Mitsubishi's First-Quarter Net Rises 11% on Oil, Coal

By Shigeru Sato

July 31 (Bloomberg) -- Mitsubishi Corp., Japan's largest trading company, said first-quarter profit rose 11 percent as higher oil and coal prices bolstered revenue from its energy and commodities businesses.

Net income increased to 137 billion yen ($1.3 billion) in the April-to-June quarter from 123 billion yen a year earlier, the Tokyo-based trading company said in a statement to the stock exchange today. Revenue climbed to 6.25 trillion yen from 5.46 trillion yen.

Mitsubishi is benefiting from record prices for commodities, which generate more than half the company's profit. Oil in New York climbed 62 percent in the past year, while BHP Billiton Mitsubishi Alliance, a venture with BHP Billiton Ltd., tripled its coking coal sales prices to Nippon Steel Corp., the world's second-largest maker of the alloy.

``Spikes in oil and commodities prices are apparently the key driving force,'' Hiroshi Sakurai, an analyst at Mizuho Investors Securities Co. in Tokyo, said before the announcement. ``Mitsubishi has a greater appetite for natural resource assets abroad and the cash flow to acquire them.''

Mitsubishi left its profit forecast for the year ending March 31 unchanged at 580 billion yen on revenue of 25 trillion yen, according to the statement.

Mitsubishi shares fell 1.2 percent to 3,220 yen on the Tokyo Stock Exchange at 1:10 p.m. in Tokyo. The stock has declined 9 percent in a year.

Acquisitions

Increased profit, mainly from the energy and commodities businesses, prompted Mitsubishi to accelerate acquisitions of assets around the world. The trading house has said it would allocate a maximum of 1.5 trillion yen in the two years through March 2010 for capital spending.

BHP Billiton and Mitsubishi said this month they would pay $2.4 billion to acquire the New Saraji coal project in Australia from New Hope Corp. to tap growing demand from steelmakers.

In Japan, Mitsubishi and Mitsubishi UFJ Financial Group Inc. are setting up a 100 billion yen buyout fund to invest in a variety of Japanese companies, both publicly traded and private.

``We should look closely at the type of assets that Mitsubishi acquires in order to gain sustainable growth in its bottom line for the medium and long term,'' Tsuyoshi Ishisone, an analyst at Daiwa Institute of Research in Tokyo, said before the announcement. ``Like other buy-out funds, Mitsubishi isn't going to unveil details until it's sealed the deals.''

To contact the reporter on this story: Shigeru Sato in Tokyo at ssato10@bloomberg.net.