5 Major Japanese Trading Houses Post Record Profits, Flag Middle East Risks

On May 1, Japan's five largest general trading companies simultaneously released their financial reports for the fiscal year ending March 2026 (under IFRS accounting standards). The results painted an optimistic picture, with three of the five firms achieving record net profits.

Specifically, Itochu led with net profit of 1.0 trillion yen (approximately $6.7 billion), up 20% year-over-year, driven by strong performance in its energy and food segments. Mitsubishi Corporation and Mitsui & Co. also posted record net profits of 980 billion yen and 850 billion yen, respectively, mainly due to persistently high commodity prices and strategic investments.

Meanwhile, Sumitomo Corporation reported net profit of 600 billion yen, up 30% from the prior year, while Marubeni posted 550 billion yen, a 22% increase. However, growth lagged some analysts' expectations.

Despite the strong fiscal 2026 results, the trading houses expressed caution about fiscal 2027. The primary concern is escalating geopolitical tensions in the Middle East, particularly the Israel-Hamas conflict and Houthi attacks in the Red Sea, which threaten global energy and commodity supply chains.

"We expect crude oil prices to remain in the $70–80 per barrel range, but if the conflict widens, prices could exceed $100, directly impacting our energy and logistics profits," a Mitsubishi Corporation representative said during a press conference.

Analysts noted that Japanese trading houses have capitalized on the high commodity price cycle and diversified investment strategies. However, risks from the Middle East and the possibility of the U.S. Federal Reserve maintaining high interest rates could dampen global demand, applying mid-term pressure on earnings.

For fiscal 2027, all five companies set conservative profit targets, forecasting an average decline of 10–15% from fiscal 2026 levels, reflecting caution amid geopolitical uncertainties.