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AFX News Limited: Mitsubishi Corp H1 net profit hits record, hikes FY forecast

10.31.2006, 12:10 AM

TOKYO (XFN-ASIA) – Mitsubishi Corp reported record net profit for the fiscal first half, thanks to higher commodity prices, prompting the company to upgrade its full-year forecasts.

Japan’s largest trading house said net profit for the six months to September increased 32 pct from a year earlier to 234.83 bln yen.

Operating income jumped 25 pct to an all-time high of 204.96 bln yen as revenue rose 9.1 pct to 9.83 trln, the second best on record.

‘Thanks to metal and energy prices rising beyond our initial expectations, we managed to report

record-breaking profits,’ chief financial officer Ichiro Mizuno told a news conference.

‘Our mid-term business plan, which began this fiscal year, calls for nurturing new businesses, while enhancing existing operations, and I believe we got off to a good start,’ he added.

Following the robust results, the trading house raised its interim dividend to 18 yen per share from

13 yen a year earlier.

The company also increased its net profit forecast for the full year to March 2007 to 400 bln yen from 370 bln, and its revenue projection to 20 trln yen from 19.2 trln.

‘If the new profit targets are met, we may hike full-year dividend to 36 yen per share from 35 yen a year earlier,’ Mizuno said.

Mitsubishi said first-half net profit at its metal division rose to 99.8 bln yen from 53.9 bln a year earlier, while net income at its machinery division jumped to 46.7 bln yen from 29.0 bln.

Crude oil prices during the period averaged 65.3 usd per barrel, up from 51.6 usd a year before.

Copper prices averaged 7,440 usd per tonne, up from 3,573 usd a year earlier, while aluminium ingot prices rose to an average 2,568 usd a tonne from 1,809 usd.

‘The underlying paradigm surrounding energy prices has changed completely, and these prices have never come back to the previous levels seen before the paradigm shift,’ Mizuno said.

Mitsubishi Corp also saw healthy contributions from Mitsubishi Development Pty, an Australian coke venture, where net profit surged by 23.2 bln yen to 57.8 bln during the six-month period.

Meantime, Mizuno said he is ‘not worried’ about the prospect for the Sakhalin-2 oil and gas field project, despite an announcement by Russian Natural Resources Minister Yuri Trutnev that some of the activities at the Sakhalin-2 oil and gas field may be suspended, adding that a probe into alleged breaches of environmental regulations will go before the prosecutor in two weeks.

‘Negotiations between Shell and Gazprom are likely to resume shortly and an agreement may be reached in early next year.

‘While the worst case scenario for us is that the construction will be suspended permanently and the start of commercial production will be delayed, I believe that scenario will be avoided,’ he said.

Royal Dutch Shell PLC has a 55 pct stake in the Sakhalin Energy consortium, Mitsui & Co Ltd has 25 pct and Mitsubishi Corp has 20 pct. In September, the ministry revoked environmental permits necessary for the consortium to develop Sakhalin-2.

(1 usd = 117.55 yen)

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