Japan’s Itochu raises profit forecast on strong machinery business
3:19 am Monday, November 06th, 2023
(Reuters) -Japanese trading house Itochu posted a 14.5% drop in six-month net profit on Monday but raised its full-fiscal year profit forecast on stronger expectations for its machinery business and the weaker yen.
Other big Japanese trading houses, including Mitsui, Mitsubishi, Marubeni and Sumitomo, also raised their forecasts last week on the weaker yen and non-resource businesses after a drop in half-year results.
Itochu increased its net profit forecast for the year ending in March 2024 by 20 billion yen to 800 billion yen ($5.4 billion) after weaker coal and iron ore prices resulted in its half-year net profit falling to 412.90 billion yen.
“We have raised our full-year profit forecast for the machinery segment, backed by strong performance of automobile, construction machinery and North America’s power business,” President and Chief Operating Officer Keita Ishii told a news conference.
The full-year profit forecast for Itochu’s machinery business — its second-biggest profit contributor after the metals and minerals segment and which makes ship and car parts and industrial machinery — was increased by 10 billion yen to 115 billion yen.
Itochu, which has a higher exposure to China than other top Japanese trading houses, believes it will take a while for the Chinese economy to recover, Ishii said.
“It does not look that China’s economy will pick up quickly with Beijing’s stimulus. We will have to endure it a little bit more,” Ishii said.
The company also said it will buy back up to 1.2% of its shares, worth 75 billion yen.
Itochu’s shares closed 1.66% higher on Monday but underperformed the wider Nikkei index, which was 2.37% higher. ($1 = 149.5600 yen)
(Reporting by Katya Golubkova and Yuka Obayashi; Editing by Kim Coghill and Savio D’Souza)
