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Sojitz Corporation (TYO:2768) reported a profit of JPY21.1 billion for the first quarter of fiscal year 2025, representing 18% progress toward its full-year forecast of JPY115.0 billion, according to its presentation materials released on July 30, 2025.
Quarterly Performance Highlights
The Japanese trading company’s Q1 performance showed mixed results across its business segments, with solid contributions from Energy Solutions & Healthcare and Chemicals divisions offsetting challenges in other areas. Despite a slight year-over-year decline in profit from JPY23.0 billion in Q1 FY24, the company maintained that results were in line with its initial plan.
"Profit declined slightly due to the impact from the previous fiscal year’s one-time gains and the decline of coking coal prices," the company noted in its presentation. However, Sojitz emphasized that the impact of U.S. tariffs has been limited so far and is expected to remain within the JPY5.0 billion buffer set at the beginning of the fiscal year.
As shown in the following summary of Q1 results:
The company’s gross profit decreased by JPY2.7 billion year-over-year to JPY82.2 billion, while SG&A expenses increased by JPY5.2 billion to JPY70.2 billion. This was partially offset by a JPY2.2 billion increase in share of profit from investments accounted for using the equity method, which reached JPY10.8 billion.
Breaking down performance by segment reveals significant variations, with Energy Solutions & Healthcare showing strong growth while Metals, Mineral Resources & Recycling experienced a substantial decline:
The Energy Solutions & Healthcare division saw its gross profit increase from JPY7.9 billion to JPY12.0 billion year-over-year, while Metals, Mineral Resources & Recycling’s gross profit fell from JPY9.8 billion to JPY2.6 billion, primarily due to lower coking coal prices.
Strategic Initiatives
Sojitz continues to advance its growth strategy through strategic investments and portfolio transformation. In Q1 FY25, the company made total investments of JPY55.0 billion, with JPY30.0 billion allocated to essential infrastructure projects, including a public infrastructure developer in Australia and a primary healthcare business in Singapore.
The company’s chemical business has been a particular focus area for growth, with Sojitz acquiring NIPPON A&L INC. as a consolidated subsidiary to capitalize on high societal demand for lithium-ion batteries.
The following slide illustrates the company’s strategy in chemical businesses:
Additionally, Sojitz expanded its automobile sales business in Panama, adding to its network of dealerships selling Hyundai, Kia, and Mazda vehicles. The company views this expansion as a strategic move to take advantage of market growth in the region.
"We want to enhance expectations for growth and PER by sharing the process with all stakeholders," said Makoto Shibuya, an executive at Sojitz, highlighting the company’s focus on expanding investments and enhancing existing businesses.
Forward-Looking Statements
Despite the mixed Q1 results, Sojitz maintained its full-year forecast of JPY115.0 billion in profit. The company expects a 40-60 profit split between the first and second halves of the fiscal year, in line with its traditional business cycle.
The following forecast by segment shows the company’s expectations for the full fiscal year:
Commodity prices continue to impact Sojitz’s performance, particularly in its resource-related businesses. The company’s assumptions for key commodities and financial indicators are outlined below:
Shareholder Returns
Sojitz has implemented a progressive dividend policy, announcing a 10% increase in dividends year-over-year from JPY150 to JPY165 per share. The company also initiated a stock repurchase program with an upper limit of JPY10.0 billion or 2,800,000 shares, based on stock price and core operating cash flow trends.
The following chart illustrates Sojitz’s dividend growth trajectory:
"Approximately 70% of core operating cash flow over the three-year period to be allocated to growth investments, with the remaining 30% allocated to shareholder returns," the company stated in its presentation, underscoring its balanced approach to capital allocation.
Sojitz’s financial position showed some changes, with total assets increasing from JPY3,087.3 billion to JPY3,174.0 billion, while total equity decreased from JPY1,007.6 billion to JPY986.5 billion. Net interest-bearing debt rose from JPY887.2 billion to JPY978.1 billion, pushing the net debt-to-equity ratio from 0.92x to 1.04x.
Despite these challenges, Sojitz maintains a relatively attractive valuation with a price-to-earnings ratio of 7.6x, according to the earnings call transcript. The company’s strategic investments and progressive dividend policy suggest confidence in its long-term growth prospects, even as it navigates near-term headwinds in certain business segments.
Full presentation:
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