DIVIDENDS SEEN AS U$214 MLN BOON FOR MITSUI'S BOTTOM LINE

Fri. August 28, 2009; Posted: 01:31 AM

TOKYO, Aug 28, 2009 (AsiaPulse via COMTEX) -- MITSY | Quote | Chart | News | PowerRating -- Mitsui & Co.'s (TSE:8031) group net profit is expected to get a boost of more than 20 billion yen (US$214 million) in fiscal 2009 thanks to increased dividend income from overseas group firms.

Mitsui plans to repatriate about 150 billion yen in dividend income from foreign units this fiscal year, up from more than 110 billion yen in fiscal 2008. Under fiscal 2009 tax code revisions that took effect in April, the proportion of such income that is subject to Japan's roughly 40 per cent corporate tax rate falls from 100 per cent to 5 per cent.

Before the revisions, Mitsui had to book the equivalent of about 40 per cent of repatriated dividend income from equity-method affiliates as deferred tax liabilities. But now, it has to make a charge of only 5 per cent. The drop in future tax liabilities gives an equivalent lift to bottom line profit.

The booming market for natural resources swelled profits at Mitsui's foreign affiliates through the middle of fiscal 2008. The trading house collected about 50 billion yen in dividends from these companies in the April-June quarter, pushing up net profit by 19.8 billion yen. Despite an expected slump in commodity prices, Mitsui's net profit is still likely to get a boost of about 10 billion yen next fiscal year.

Trading houses hold equity stakes of 20 per cent or so in many of their overseas group firms. But differences in tax accounting and cash management mean that not all may enjoy the profit boost that Mitsui is expected to receive.

(Nikkei) cg

For full details on Mitsui and Company Ltd. ADS (MITSY) click here. Mitsui and Company Ltd. ADS (MITSY) has Short Term PowerRatings of 5. Details on Mitsui and Company Ltd. ADS (MITSY) Short Term PowerRatings is available at This Link.

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