The Japanese trading company Itochu (8001.T) increased its full-fiscal year profit projection despite reporting a 14.5% decline in six-month net profit on Monday due to higher expectations for its machinery sector and the cheaper yen.
Following a decline in half-year results, many major Japanese trading houses, including Sumitomo (8053.T), Mitsubishi (8058.T), Marubeni (8002.T), and Mitsui (8031.T), increased their projections for the lower yen and non-resource industries last week.
After lower coal and iron ore prices caused its half-year net profit to drop to 412.90 billion yen, Itochu upped its net profit prediction for the year ending in March 2024 by 20 billion yen to 800 billion yen ($5.4 billion).
President and Chief Operating Officer Keita Ishii said at a press conference, “We have raised our full-year profit forecast for the machinery segment, backed by strong performance in automobiles, construction machinery, and North America’s power business.”
Itochu’s machinery division, which produces industrial machinery, ship parts, and automobile parts and is its second-largest profit contributor after the metals and minerals section, raised its full-year profit prediction by 10 billion yen to 115 billion yen.
According to Ishii, Itochu, which is more exposed to China than other leading Japanese trading firms, thinks the Chinese economy will take some time to recover.
It appears that Beijing’s stimulus plan will not cause China’s economy to increase. We’ll have to put up with it for a bit longer,” Ishii said.
Additionally, the business said it will repurchase up to 1.2% of its shares, or 75 billion yen. Monday’s closing price of Itochu’s shares was 1.66% higher than those of the broader Nikkei index (.N225), which increased by 2.37%.
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