Japan's trading houses are riding a boom in commodities markets that has been fuelled by the recovery in major economies from the coronavirus pandemic, with Itochu reporting record quarterly profit and three others raising their earnings forecasts.
The results this week highlight how commodity price swings dictate the bottom line for Japan's storied trading houses as they bounced back from the hit to earnings last year when the coronavirus pandemic began, riding gains in the prices of everything from liquefied natural gas (LNG) to nickel.
The recovery of major economies, including the United States, China and in Europe, has fuelled demand for consumer goods, autos, ships and other heavy goods, even as billions of people in poorer countries are yet to be vaccinated, ensuring a bumpy global recovery.
But for the first quarter of the financial year, the general trading houses, known as sogo shousha in Japan, are reaping the benefit of higher demand for the resources needed to build these cars, trucks, trains and ships.
Sumitomo Corp, Japan's fifth-biggest trading house by revenue, on Wednesday boosted its profit forecast by more than a quarter, as it returned from a loss last year, with a quarterly profit just shy of $1 billion dollars..
Itochu Corp, the second-biggest sogo shousha by turnover, said it had a record profit off 267 billion yen ($2.5 billion), its turnover surging 22%, as it also benefited from diversifying into retail and consumer areas that are jumping back with the easing of lockdowns.
Mitsui & Co and Maurbeni Corp kicked off the earnings bonanza on Tuesday, with Mitsui, the third-biggest trading house, announcing profit had tripled and Marubeni, the fourth-biggest, saying net income had doubled.
Mitsubishi Corp, the biggest sogo shousha, rounded out the earnings on Tuesday with a two-fifths jump in revenue fuelling a quadrupling of profit to nearly 190 billion yen.
(Reuters reporting by Aaron Sheldrick; Editing by Christian Schmollinger)