Itochu keeps 2014/15 profit outlook despite slump in metal prices
TOKYO Nov 5 (Reuters) - Japanese trading house Itochu Corp stuck to its annual net profit forecast of 300 billion yen ($2.63 billion) on Wednesday although it slashed the forecast for its metals business by 28 percent due to a slump in iron ore and coal prices.
The company managed to book a 1.1 percent gain in net profit for the April-September half as growth in non-resource businesses such as IT-related services and machinery more than made up for the weak performance in the metal sector.
Its steady profit contrasted with the performance of peer Sumitomo Corp, which posted a net loss of 38.4 billion yen for April-September, its first red ink for the six months since 1996.
Sumitomo also cut its annual profit forecast by 96 percent due to massive losses on a U.S. shale project and the sharp falls in iron ore and coal prices.
The drop in price of industrial commodities is weighing on the balance sheets of trading houses, which have business portfolios like investment funds.
Itochu now expects net profit from its metal segment to be 52 billion yen, down from its previous forecast of 72 billion yen, for the year to March 31, but the shortfall will be offset by a 20 billion yen contingency fund it had set aside, Executive Vice President Tadayuki Seki told a news conference.
"We have no plan to book an impairment loss on iron ore or coal assets for this business year, based on the revised assumption of metal prices," he said.
Seki, also chief financial officer, did not disclose those new price forecasts.
Iron ore prices .IO62-CNI=SI have plunged more than 40 percent this year, hit by a glut in supply as top, low-cost global miners boosted output at the same time as demand slowed in China, the biggest consumer of the steelmaking ingredient. Continuación...