Sumitomo Corp eyes record profit, creates loss buffer against US tariffs

By Katya Golubkova, Yuka Obayashi

TOKYO, May 1 (Reuters) - Japanese trading house Sumitomo Corp 8053.T on Thursday forecast a record net profit of 570 billion yen ($4 billion) for the current fiscal year and set aside a financial buffer to hedge against the potential negative impact of U.S. tariffs.

Sumitomo posted 562 billion yen in net profit for the year ended in March, up 45.4% from a year earlier and beating analysts' expectations of 554.2 billion yen, on strong non-mineral resources performance in segments including real estate.

Warren Buffett's Berkshire Hathaway BRKa.N is a large minority shareholder in Sumitomo and other Japanese trading houses and has recently been increasing its ownership.

Sumitomo allocated a loss buffer of 40 billion yen, adding that while the direct impact of U.S. tariffs will likely be limited, "a certain degree of indirect impact may arise."

Sumitomo plans to increase its annual dividend to 140 yen for the year ending next March, up from 130 yen now, and to buy back up to 2.9% of its shares worth 80 billion yen.

It forecasts nickel output at its Ambatovy project in Madagascar at around 30,000 metric tons this year, up from under 30,000 tones last year, as a number of issues, including a pipeline, are being resolved.

Production was suspended in February for a detailed inspection of the pipeline that broke last September. With the cause identified and maintenance complete, operations will resume once safety is confirmed, CEO Shingo Ueno told a news conference.

"We will work to stabilize production and review the project's medium-term business plan," he said.

"Also, we'll continue to keep all options on the table to reach a decision to ensure the best outcome for stakeholders," he said, without elaborating.

Sumitomo, which owns a 54.2% stake in the project companies, has struggled to stabilise production and boost profitability at Ambatovy. It has been reviewing all possible options for the project's future since last May.

($1 = 143.7500 yen)