(Bloomberg) -- Japanese trading giant Itochu Corp. raised its full-year profit target 14% as it benefits from surges in metals and energy prices in conjunction with the yen’s historic decline, which has inflated earnings in its home currency.
Itochu’s shares jumped as much as 7.4% in Tokyo, its biggest intraday gain in four years, after the revised target was announced on Tuesday. The company forecast net income of 800 billion yen ($5.5 billion) for the fiscal year through March, up from its initial projection of 700 billion yen and above the average analysts’ estimate of 731.8 billion yen.
The new forecast shows how Japan’s biggest trading houses, known as sogo shosha, have benefited from surging energy and commodity markets as supply constraints, geopolitical tensions and a demand rebound push up prices. The lower currency is also a tailwind for Itochu, which is part-held by Berkshire Hathaway Inc., as it can repatriate overseas earnings into the yen.
Itochu will raise its annual dividend payment to at least 140 yen for the current year, up from 110 yen a year earlier, it said Tuesday. It also announced a plan to buy back as many as 11 million shares, or 0.7% of its outstanding stock, for 35 billion yen by the end of January.
“From the beginning of the year, there’s been rising expectations from the market for us to take steps for the return of shareholders as commodity prices have surged,” Chief Operating Officer Keita Ishii said at a briefing on Tuesday.
The yen last month weakened beyond 145 against the dollar for the first time in 24 years. The fragile currency is “not all bad” for Japan, Ishii said, adding it will help attract overseas tourists and spur growth when the nation starts welcoming vaccinated foreign tourists this month.
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