Japanese trading house Itochu has reported a net income of 801.8 billion yen ($5.2 billion) for the fiscal year ended in March 2023, largely flat compared to the previous year and lower than market estimates.
Analysts polled by LSEG had expected Itochu to post a net profit of 818.6 billion yen. The company, which reported a net profit of 800.5 billion yen a year ago, noted that its bottom line had exceeded 800 billion yen for three consecutive years.
For the fiscal year ending in March 2025, Itochu expects a record net profit of 880 billion yen, unchanged from its April forecast. This is due to solid growth in its information technology service unit and higher output and reduced costs in its iron ore and coking coal business.
However, the company has changed its assumption of the yen’s exchange rate for the current financial year to 145 yen per U.S. dollar, against its previous estimate of 140 yen, reflecting the recent slide in the Japanese currency.
Itochu President and COO Keita Ishii acknowledged that a weaker yen is positive for trading houses’ earnings, but it will have more negative impacts on Japan’s economy as a whole if the trend persists. He also said that the yen’s depreciation raises the hurdle for overseas investment, but Itochu would proceed in that direction if the investments contribute to its growth.
Furthermore, Ishii stated that Itochu is ready to capitalize on potential interest from foreign firms looking to acquire Japanese businesses or stakes, though he did not provide any further details.
Itochu, in which Warren Buffett’s Berkshire Hathaway holds a minority stake, plans to buy back shares worth around 150 billion yen and targets a return on equity ratio of 16%.