Executives at the companies this week have been brushing off the impact of a stronger yen on their profit outlook. — Bloomberg
Tokyo: Japanese trading houses say the central bank’s decision to raise interest rates is positive for their domestic businesses because it signals improvement in the economy, as they released quarterly results that missed estimates.
Marubeni Corp sees limited impact on capital procurement costs from the Bank of Japan’s decision to tighten policy, chief financial officer Takayuki Furuya said during an earnings press conference yesterday.
Stable growth in an environment with “appropriate inflation” is a positive for the company’s domestic business, he said.
The weak yen had helped propel profits to record highs at Japan’s trading firms, which have sprawling portfolios abroad that include oil and gas assets doing business in US dollars.
Executives at the companies this week have been brushing off the impact of a stronger yen on their profit outlook.
The Bank of Japan decided on Wednesday to raise rates for the second time this year. The US Federal Reserve’s signalling on rate cuts also led to the yen strengthening against the USdollar.
Marubeni has set its currency rate for the fiscal year ending in March at 140 yen per US dollar.
Marubeni shares declined as much as 11% following the results, as the firm’s net income for the first quarter rose 0.9% year-on-year, missing estimates, and operating income fell roughly 2% from the year prior.
Sumitomo Corp, which announced earnings on Wednesday, echoed Marubeni’s sentiment. A rate hike symbolises economic recovery for Japan and is a welcome and positive sign, said chief financial officer Reiji Morooka.
Sumitomo’s net income for the quarter ending in June fell 2.4% from the year prior, also missing analyst estimates. — Bloomberg
