Weak yen, non-resource businesses lift Japan trading houses' profit forecasts
TOKYO, Nov 2 (Reuters) - Japanese trading houses Mitsubishi and Marubeni on Thursday lifted full-year profit and dividend forecasts as weaker yen and non-resource businesses are set to support operations after a drop in half-year results.
Trading houses' profits have fallen from last year's peaks when commodity prices skyrocketed after Russia's invasion of Ukraine disrupted supply chains. However, trading firms' exposure to food business and foreign operations have limited the fall in profits.
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Mitsubishi and Marubeni, in which U.S. billionaire investor Warren Buffett has a stake, have increased profit forecasts for the year ending in March 2024 to 950 billion yen ($6.31 billion) and 450 billion yen, respectively, from 920 billion yen and 420 billion yen.
The Japanese yen has lost around 20% against the greenback this year, helping exporters but hitting households' incomes and forcing the government to spend billions to cushion the economic blow from rising inflation, including subsidies to curb gasoline bills.
Mitsubishi announced an increase in its annual dividend by 10 yen to 210 yen per share while Marubeni raised the dividend promise by 5 yen to 83 yen per share, following a similar increase by their peer Mitsui on Tuesday.
To boost liquidity, Mitsubishi said it would split each ordinary share into three shares at the end of December.
Separately, Marubeni will buy back up to 1.2% of its shares worth 20 billion yen to boost returns for shareholders.
"By investing in (Japanese) trading houses, investors obtain a well diversified business portfolio that is not exposed to any single industry or geography," Jefferies analysts said in a note this week.
On Thursday, Mitsubishi reported a 35% drop in half-year net profit to 466 billion yen.
Marubeni's profit fell 20% to 251.3 billion yen for the half year, as weaker commodity prices hit revenues. ($1 = 150.3100 yen) (Reporting by Katya Golubkova; Editing by Christian Schmollinger and Rashmi Aich)