TOKYO :The weaker yen risks hurting the Japanese economy by boosting energy prices and accelerating inflation, Mitsubishi’s CEO said on Thursday, and may raise obstacles to investments abroad that are essential for business growth.
The yen has slid to 34-year lows this year as the Bank of Japan keeps interest rates low, causing investors to buy higher-yielding currencies. For Japanese consumers, the weaker currency makes typically dollar-priced commodities more expensive.
“The current depreciation of the yen will actually lead to soaring prices for Japan’s resources and energy, and lead to inflation,” Mitsubishi CEO Katsuya Nakanishi said at a briefing after the company released its annual results.
“The yen represents national power, so the depreciation of the yen also means that national power is weakening.”
Mitsubishi shares closed down 2.5 per cent after the group reported an 18.4 per cent drop in net profit for the year ended March to 964 billion yen ($6.2 billion), below a forecast of 979 billion yen from a LSEG poll of analysts.
That was due in part to lower metallurgical coal prices, it said. The company expects net profit for the year to March 2025 to be 950 billion yen, and plans to boost its dividend payout to 100 yen per share from 70 yen a year previously.
Nakanishi said that while the weaker yen boosts the value of Mitsubishi’s profits in yen terms as about 70 per cent of its revenues originate from overseas, it could be negative for mergers and acquisitions abroad, making it cautious about future investments.
Masumi Kakinoki, the CEO of Mitsubishi’s smaller rival Marubeni, which also presented results on Thursday, said too that excessive depreciation and wild swings in the yen were unwelcome.
“We feel investment targets have become more expensive when converted to yen,” Kakinoki said. The group does yet see much of a problem yet as its revenues are also increasing, he added, “but the time to sound the alarm seems to be approaching”.
For trading houses, foreign business is a key area for growth.
Mitsubishi is looking to invest in liquefied natural gas (LNG), new fuels such as green hydrogen, and mineral resources key for the energy transition, including copper, to propel future growth, Nakanishi said.
It is meanwhile taking measures to stabilise output of metallurgical coal in Australia, one of its key profit drivers, he added.
Mitsubishi forecasts an average yen rate for the current fiscal year at 143 per U.S. dollar, up from 144.59 last year and against Thursday’s rate of 155.4 per dollar.
For Mitsubishi, a 1 yen depreciation boosts its profit by 5 billion yen. Its peer Mitsui, which assumes the yen at 145 per dollar, forecasts this change at 3.4 billion yen.
($1 = 154.9400 yen)
