(Bloomberg) -- Five major Japanese trading firms backed by Warren Buffett saw their profits dented by lower commodity prices this year.
Among the five, Mitsui & Co. was the only one to boost its net income guidance for the full year, saying its LNG business will contribute to profits. Mitsubishi Corp., Marubeni Corp. and Sumitomo Corp.’s net income missed the average analyst estimates for the second quarter ended September, according to data compiled by Bloomberg. Itochu Corp., which announced results on Wednesday, also missed analyst estimates for operating income. The four firms retained their fiscal year guidance.
The trading houses said profits were affected by China’s economic slowdown alongside declining prices of coking coal and iron ore.
The five firms, in which Buffett’s Berkshire Hathaway Inc. has stakes, have a significant presence in the global commodities space, with investments in upstream oil and gas projects to mines. In recent years, they have worked to diversify their business portfolios to protect against swings in commodity markets.
The companies added they see some bright spots for the remainder of the fiscal year.
Mitsubishi boosted the net income forecast for its energy segment by 16% compared with a previous projection, saying higher market prices for LNG will support sales. Sumitomo expects its overseas electricity business to help support profits, while Marubeni sees its copper business recovering in the second half of the year after resolving delays at its mines.
Itochu raised the forecast for its textile segment as it expects a higher valuation after acquiring sportswear company Descente Ltd., as well as due to the brand’s positive performance overseas. The firm also announced it will acquire an additional stake in Brazilian iron ore producer CSN Mineração for around 117 billion yen ($760 million), in an effort to secure high-quality ore for use in cleaner steel-making.
(Updates with details of Itochu’s reasons for raising textile segment’s forecast in last paragraph.)
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