Sumitomo sees businesses surpassing hopes in fiscal 2013
TOKYO -- Sumitomo Corp. is expected to meet its projection of consolidated net profit rising 3% on the year to 240 billion yen ($2.32 billion) for fiscal 2013, even without the help of a previously anticipated extraordinary profit.
The Japanese trading house had planned to book a roughly 20 billion yen gain on the sale of unspecified assets for the year ending March 31. Now, grappling with foreign antitrust regulators and other issues, Sumitomo plans to delay the sale until fiscal 2014.
Still, it looks like the company will hit its group profit target. "Such segments as transportation and construction equipment as well as resources, energy, chemical and electronics look like they will see bigger profits than expected," President Kuniharu Nakamura says.
The transportation and construction systems business will apparently outstrip the anticipated 35% surge in net profit to 45 billion yen. Mineral resources and chemicals, whose profit was to fall 26% to 34 billion yen, will also likely do better than expected as prices of copper and other commodities trend higher than assumed.
For fiscal 2014, Sumitomo is targeting a 270 billion yen consolidated net profit. The company's acquisition of the U.S. steel products distributor Edgen Group, overseas power plant projects, and shale gas-oil activities in Texas will all contribute, according to Nakamura. The delayed asset sale will provide an additional boost.
Nakamura has indicated that the company, which has not bought back its own shares on a large scale since 2007, is unlikely do so in the near future.
"We are still at a stage where we are increasing assets and growing," he says. "This is not a stage for stock buybacks."