from its planned sale of two Australian thermal coal mines and stronger profits from some segments are expected to fill the gap.
Japanese trading companies have benefited from higher prices for oil and coal, while results also reflect healthy earnings in nonresource segments, which they have strengthened since the last commodities downturn.