TOKYO (Reuters) -Japanese trading house Mitsui & Co Ltd reported a record full-year profit on Monday as soaring metals and energy prices offset a loss from its liquefied natural gas (LNG) business in Russia amid the deepening Ukraine crisis.
“All business segments have performed well, with an overall profit reaching a significant new record high,” Mitsui Chief Executive Officer (CEO) Kenichi Hori told a news conference.
Net profit for the year through March 31 surged 173% from a year earlier to 914.7 billion yen ($7 billion), beating its February forecast of 840 billion yen, as higher prices of iron ore, coal and gas tripled its earnings from metals and energy operations.
The bumper profit offset a 20.9 billion yen loss on LNG business in Russia it booked in the January-March quarter.
After reassessing fair value of its Sakhalin-2 and Arctic-2 projects to reflect a downgrade of the Russian government’s credit rating, Mitsui wrote down 80.6 billion yen on those assets and posted the one-off loss, it said.
As a result, Mitsui’s outstanding investments, loans and guarantees for its LNG business in Russia came to 404.7 billion yen as of the end of March, against 430 billion yen as of end-December.
“We’ll continue our involvement in the Sakhalin-2,” Hori said, adding the project, in which it owns 12.5% stake, is important for Japan’s energy supply.
Energy giant Shell in February said it would exit all its Russian operations, including the Sakhalin-2, after sanctions tightened on Moscow.
The Arctic-2 is continuing as there has been no formal decision to change the plan, Hori said, even though its partner TotalEnergies has recorded an impairment of about $4.1 billion partly related to the project.
“Still, there is a good chance that various circumstances will change the project’s plan and if that happens, we’ll make an announcement after reviewing the situation and confirming what needs to be confirmed among the partners,” Hori said.
For the year through next March, Mitsui forecast a 13% decline in net profit to 800 billion yen, beating a mean forecast of 738.7 billion yen of 11 analysts, according to Refinitiv data.
“While we expect some commodity markets, such as iron ore, to normalize, we aim to achieve strong earnings that is roughly on par with the previous year by strengthening our earnings base in areas that are less susceptible to market conditions,” Hori said.
($1 = 130.2700 yen)
(Reporting by Yuka Obayashi; Editing by Tom Hogue and Bernadette Baum)