Trading house Sojitz predicts record annual profit on higher coal prices

TOKYO (Reuters) - Japanese trading house Sojitz Corp on Wednesday raised its net profit forecast by 14% to a record 80 billion yen ($699 million) for the year to March 31 thanks to higher coal prices.

Average thermal coal prices during the nine months to Dec. 31 rose nearly three-fold from a year earlier to $163.9 a tonne while an average coking coal price more than doubled to $278.0 a tonne, Sojitz said.

The company is in talks to sell its thermal coal assets as part of a plan to exit from thermal coal business by 2030 and it has set aside a 5 billion yen restructuring charge for the year as it may book an impairment loss from the deal, CFO Seiichi Tanaka said.

"We have booked the charge including provisions to avoid our thermal coal assets from becoming stranded," Tanaka told reporters.

Japanese trading houses are speeding up efforts to shift away from coal and other fossil fuel assets amid a growing decarbonisation push worldwide and to match an ambitious government pledge to become carbon neutral by 2050.

Sojitz said last March it planned to halve its upstream thermal coal assets by 2025 and exit by 2030 while it will reduce its upstream coking coal assets to zero by 2050.

The company aims to sell one of the two remaining thermal coal assets this financial year, a spokesperson said, without disclosing the names of the mines.

For the April-December period, Sojitz' net profit jumped nearly four-fold to 62 billion yen as soaring prices in thermal coal and coking coal bolstered its metals profit.

As a result, the company increased an annual profit estimate of its metals business to 44 billion yen from 31 billion yen.

($1 = 114.4100 yen)

(Reporting by Yuka Obayashi. Editing by Jane Merriman)

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