Sumitomo Corp. warned that its business outlook is becoming more uncertain after missing its full-year profit target due to widening impairments on its resources investments.
The Tokyo-based trading house said net income in the year through March was ¥74.5 billion, below the ¥100 billion it had forecast in February, after impairments widened from an estimated ¥170 billion to ¥195.1 billion.
"The outlook is becoming more unclear than it was," Chief Financial Officer Koichi Takahata told a briefing in Tokyo after the trading house reported the results, citing China's slowing economy and the prolonged slump in commodities prices.
President Kuniharu Nakamura and some other executives will take pay cuts because of the deterioration in earnings, Takahata said. The president will lose 30 percent of his salary for six months.
Sumitomo forecast net income in the current year at ¥130 billion, below analysts' estimates. The company had posted a loss of ¥73.2 billion in fiscal 2014, its first annual loss in sixteen years. Its shares pared gains of as much as 4.8 percent to end 0.4 percent higher at ¥1,110 in Tokyo.
Sumitomo is the second of Japan's top five trading giants, known as sogo shosha (general trading houses), to report full-year earnings. On Friday, Itochu Corp. posted a net income of ¥240.4 billion, and is poised to have the highest profit among the traders due to its diversification out of commodities and energy.
Itochu forecast net income to reach a record ¥350 billion in the current year, it said in a presentation Friday.