Sojitz Corp ((JP:2768)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Sojitz Corporation struck a balanced tone, highlighting both achievements and challenges faced by the company. Notable positives included an upward revision of profit forecasts, robust cash flow, and growth in specific segments. However, these were tempered by declines in profit, difficulties in key segments, and rising SG&A expenses.
Upward Revision of Full Year Profit Forecast
Sojitz Corporation has revised its full-year profit forecast upward from JPY 95 billion to JPY 100 billion. This revision signals the company’s confidence in achieving higher earnings despite current challenges in the market.
Strong Free Cash Flow
The company reported a significant inflow of JPY 111.7 billion in free cash flow. This demonstrates effective cash flow management and a strong operational performance that supports Sojitz’s financial health.
Retail & Consumer Service Segment Growth
Growth in the Retail & Consumer Service segment was a highlight, driven by a recovery in the domestic retail business, the sale of a shopping mall, and a negative goodwill from new investments.
Dividend Increase
Reflecting its increased profitability and commitment to shareholder returns, Sojitz has raised its annual dividend forecast from JPY 130 per share to JPY 135 per share.
Decline in Consolidated Profit
Consolidated profit for the period fell by 30% year-on-year to JPY 75.2 billion. This decline was largely due to falling coal prices and sluggish demand for chemical products.
Decreased Profit in Metals, Mineral Resources & Recycling
The Metals, Mineral Resources & Recycling segment faced significant profit declines due to lower market prices impacting the coal business.
Challenges in Automotive Segment
The Automotive segment also saw decreased profits, attributed to the withdrawal from the distributorship business in Thailand, high-cost inventory in the Philippines, and the adverse effects of rising interest rates.
Increased SG&A Expenses
SG&A expenses rose by JPY 13.8 billion year-on-year, influenced by a weaker yen and changes in the consolidation base.
Forward-Looking Guidance
Looking ahead, CFO Makoto Shibuya discussed Sojitz’s financial performance and future outlook during the Q3 2024 earnings call. While acknowledging a 30% year-on-year decline in consolidated profit, the company has achieved 75% of its revised full-year forecast of JPY 100 billion. Despite market challenges, Sojitz aims to achieve an average net profit of over JPY 120 billion in the next MTP period, backed by improvements in several segments and ongoing efforts to surpass a PBR of 1x.
In conclusion, Sojitz Corporation’s earnings call presented a mixed yet optimistic perspective on its financial health and future prospects. While certain segments faced challenges leading to a decline in overall profit, strategic revisions and growth in key areas underscore the company’s potential for recovery and advancement.
