Japanese trading houses lift dividend forecasts on record profits

TOKYO (Reuters) -Japanese trading houses Marubeni Corp, Itochu Corp and Mitsui & Co on Friday raised their dividend forecasts for the year to March 31 thanks to record profits and announced share buybacks to reward investors.

Japanese trading houses are beneficiaries of rising commodity prices from coal to liquefied natural gas (LNG), while domestic utility peers face cost inflation and financial losses.

Marubeni shares rose 3.7% and Mitsui shares 1.3% after both boosted their full-year earnings outlook. Itochu shares traded 1.3% lower after it maintained its annual guidance.

Marubeni's net profit in the nine months ended on Dec. 31 grew 41.5% to a record 463.5 billion yen. The firm lifted its full-year profit forecast by 4% to a record 530 billion yen.

"Earnings of our U.K. wholesale and retail power unit called SmartestEnergy have been robust, while our coking coal and iron ore businesses in Australia have continued to generate healthy profits," Marubeni Chief Financial Officer (CFO) Takayuki Furuya told a news conference.

"We have also decided to enhance shareholder returns as we have reinforced our earnings base and financial position," Furuya said.

The new policy include progressive dividend scheme to reflect medium- and long-term profit growth, with an initial annual dividend being set at 78 yen per share, up from 75 yen forecast previously.

Marubeni will also conduct a flexible share buyback with the aim of improving capital efficiency. The amount and timing of the buyback will be determined based on its new target of a total payout ratio of around 30% to 35%, it said.

Itochu posted a 3% increase in its April-December net profit to reach a record high of 682.2 billion yen, achieving 85% of its full-year profit target of 800 billion yen, it said.

The company also increased its full-year dividend forecast by 10 yen per share to a minimum 140 yen per share and said it would spend 25 billion yen to buy back around 0.5% of its shares by March 31.

Mitsui's profit for the April-December period rose 208% to a record 840.8 billion yen and it lifted its annual profit forecast by 100 billion yen to 1.08 trillion yen, it said.

"The operation of the U.S. Cameron LNG is going well. Maintaining high production and increasing supply volume amid tight global LNG supply contributed to our LNG trading," Mitsui CFO Tetsuya Shigeta told a news conference.

Mitsui raised its full-year dividend forecast by 5 yen to 135 yen per share and increased its share buyback program by 100 billion yen, extending the timing to July.

($1 = 128.4800 yen)

(Reporting by Yuka Obayashi and Katya Golubkova; Editing by Jamie Freed and Tom Hogue)

By Yuka Obayashi and Katya Golubkova