Itochu(ITOCY) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The net profit for Q1 2025 was JPY206.6 billion, a decrease of JPY6.6 billion from JPY213.2 billion in the previous year, primarily due to a reduction in extraordinary gains and losses by JPY18.5 billion [2] - Core profit increased from JPY190 billion to JPY202 billion, reflecting a growth of 6.3% year-on-year, aligning with the company's target of 10% growth for the fiscal year [3][4] - The progress towards the forecast of JPY880 billion was at 23%, indicating a good start despite being slightly below expectations [4] Business Line Data and Key Metrics Changes - Textile segment reported a profit of JPY5.3 billion, up JPY0.6 billion, driven by strong performance in Japan and abroad, particularly in Hong Kong and China [9] - Machinery segment achieved a record high profit of JPY34 billion, an increase of JPY2.4 billion, aided by strong performance in auto-related and aerospace transactions [10] - Metals & Minerals segment saw a profit of JPY52.5 billion, down by JPY3.7 billion, impacted by decreased prices of iron ore and coal, although a weaker yen contributed an increase of JPY700 million [11] - Energy & Chemicals segment reported a profit of JPY17.8 billion, down by JPY19.6 billion, largely due to extraordinary gains last year [12] - Food segment's profit was JPY19 billion, down by JPY1.8 billion, but core profit increased by JPY1.7 billion due to strong performance in food distribution [13] - General Products & Realty segment reported a profit of JPY18.8 billion, up by JPY1.4 billion, with strong domestic business performance [14] - ICT & Financial Business segment's profit was JPY16 billion, up by JPY1.6 billion, supported by strong transactions in retail finance [15] - The 8th segment reported a profit of JPY10.9 billion, up by JPY0.3 billion, driven by increased daily sales at FamilyMart [16] Market Data and Key Metrics Changes - The average exchange rate in Q1 was JPY155.85 to the dollar, with a depreciation of JPY21.2, resulting in a JPY15 billion impact on after-tax profit, particularly affecting Metals & Minerals and Machinery [19] Company Strategy and Development Direction - The company announced a JPY150 billion share buyback and two tender offers totaling JPY220 billion, indicating a commitment to shareholder returns and growth investments [5][6] - The company aims to allocate cash for shareholder returns and growth investments equally, targeting a total shareholder return of 50% [5] Management Comments on Operating Environment and Future Outlook - Management acknowledged challenges in resource businesses but noted improvements in non-resource sectors, indicating a mixed outlook for the future [7] - The company emphasized the importance of investments for growth, with preparations underway for execution [4] Other Important Information - The core operating cash flow reached a record high of JPY238.8 billion, an increase of JPY66 billion [20] - Total major new investments in Q1 amounted to JPY118 billion, with a net investment of JPY98 billion after accounting for exits [22] - 84.5% of the group companies were profit-making, with 160 companies increasing profits compared to the previous year [23] Q&A Session Summary - No specific questions or answers were recorded in the provided content, indicating the end of the Q&A session [24]