[Company analysis] Sumitomo Corporation (住友商事)

「Sumitomo Corporation (住友商事)」is a general trading company of the Sumitomo Group. In addition, this company is included in the five largest Japanese trading companies(「Mitsubishi Corporation(三菱商事)」,「Sumitomo Corporation(住友商事)」,「Mitsui & Co., Ltd.(三井物産)」,「Itochu Corporation(伊藤忠商事)」and「Marubeni Corporation(丸紅)」) . Although it has the shortest history among the five major trading companies, it has very stable business structure. Together with「Sumitomo Electric Industries, Ltd.(住友電気工業)」and 「NEC Corporation(日本電気)」, this company is core company of Sumitomo group. The number of consolidated employees is approximately 65,662.

 

1. Company Profile

2. Summary and Features

3. Major Business

4. Financial Information

 

 

 

1. Company Profile

 

※Unit is JPY million, as of 2019

Company name	Sumitomo Corporation
Company name (Japanese)	住友商事
Date of establishment	Wednesday, December 24, 1919
Headquarters location	〒100-8601 東京都千代田区大手町二丁目3番2号
Capital	219,400
Consolidated sales	5,339,238
Consolidated operating profit	404,017
Consolidated total assets	7,916,523
Consolidated capital	2,906,199
Capital adequacy ratio	36.7%
Consolidated number of employees	65,662

 

 

 

2. Summary and Features

 
Before the World War II, the Sumitomo Group had no independent trading company division. After the war, the dismantling of Sumitomo Zaibatsu was implemented, but it was necessary to create a workplace for Sumitomo's employees who returned from overseas. Therefore,  a trading company section was established in「Sumitomo Real Estate Building(住友土地工務)」and this is predecessor of current「Sumitomo Corporation」. Because of this history, this company is sometime to be called "The general trading company who was late".

From 1945, they carried out a trading business. But originally,「Sumitomo Corporation」had no expert in trading  business and it were even treated as a heretic, because it was a company who broke the taboo of Sumitomo Group. However, with the active expansion of the business, in 1957, sales of「Sumitomo Corporation」were included Sumitomo Group's top 10 annual sales. And in 1983, this company finally achieved the top profit amount in the Sumitomo Group. 

 

Compared to other general trading companies,「Sumitomo Corporation」handles a relatively wide variety of products. In terms of consolidated sales, it is the lowest of the five major general trading companies, but it ranks third in net income. In other words, this company focus on profitable business struture rather than expanding scale.

On the other hand, the business structure is well balanced, including the media and lifestyle division. Actually, 「Sumitomo Corporation」, like other general trading companies, had a high level of dependence on resource business. However, once they experienced a large deficit in the resource field for a while, they soon started to concentrate on the development of the non-resource business. As a result, they have been able to secure a solid portfolio now.

Among the general trading companies, 「Sumitomo Corporation」has advantages in the media and digital business , and it holds the top share in the cable TV market in Japan. It is also one of the largest trading companies about construction machinery and aircraft leasing business in Japan. In addition, this company is less dependent on the resource business such as iron, copper, nickel, zinc...etc.

 

 

 

3. Major Business

 

■ Metal business
They handle steel materials, steel pipes, non-ferrous metals (aluminum, titanium, etc.). Recently, they could hardly make a profit due to overproduction of Chinese companies. But in 2017, it returned to profitability by improving the profitability of the North American steel pipe business.

■ Transportation and construction machinery business
They carry out leasing and finance business for ships, aerospace, automobiles and construction machinery. They make stable profits every year.

■ Infrastructure business
Their business domain has a wide range of infrastructure departments such as social infrastructure, power infrastructure, and logistics infrastructure. This is also not large in scale, but it makes stable profits every year.

■ Media / Digital Business
They handle media(cable TV, video contents, home shopping, etc.), digital business(ICT platform business, venture investment, etc.), smart platform(information and communication infrastructure, etc.). It has stable and high profits.

■ Life and real estate business
They are developing health management business such as retail business and drug store, textile business, food products, materials business, and real estate business. This also produces stable and high profits every year.

■ Resource / Chemical business
They also handle metals (copper, gold, silver, zinc, nickel, coal, uranium) and petroleum, LNG, various chemicals, pharmaceuticals, etc.

 

 

 

4. Financial information

 

※Unit is JPY million

		2016	2017	2018
Consolidated revenue		3,996,974	4,827,323	5,339,238
Consolidated operating profit		213,101	412,295	404,017
Consolidated total assets		7,761,794	7,770,632	7,916,523
Consolidated net assets		2,486,955	2,694,321	2,906,199
Breakdown of sales	Metal business	-	1,046,957	1,396,268
	Transportation and construction machinery business	-	1,105,632	743,597
	Infrastructure business	-	334,738	518,619
	Media・Digital Business	-	339,304	360,889
	Life and real estate business	-	938,654	982,500
	Resource・Chemical business	-	899,013	1,117,402
	Others・Adjustments	-	163,025	220,063