Japan's trading houses log bumper Q1 profits on strong coal, oil prices

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TOKYO : Japan's top five trading houses mostly reported bumper profits for the first quarter thanks to higher prices of coking coal, oil and liquefied natural gas (LNG) as well as solid demand for steel products and automobiles.

But they, including Mitsubishi Corp whose profit jumped in the April-June period and reached 63 per cent of its annual forecast, stuck to their full-year forecasts of a year-on-year profit decline, citing growing concerns over a global economic slowdown.

Like their global rivals in energy and mining, Mitsubishi, Mitsui & Co and other trading houses have benefited from the rally in energy and commodities markets.

The biggest gainer was Mitsubishi whose first-quarter net profit nearly tripled to a record 534 billion yen ($4 billion), followed by Marubeni Corp whose profit soared 80 per cent, Sumitomo Corp with a 45 per cent jump and Mitsui with a 44 per cent leap.

Only Itochu Corp booked a 14 per cent fall due to smaller one-off gains than a year earlier.

Rising inflation worldwide, China's slowing economic growth and recent drops in some commodities such as coking coal and copper may constrain future profit growth, executives warned.

"There is growing uncertainty due to a global economic slowdown, falling resource prices, prolonged Russia-Ukraine conflict and global monetary tightening," Mitsubishi Chief Financial Officer Yuzo Nouchi said.

Marubeni's strong first-quarter results also led to 50 per cent progress on its full-year profit estimate.

"But we are keeping our annual profit forecast as we see an extremely uncertain business environment in the second quarter and beyond," Chief Financial Officer Takayuki Furuya said, citing fears over recession and demand destruction.

"We need to examine how natural resource prices will move and how slowing demand and higher raw material costs will constrain profits in manufacturing sector and trading margins," he said.

Marubeni also said on Friday it slashed the value of its stake in the Sakhalin-1 oil project in Russia by 8 billion yen to 3 billion yen at the end of June.

Mitsui and Mitsubishi have cut the value of their stakes in the Sakhalin-2 LNG project by 217.7 billion yen after Moscow's move to seize control of it.

Following is a table of net profit for the April-June first quarter by Japan's top five trading houses. (in billions of yen)

Q1, FY22 Q1, FY21 year/year progress to ...

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