Food, FamilyMart boost Japan's Itochu's H1 profit by 6%

By Katya Golubkova and Yuka Obayashi

TOKYO (Reuters) -Japanese trading house Itochu booked a 6% increase in first-half profits, it said on Wednesday, as a rise in food, textiles and the FamilyMart convenience store chain offset the impact of lower prices on the metals and energy segments.

Japanese trading houses have expanded their presence in the retail business, from food to textiles and convenience stores, as diversified portfolios help them to mitigate risks from commodity price fluctuations that became especially marked following the pandemic and Russia's war in Ukraine.

For the six months to end-September, net profit grew to 438.4 billion yen ($2.9 billion) from 412.9 billion yen a year earlier.

Itochu kept its profit forecast for the year to next March unchanged at 880 billion yen, of which 24% or 213 billion yen is projected from food, textiles and the 8th division, which includes FamilyMart, overtaking the metals division, typically the largest, with a 200 billion yen forecast.

The metal's profit forecast was lowered by 40 billion yen due to weaker iron ore prices and reduced coking coal output from Australia and United States.

At the same time, however, the trading company has decided to boost its exposure to metals business.

In a separate statement on Wednesday, it said it has agreed with Brazil's steelmaker Companhia Siderúrgica Nacional (NYSE:SID ) (CSN) to buy a 10.74% stake in CSN's iron ore unit, CSN Mineracao (BVMF:CMIN3 ) (CM), for about 4.42 billion real ($769 million).

The deal will boost Itochu's stake in CM, Brazil's leading iron ore producer and distributor, to 17.89% from 7.15%.

Itochu shares ended up 1.68% on Wednesday, against a 1.94% rise in broader TOPIX index (TOPX ).

"Our aim is to secure high-grade iron ore, which is an essential raw material for making low-carbon steel," Itochu President Keita Ishii told a news conference.

Production in the Longview coking coal mine, in which Itochu owns 25% stake, in the U.S. was affected by the Baltimore bridge collapse, which disrupted shipping, and a mine fire in June that led to a temporary suspension, a spokesperson said.

Itochu acquired FamilyMart fully following a tender offer in 2020 and runs more than 16,000 stores across Japan, which it provides with ingredients for the highly popular Famichiki fried chicken, as well as basic items also sold by FamilyMart, such as bananas, eggs and socks.

Other trading houses have also continued to expand into the food business.



In October, Marubeni began selling salmon from a farm operated near mount Fuji by its Norwegian partner, adding to the seafood business where its rivals Mitsubishi and Mitsui are also present.

($1 = 153.9900 yen)

Source: Investing.com