Major Japanese trading houses, backed by Warren Buffett, this week released cautious profit forecasts for the year, setting aside millions to hedge against persistent tariff uncertainty.
Mitsubishi Corp. and Mitsui & Co. forecast this fiscal year’s net income will fall 26% and 14%, respectively, from a year earlier, according to filings. Sumitomo Corp. and Marubeni Corp. expected theirs to rise 1.4% while Itochu Corp. saw a 2.2% climb. All five firms allocated funds as a buffer to hedge against tariff impacts, they said, with Sumitomo and Itochu setting aside 40 billion yen .
Japan is among several countries clamoring to cut a deal with the US to avoid tariffs. Its chief trade negotiator Ryosei Akazawa said the latest round of discussions in Washington was a frank and open one, and that he aims to step up talks in mid-May.
“Uncertainty surrounding US policy developments may lead to postponed capital investments, further raising concerns about an economic downturn,” Mitsui said. Meanwhile, Sumitomo said it will face “a certain degree of indirect impact” from the tariffs.
Though the country’s trading houses have been minimally affected so far, they could face a 5-8% drop in net income for every 10% strengthening of the yen, according to Macquarie analyst Sonny Lee.
Still, the conglomerates expect some tailwinds from the punitive American trade measures and their potential to disrupt global supply chains.
Mitsui expects to zero in on such opportunities through its North American and energy and chemical businesses. Marubeni also sees upsides in the used aircraft engines business, while projecting limited negative impact on its crop trading in US, Europe and China. Sumitomo’s CEO Shingo Ueno said tariffs could help their North America steel pipe business.
“We expect either neutral or positive impacts,” Marubeni’s Chief Executive Officer Masayuki Omoto said.
The companies also expect crude oil prices to trend between US$60 to $71 per barrel due to sluggish demand, even though supply concerns persist over tensions in the Middle East.
This article was generated from an automated news agency feed without modifications to text.
