Itochu Q1 2026 slides: Net profit surges 32% despite core profit decline

Introduction & Market Context

Itochu Corp (TYO:8001) presented its first quarter fiscal year 2026 business results on August 1, 2025, revealing a significant 32% year-over-year increase in consolidated net profit to ¥283.9 billion, despite headwinds from yen appreciation and declining resource prices.

The Japanese trading company’s performance demonstrates its successful strategic shift toward non-resource businesses, which now account for 90% of consolidated net profit. This transition has helped insulate Itochu from commodity price volatility while positioning the company for more stable growth.

Itochu’s stock has responded positively to these results, with shares trading near their 52-week high, reflecting investor confidence in the company’s strategic direction and ability to deliver strong returns despite challenging market conditions.

Quarterly Performance Highlights

Itochu’s first quarter results show mixed performance across key metrics. While consolidated net profit surged 32% year-over-year to ¥283.9 billion, core profit declined by ¥21.0 billion to ¥181.0 billion compared to the same period last year. This decline was primarily attributed to negative impacts from foreign exchange (¥12.0 billion) and resource price fluctuations (¥9.0 billion).

As shown in the following comprehensive summary of Q1 results:

Despite the core profit decline, Itochu maintained strong cash generation with core operating cash flows of ¥245.0 billion, representing a ¥7.0 billion increase year-over-year. The company also reported a solid ratio of group companies reporting profits at 84.2%, demonstrating the broad-based health of its portfolio.

A key driver of the consolidated net profit growth was extraordinary gains, particularly the ¥88.0 billion gain from the sale of CPP. The company’s waterfall chart clearly illustrates how various factors contributed to the overall profit change:

Segment Performance Analysis

Itochu’s performance varied significantly across business segments, with non-resource sectors generally outperforming resource-related businesses. The segment breakdown reveals that non-resource segments contributed ¥255.1 billion (90%) to consolidated net profit, while resource segments accounted for just ¥27.2 billion (10%).

The following segment analysis provides detailed insight into performance drivers:

Notable performers included:

• Textile segment: ¥8.9 billion, driven by strong DESCENTE performance
• Machinery segment: ¥32.0 billion, with solid results despite some ship-related business challenges
• Food segment: ¥28.8 billion, benefiting from provisions-related business strength
• The 8th segment: ¥15.4 billion, supported by FamilyMart’s performance

The core profit breakdown by segment further illustrates the mixed performance across Itochu’s diverse business portfolio:

Strategic Initiatives & Investments

Itochu continued its aggressive investment strategy in Q1, with total investments (including CAPEX) of ¥297.0 billion. These investments are aligned with the company’s focus on growth in consumer-related and non-resource sectors.

The company’s financial policy and cash allocation strategy prioritize growth investments while maintaining shareholder returns:

Key investment highlights include strategic moves in consumer-related businesses such as DESCENTE (squeeze-out), We Sell Cellular, and Nishimatsu Construction, as well as industrial investments in Kawasaki Motors, Hitachi Construction Machinery, and AICHI CORPORATION. These investments align with Itochu’s long-term strategy of reducing resource dependence and building more stable profit streams.

The company also executed significant exits, including C.P. Pokphand and PROVENCE HUILES, generating substantial cash that contributed to the extraordinary gains in the quarter.

Forward-Looking Statements

Itochu remains confident in achieving its full-year consolidated net profit target of ¥900.0 billion, having already achieved 32% of this goal in the first quarter. The company’s roadmap to this target is clearly outlined in its profit plan:

The company is making steady progress toward its annual objectives, with several key initiatives tracking as planned:

While acknowledging potential headwinds from currency fluctuations, resource price volatility, and global economic uncertainties (including potential U.S. tariff impacts), management expressed confidence in the company’s ability to achieve its targets through organic growth of existing businesses and profit contributions from new investments.

Itochu plans to maintain its shareholder-friendly approach with a total payout ratio target of 50%, including a dividend per share of ¥200 and share buybacks totaling ¥170.0 billion for the fiscal year.

With its strategic shift toward non-resource businesses largely complete, Itochu appears well-positioned to navigate market volatility while delivering on its growth and profitability objectives for fiscal year 2026.

Full presentation:

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