Sumitomo Q1 profit rises 45% on stronger prices of coal, nickel

Japanese trading house Sumitomo Corp 8053.T said on Wednesday its net profit for the April-June quarter rose 45% to a record thanks to higher prices of commodities such as coal and nickel as well as strong demand for steel products in North America.

Net profit for the three months climbed to a record 155.2 billion yen ($1.2 billion) from 107.3 billion yen a year earlier, but the company stuck to its annual profit forecast of 370 billion yen.

"Earnings from both resource and non-resource businesses have been stronger than anticipated earlier," Sumitomo Chief Financial Officer Reiji Morooka told a news conference, adding that it may raise its profit guidance.

"On the other hand, the risk of a global economic slowdown and other uncertainties are increasing, and we will closely examine full-year forecasts going forward," he said.

Sumitomo expects nickel production at its Ambatovy project in Madagascar to achieve its initial target of about 40,000 tonnes this financial year to March 31, after producing about 8,000 tonnes in the first quarter.

Increased oil and gas drilling activities in North America have also supported its steel pipe business in the April-June quarter and the company sees robust demand in pipes continuing through next March, Morooka said.