Azernews.Az

By Bloomberg

Japan’s two biggest trading houses pledged to bolster investor returns after forecasting profits will drop this year.

Mitsubishi Corp., which expects profit to decline 10.1 percent in the year ending March 2016, announced plans to spend up to 100 billion yen ($834 million) on buying back as much as 2.8 percent of its stock. Mitsui & Co. said it will retain its dividend at 64 yen a share this year, which would lift its payout ratio to 48 percent of profit.

Slowing growth in China’s consumption of commodities and energy and a fall in global prices has resulted in writedowns and profit declines for Japan’s top traders of oil, coal, and liquefied natural gas, among other raw materials. Sumitomo Corp., a rival of Mitsubishi and Mitsui, last week reported its first annual loss in 16 years.

Mitsubishi’s buyback, the second in two years, starts on May 11 and runs through August 31. The trading house forecast that net income will drop to 360 billion yen this year after it jumped 11 percent last year to 400.6 billion yen, the highest in three years.

Mitsui reported a 12.5 percent drop in net income last year to 306.5 billion yen, which missed the company’s 320 billion yen target. That target was already lower than the one set in May 2014.

Profit may decline further to 240 billion yen this fiscal year, Mitsui said. Lower iron ore and energy prices, as well as impairments on oil and gas assets in the North Sea and the U.S. were behind last year’s profit drop, it said.