Sumitomo Mitsui Trust Holdings (TH) has revised downward its consolidated net income forecast for the current fiscal year (ending March 2024). The initial forecast of 200 billion yen has been lowered to around 100 billion yen. This was revealed on the 30th by multiple people familiar with the situation. The resolution will be resolved and announced at the board of directors meeting held on the same day.
The company had expected record high profits for the second consecutive year, but now it is expected to take a turn and report a significant decline in profits. Following the Bloomberg report, Sumitomo Mitsui TH’s stock price plunged to 5,465 yen, down 3.5% from the previous business day.
According to the people involved, the Bear Investment Trust, which was held to hedge the risk of stock price fluctuations in cross-shareholdings, fell due to the unexpected rise in stock prices, and the company was forced to write off its losses. The Bear Investment Trust recorded a loss of approximately 31.5 billion yen in the April-June period (first quarter), but the loss widened further in the July-September period.
Bear investment trusts’ prices rise when stock prices fall, but fall when stock prices rise. For this reason, they are used to hedge the risk of stock price fluctuations in cross-shareholdings.
On the other hand, the company plans to maintain its annual dividend forecast of 220 yen per share, noting that the business itself is performing well and that net business profit, which represents profits from the main business, has exceeded expectations.
A spokesperson for Sumitomo Mitsui TH declined to comment.
Net income for this term revised downward to around 100 billion yen
Sumitomo Mitsui TH’s net profit trends
Source: Company data
Related article:
Sumitomo Mitsui Trust Holdings: 1Q net profit below market expectations
(Article updated with stock price trend added in second paragraph)
2023-10-30 01:03:29
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