Sharp falls at Japanese trading houses/ ft....18 nov 98
By Our Summaries Staff
Japan's top six trading houses; Sumitomo, Itochu, Marubeni, Mitsubishi, Mitsui and Nissho Iwai, said on Wednesday that profits had fallen sharply for the six months to September because of a slump in Asian consumer confidence.
The trading houses buy and sell everything from raw materials to finished products.
The Tokyo stock market forced the companies to post total valuation losses of ¥217bn ($1.79bn) on their stock holdings, in particular in bank shares, for the six-month period.
Sumitomo announced a securities valuation loss of ¥75.5bn in the interim period, in addition to ¥17.5bn loss to settle class action lawsuits related to unauthorised copper trading. The company had a parent loss of ¥59.03bn over the same period but predicted a return to the black for the full year with a parent net profit of ¥15bn partly from the sale of shares.
Itochu posted profits of ¥1.5bn over the same period, down 73.1 per cent, on sales of ¥6.32 trillion, down 8.8 per cent.
Marubeni posted a parent loss in the six months to September of ¥26.7bn, compared with ¥4.6bn the previous year, on sales of ¥5.44 trillion, down 12.1 per cent.
Mitsubishi, the largest trading company, posted a net income of ¥20bn, down 56 per cent from ¥45.9bn a year earlier. Sales fell 10.9 per cent, to ¥7 trillion.
Mitsui said its six-month parent income was ¥9.2 trillion, down 27.5 per cent from ¥12.8bn the previous year, on sales of ¥5.8 trillion. Sales fell 10.9 per cent to ¥7 trillion.
Nissho Iwai posted a group loss of ¥55.9bn, compared with profit of ¥13.3bn a year earlier and predicted a ¥79bn loss for the full year. Sales for the six months to September were ¥4.6 trillion, down 2.1 per cent. The company said it would borrow ¥500bn from Sanwa Bank and six others to deal with debts which are due by the end of the year.
The trading houses blamed a 8.5 per cent fall in Japan's industrial production during the first half for their poor performances. They said that with Asia's 20 economies predicted to grow an average 0.7 per cent this year and 1.9 per cent in 1999, the slump in production and trade would delay recovery.
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