TOKYO (Reuters) - Japan’s Mitsui & Co said on Tuesday it will close its Multigrain unit in Brazil by the end of this year amid fierce competition in the sector that led to years of losses.
Mitsui spent a total of 47 billion yen ($431.47 million) to acquire a full stake in Multigrain by late 2011, but the unit, which trades in soybean and corn, has been making losses in the last four years due to increasing competition from global grain majors and Chinese operators.
“The direct reason behind the losses is excessive competition after the number of new entrants has grown rapidly,” Mitsui’s Chief Financial Officer Takakazu Uchida told a news conference.
Mitsui booked a one-off charge of 38.2 billion yen ($351 million) in the year ended March 31 on Multigrain. The Tokyo-based company had warned in February that a restructuring of the unit was likely.
Multigrain reduced Mitsui’s full-year earnings by 47.7 billion yen, a company spokeswoman said.
Japanese trading houses, including rival Marubeni Corp, aggressively invested in overseas grain businesses several years ago, but they are still struggling to generate targeted profits.
Overall, Mitsui reported a 37 percent jump in consolidated net profit for the year ended March 31, 2018 to 418.5 billion yen on the back of higher prices of iron ore and coal.
($1 = 108.9300 yen)
Reporting by Yuka Obayashi; Editing by Christian Schmollinger