Japan's Mitsui lifts FY profit f'cast on strong LNG trading, weaker yen

  • Ups FY net profit estimate to Y980 bln from Y800 bln
  • Weaker yen seen to contribute Y108 bln to annual profit
  • Plans to stay in Sakhalin-2, Arctic-2 LNG projects in Russia

TOKYO, Nov 1 (Reuters) - Japanese trading house Mitsui & Co (8031.T) on Tuesday lifted its net profit forecast for the year by 23%, helped by strong liquefied natural gas (LNG) trading, a one-off gain from selling its stake in a coal venture and the yen's plunge.

Like global energy companies, Japanese trading houses have benefited from oil and gas prices that have risen this year in the wake of Russia's invasion of Ukraine.

Net profit is now predicted to hit a record 980 billion yen ($6.6 billion) for the year to March 31, against its May forecast of 800 billion yen and above a mean forecast of 939 billion yen of 8 analysts, according to Refinitiv data.

Still, Mitsui said the latest forecast is based on a conservative view over the October-March second half.

"We have made a conservative outlook due to growing uncertainty amid greater geopolitical risks and weaker demand because of tightening monetary policies in various countries," Mitsui Chief Financial Officer Tetsuya Shigeta told a news conference.

"We expects the prices of major metals and energy, except for LNG, to fall in the second half from the first half," he said.

The yen's sharp drop against the U.S. dollar, however, is expected to boost its profit by 108 billion yen.

Mitsui in August agreed to sell its 20% stake in a metallurgical coal venture in Australia to its local partner Stanmore Resources (SMR.AX) for $380 million. The deal was completed in October, Mitsui said. read more

For the first half, net profit grew 33% to record 539 billion yen on higher gas and oil prices and healthy automobile sales in North America.

Shigata said the Arctic-2 LNG project in Russia, in which Mitsui owns a stake, is on track to start production of the first train in 2023.

Mitsui intends to stay in the Sakhalin-2 gas and oil project and the Arctic-2 project, while complying with sanctions by Western nations on Russia, to contribute to Japan's energy security, Shigeta said.

($1 = 147.6200 yen)

Reporting by Yuka Obayashi; Editing by Jacqueline Wong and Louise Heavens

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Yuka Obayashi reports on Japan's energy, metals and other commodities. Signal phone number: 81-90-2520-3273