Photo/Illutration The Asahi Shimbun

Major trading house Mitsubishi Corp. on May 9 reported a record net profit of 1.1806 trillion yen ($8.7 billion) for the year ending in March, up 25.9 percent from the previous fiscal year.

Another large trading firm, Itochu Corp., posted a net profit of 800.5 billion yen for the same fiscal year, while competitor Mitsui & Co. earlier said it turned a net profit of 1.1306 trillion yen for the period.

Mitsubishi’s financial results for the fiscal year showed the company’s revenue reached 21.5719 trillion yen.

Partly helped by the weaker yen, the company netted 170.6 billion yen through deals on natural gas and 439.3 billion yen through its metal materials business, including trade in coking coal used in steelmaking.

Mitsubishi forecasts its net profit to fall to 920 billion yen in the fiscal year ending in March 2024.

But its president, Katsuya Nakanishi, has said that even after the price rises in natural resources subside, the company will still “be able to make a 1-trillion-yen profit.”

He said the company’s advances over the past few years, such as its copper business in South America and a renewable energy operation in Europe, are bearing fruit.

He also said Mitsubishi will strengthen its earning power by allocating funding to growing areas.

Itochu’s net profit actually fell by 2.4 percent from the previous year as it could not take full advantage of price hikes in natural resources.

But the figure was still near the record profit it posted for the fiscal year ending in March 2022.

The company forecasts net profit to drop further to 780 billion yen for the year ending in March 2024.

However, it expects stable profits from “downstream businesses” that are closer to customers. For example, Itochu holds stakes in major convenience store chain FamilyMart and automaker Yanase & Co.

Itochu President Keita Ishii has said the trading house will “naturally aim for a profit of 900 billion yen and 1 trillion yen” after stabilizing at around 800 billion yen.

Mitsui, too, forecasts its net profit to decline in the fiscal year ending in March 2024, but the company is planning a rebound to 920 billion yen for the year ending in March 2026, despite predictions of subsiding markets.

Before the COVID-19 pandemic struck in 2020, the net profits of these three major trading firms had hovered between 400 billion yen and 600 billion yen.

The economic recovery from the COVID-19 pandemic pushed them toward the 1-trillion-yen level.

The companies are also strengthening efforts in areas connected to global challenges, such as combating climate change and promoting food and health security.

For example, Mitsui used to trade in ammonia primarily for fertilizer production. But its section is taking a “cross-sector initiative” by trading the substance as fuel for “co-firing,” the combustion of different fuels to reduce CO2 emissions, in conjunction with the company’s energy section.

“We are now able to work with global companies that have capabilities to solve increasingly complex challenges,” Mitsui President Kenichi Hori has said. “We will make a profit of a different level than before.”

Two smaller trading houses also had record net profits for the year: Sumitomo Corp. reported 565.1 billion yen while Marubeni Corp. posted 543 billion yen.

Their net profits were usually between 200 billion yen and 400 billion yen in the pre-pandemic years.

Berkshire Hathaway Inc., a U.S. investment company owned by billionaire Warren Buffett, has been buying more shares in these five trading houses.

Senior officials of the five companies met Buffett when he came to Japan in April and discussed operational policies and other topics.

Marubeni President Masumi Kakinoki has expressed confidence that his company will continue to grow in the future.

“I believe that the management of the five trading houses has received a sort of passing grade (from Buffett),” Kakinoki said.

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