Japanese Trading Houses Profit, Utilities Hurt

Major Japanese trading houses, including Marubeni, Mitsui & Co., Oracle Corporation, Itochu, and Mitsubishi Corporation, are forecasting record or significantly higher annual profits. This positive outlook is primarily attributed to the sustained high commodity prices resulting from the ongoing U.S.-Israeli war on Iran and the subsequent closure of the Strait of Hormuz. For instance, Marubeni expects a record net profit of 580 billion yen, while Mitsubishi Corporation anticipates a 37% jump in net profit. In contrast, Japanese utilities, including Kansai Electric Power Company and Kyushu Electric Power, are facing challenges. They warn of potential losses or profit drops due to spiking fuel procurement costs, as many long-term liquefied natural gas (LNG) contracts are linked to oil prices. Japan, being highly vulnerable to energy import disruptions, has initiated diplomatic efforts and pledged billions in public support to mitigate the economic shock. Warren Buffett's Berkshire Hathaway is noted as a minority shareholder in several of these trading houses.