TOKYO, May 24 (News On Japan) – The financial results of Japan’s five largest trading companies for the fiscal year ending March 2024 show that Mitsui & Co. Mitsubishi Corporation has surpassed by topping the list with a net profit of over one trillion yen, while Sumitomo Corporation suffered significant impairment losses. While these companies have benefited from the weakening yen, the situation is more complex than it seems.
Warren Buffett has invested in these companies, making them highly regarded both nationally and internationally as indicators of Japanese company performance. With the continued depreciation of the yen and possible interest rate hikes by the Bank of Japan, we will assess their financial performance and forecast their future business activities.
Mitsui & Co reported sales of 3.3249 trillion yen and net profit of 1.0636 trillion yen. This is the second consecutive year that Mitsui & Co. has achieved and maintained a net profit of more than one trillion yen, while Mitsubishi Corporation fell below the one trillion yen mark, making Mitsui the best performer. The company has achieved this through several strategic initiatives, maintaining a balanced and diversified portfolio across developed and emerging markets, and demonstrating strong resilience to environmental change.
For the fiscal year ending March 2025, Mitsui & Co. plans to focus on food businesses such as shrimp and poultry farming and will also start lithium mining in Brazil, anticipating the growing demand for batteries in electric vehicles. The company wants to strengthen its earning capacity by initiating new projects as planned. Despite this success, there are concerns about the Arctic LNG 2 project in Russia. The project, which involves Russian company Novatek, is facing sanctions from the United States over Russia’s invasion of Ukraine, potentially halting operations and use of the extracted LNG. Mitsui & Co. remains involved in the project for the time being, but faces significant risks of impairment if the project cannot proceed.
Mitsubishi Corporation reported sales of 19.5676 trillion yen and net profit of 964 billion yen. While it remains a giant, net profit has fallen from the previous year due to continued coal production during the pandemic, which has led to operational tensions. The fiscal year ending March 2025 is expected to see a slight decline in net profit to 950 billion yen. Mitsubishi Corporation plans to focus on next-generation energy businesses such as green hydrogen and green ammonia, as well as developing lithium and nickel resources in preparation for the widespread adoption of electric vehicles.
Itochu Corporation is less dependent on volatile commodity sectors, resulting in stable sales and net profit. Sales reached 14.299 trillion yen, with a net profit of 801.7 billion yen, securing the third position among trading companies. Itochu Corporation’s supermarket subsidiary, FamilyMart, continues to perform well and contribute to the company’s stable profits. The company emphasizes profits from consumer-oriented businesses, setting itself apart from Mitsubishi and Mitsui.
A key focus for Itochu Corporation this fiscal year is the acquisition of Big Motor’s used car division. The company aims to reform Big Motor’s organizational culture and restore its reputation, focusing on customer satisfaction and gaining public trust.
Marubeni Corporation reported revenues of 7.25 trillion yen, down about 20% year-on-year, and net profit of 474 billion yen, down about 13%. The company recorded a fixed asset impairment loss of 189 billion yen due to revised sales and production plans for its cardboard raw material manufacturing operations in Vietnam. For the fiscal year ending March 2025, Marubeni forecasts a 1.8% net profit increase to 480 billion yen, driven by profits from agriculture-related businesses and construction equipment activities.
In contrast, Sumitomo Corporation faced challenges with its nickel operations in Madagascar, resulting in a significant impairment loss of 89 billion yen due to operational issues. The company’s net profit fell by more than 30% to 386.3 billion yen, dropping it from the top three trading companies. The company is working to normalize production, but does not rule out withdrawing from the project if necessary.
Source: BIZ
