Mitsui & Co.: Changing Environment Leads To Conservative Guidance (Rating Downgrade)

2025-05-02 07:04:50 ET

Summary

• Mitsui's FY 2025 profit missed forecasts, and FY 2026 profits are projected to drop due to weaker commodity prices and a stronger yen.
• Despite lower profit forecasts, Mitsui raised its FY 2026 dividend to ¥115 per share, leveraging its low debt/equity ratio and curtailing buybacks.
• With the lower profit forecast of ¥770 billion, Mitsui's P/E of 10.4 no longer looks cheap.
• Mitsui's long-term growth projects in iron ore and LNG will support future dividends, but the stock is downgraded to hold due to near-term challenges.

Earnings Miss And Weak Forecast

The economic outlook has gotten cloudier since I last covered Mitsui & Co. ( OTCPK:MITSY )( OTCPK:MITSF ) in March. Most notably, the " Liberation Day " US tariffs on imports were announced on April 2. This shocked all kinds of markets, from stocks to commodities and foreign exchange. Stocks have generally recovered from this initial shock, especially non-US stocks that trade in the US. The Japanese trading company ADRs, for example, has gotten back to where they traded at the time of my last Mitsui article in March....

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