On October 31st 2012, Sumitomo Corporation announced its consolidated results for the six month period ended September 30th 2012, prepared on the basis of International Financial Reporting Standards.
Profit for the period attributable to owners of the parent for the six month period ended September 30th 2012 was JPY 129.4 billion, decreased by JPY 22.1 billion from the same period of the previous year.
In the six months under review, although non mineral resources businesses supported the results, mineral resources businesses, which led the company results in the same period of the previous year, were affected by commodity prices decline.
When reviewing the quarterly results of profit attributable to owners of the parent, while first quarter (April to June 2012) was JPY 48.7 billion, second quarter (July to September 2012) was JPY 80.7 billion. In the second quarter, non mineral resources businesses, including extraordinary profit resulted from business reorganization, covered the decline in mineral resources businesses.
Basic profit, which indicates after-tax actual earnings power, of non mineral resources businesses in the second quarter was JPY 42.4 billion, steadily contributing to the results as in the first quarter.
Consolidated Income
Gross profit was JPY 396.5 billion, a decrease of JPY 73.7 billion from the same period of the previous year. The decrease includes the impact of Sumitomo Mitsui Auto Service becoming an associated company
Share of profit of investments accounted for using the equity method decreased by JPY 9 billion to JPY 50.4 billion. This was mainly due to mineral resources businesses
Gain on securities and other investments, net includes gain from selling partial share of Jupiter Shop Channel Co Limited
Segment Information
Profit of Mineral Resources, Energy, Chemical & Electronics decreased from the same period of the previous year due to fall in commodity prices. Also, General Products & Real Estate decreased since condo delivery was concentrated in the same period of the previous year
However, core businesses in other segments generally showed stable performances
Metal Products
Tubular products business in North America, capturing demand of shale gas and shale oil, contributed to the results.
Transportation & Construction Systems
Automobiles motorcycles finance businesses in Asia showed recovery in this period
New Industry Development & Cross function
Aircraft leasing business, which it acquired in this fiscal year with Sumitomo Mitsui Financial Group, newly contributed to the results
Financial position
Total assets as of September 30th 2012 amounted to JPY 7,080 billion, decreased by JPY 146.8 billion from March 31st 2012
Equity attributable to owners of the parent was JPY 1.696 billion, the same level as March 31st 2012. While retained earnings increased, there was impact of yen appreciation and listed stocks price decline
Interest bearing liabilities (net) were JPY 2,747.6 billion, the same level as March 31st 2012
As a result, debt equity ratio, net (Interest bearing liabilities, net Equity attributable to owners of the parent) was 1.6 times
Cash flows
During the six month period ended September 30th 2012, net cash provided by operating activities was JPY 90.7 billion. Core businesses steadily generated cash
Net cash used in investing activities was JPY 55.4 billion. In the six months under review, it collected cash through selling partial share of Jupiter Shop Channel and other assets. On the other hand, we made new investments of JPY 170 billion, which includes tight oil development project in the US and renewable energy businesses such as wind power and solar power projects
As a result, free cash flow was JPY 35.3 billion inflow
Through collecting cash and investing in new growth areas, we are further expanding our earnings base
Progress for the full fiscal year ending March 31st 2012
Profit for the period attributable to owners of the parent progressed 50% of JPY 260 billion annual forecast. In the six month period ended September 30th 2012, although mineral resources business was affected by the commodity prices decline, extraordinary profit regarding business reorganization and stable core businesses in non mineral resources area contributed to the whole company results
The world economy seems to be more stagnant than expected due to prolonged European sovereign debt issues and Chinese economy deceleration. Our initial scenario made in May 2012, that the world economy would gradually recover from the second half of the fiscal year, has begun to decline
Looking at businesses, businesses in Transportation & Construction Systems and Media, Network & Lifestyle Retail, which led first half results, are expected to show stable performances. On the other hand, the business environment of mineral resources businesses is expected to remain severe. In addition, if the negative impact of the further down side risk of macro economy spread to the non-mineral resources businesses, the annual results could decrease by approximately 10% of the initial annual forecast of JPY 260 billion. However, taking the progress rate of 50% into account, we remain our annual forecast of 260 billion yen unchanged
Dividend
It sets the policy to flexibly decide the consolidated dividend payout ratio in the range of 20% to 30%. This is based on our fundamental policy to meet shareholders' expectations by ensuring long-term stable dividends while considering both the changes in the economic environment and progress in investment plans
The annual dividend for fiscal 2012 is planned to be JPY 51 per share (the annual dividend for fiscal year 2011 was JPY 50 yen share), applying the consolidated dividend payout ratio of 25%, which was announced on May 7th 2012, to annual forecast of profit of JPY 260 billion. Therefore, the interim dividend for fiscal 2012 is JPY 25 per share, half the amount of planned annual dividend (the interim dividend for fiscal year 2011 was JPY 24 per share)
Source - Sumitomo Corporation
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