The major Japanese trading company backed by Warren Buffett this week released a year of cautious profit forecasts, putting millions of dollars in hedging ongoing tariff uncertainty.
According to the filing, Mitsubishi and Miki predicted net income for the fiscal year will fall by 26% and 14% respectively from a year ago. Sumitomo Corp. and Marubeni Corp. expect their company to rise 1.4%, while Itochu Corp. gets a 2.2% climb. They said all five companies allocated funds to buffers that hedge tariff crashes, while Sumitomo and Itochu set aside 40 billion yen.
Japan is one of several countries, and they are clamoring to reach an agreement with the United States to avoid tariffs. Its chief trade negotiator Ryosei Akazawa said the latest round of discussions held in Washington was frank and open, and he aims to negotiate in mid-May.
“Uncertainty surrounding U.S. policy developments could lead to delayed capital investments, further raising concerns about the recession,” Mitsui said. Meanwhile, Sumitomo said he would face “a certain degree of indirect impact” of tariffs.
Macquarie analyst Sonny Lee said that while the country's trade houses have been affected by the least, their net income per 10% strengthened was down 5-8% per 10%.
Nevertheless, conglomerates expect punitive U.S. trade measures and their potential to undermine global supply chains.
Mitsui expects zero opportunities through its North American and energy and chemical companies. Marubeni also saw the situation in the second-hand aircraft engine business, while predicting limited negative impact on crop trading in the United States, Europe and China. Sumitomo CEO Shingo Ueno said tariffs could help their North American steel pipe business.
“We expect neutral or positive impact,” said Masayuki Omoto, CEO of Marubeni.
The companies also expect crude oil prices to be trending between $60 and $71 a barrel due to slow demand, although supply concerns remain in tension in the Middle East.
This article was generated from the Automation News Agency feed without the text being modified.
