TOKYO: Japan's giant trading houses reported mixed annual results, with Marubeni Corp swinging to a better than expected profit and Sumitomo Corp 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.
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.
Mitsubishi Corp's net profit slumped by 68per cent as lower coking coal prices and an impairment on its convenience store unit Lawson Inc eroded earnings.
"We had a very difficult year as our mainstay businesses were deeply affected by the pandemic," CEO Takehiko Kakiuchi said.
Mitsui & Co and Itochu Corp reported smaller falls in profits - 14per cent and 20per cent, 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 43per cent rise.
Graphic: Japan trading houses shares: https://fingfx.thomsonreuters.com/gfx/mkt/xlbvgabwovq/image-1620707866642.png
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 37per cent increase in net profit to a record 550 billion yen (US$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 2per cent 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.
(Reporting by Yuka Obayashi; Editing by Muralikumar Anantharaman)