TOKYO (Reuters) - The U.S.-China trade war has weighed on the profits of Marubeni Corp’s U.S. agri-businesses, but the Japanese trading company has no plans to change its U.S. strategy, a senior executive said on Friday.
Marubeni’s U.S. agri operations, which include Gavilon, were also hit by bad weather in the United States, Marubeni Chief Financial Officer Nobuhiro Yabe told a news conference.
The recent decision by its Columbia Grain Trading Inc (CGTI) unit to halt all new soybean sales to China would have little impact on Marubeni’s overall earnings as the CGTI’s revenue has been battered by slower trade in light of the U.S.-China trade war, Yabe said.
Marubeni currently has no plan to close or sell CGTI, but the unit could be eventually liquidated, he added.
For the April to June quarter, Marubeni’s net profit slid 25% to 65.17 billion yen ($609.7 million), but the company stuck to its full-year profit guidance of 240 billion yen, in line with a mean 244.7 billion yen estimated by analysts compiled by Refinitiv.
Stronger earnings in metals segment, boosted by higher iron ore prices, were offset by lower profits from the agriculture and chemical businesses as well as a roughly 9 billion yen impairment loss on an oil and gas development project in the United States.
“The trade war has slashed grain flow from the United States to China, which cut capacity utilization rate at our export terminals,” Yabe said.
“As an indirect impact from the trade dispute, prices of commodities including natural resources have been battered, except for iron ore and hard coking coal, because of slower demand in China or investors’ position adjustments based on expectations that global demand will weaken,” Yabe said.
The trade dispute between the United States and China escalated on Thursday when U.S. President Donald Trump vowed to impose a 10% tariff on $300 billion of Chinese imports from Sept. 1.
“The longer the trade war drags on, the more impact we will see on the United States and China, which is certainly not a good thing for all of us,” Yabe said.
Reporting by Yuka Obayashi; editing by Richard Pullin and Christian Schmollinger