Mitsui Forecasts Yen Weakness to Add Most to Profit This Year

Mitsui & Co., the most reliant of Japan’s six major trading houses on commodities for profit, forecast a weakening yen to be the biggest contributor to its net income this year.

Mitsui forecast net income to gain 62.1 billion yen ($623 million) to 370 billion yen in the year to March 31 from the previous period, according to a statement today. The depreciating yen alone will help contribute 65 billion yen to profit for the year, the Tokyo-based trader said.

Higher copper and coal sales will add another 15 billion yen to profit, while higher operating costs at resource assets and lower commodity prices will reduce profit by 48 billion yen, Mitsui said.

Policies to promote a weaker yen and the return of their backer Shinzo Abe as Japan’s prime minister in December have caused the currency to fall more than 20 percent in the past six months, the most among the 10 developed-market currencies tracked by Bloomberg Correlation Weighted Indexes. The dollar rose 1.2 percent and the euro 3.9 percent in the period. Mitsui expects the yen to average 95 to the dollar in the year to March 31.

The dollar will likely strengthen in the second half of this year, Mitsui’s Chief Financial Officer Joji Okada said at a briefing in Tokyo today.

Mitsui gained 4.3 percent, the most in more than six months, to 1,374 yen at the close in Tokyo today.

Oil Forecast

The trader, the largest in Japan after Mitsubishi Corp., forecast oil dropping to an average $103 per barrel from $114, and copper falling to $7,500 a ton in London from $7,950 in the previous 12 months. It expects to pay a dividend of 51 yen per share this year, maintaining the 25 percent payout ratio from the previous year.

Net income fell 29 percent last year to 307.9 billion yen on lower iron ore and coal prices, the company reported today. That’s less than the company’s 310 billion yen target and below the 324 billion yen average of 17 analyst estimates compiled by Bloomberg. Mitsui’s innovation division, which includes media and information technology assets, and machinery were the only two units to post a profit increase.

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