TOKYO (Nikkei)--Mitsubishi Corp. (8058) and six other major trading companies are closing in on a record of more than 1 trillion yen in dividends and other returns from overseas units and investments for the year ending March 31, according to a recent Nikkei survey.

Over the past decade, trading houses have increasingly generated profits from business investments abroad instead of traditional trading operations.
Mitsubishi, Mitsui & Co. (8031), Sumitomo Corp. (8053), Itochu Corp. (8001), Marubeni Corp. (8002), Sojitz Corp. (2768) and Toyota Tsusho Corp. (8015) earned roughly 1.01 trillion yen in dividends from Japanese and foreign subsidiaries in the year ended March 2011.

Foreign units provided most of these payouts, which doubled from five years earlier and tripled from 10 years ago. Such dividends this year are virtually certain to top the fiscal 2011 tally.

Income from overseas oil and gas fields, along with mines, generated the largest dividends for trading companies. Investments in independent power providers and other electricity operations are also beginning to pay off.

The trading houses are planning to pursue foreign investments in waterworks and food products -- segments offering potential earnings growth.

Commission businesses pillared on overseas trading hit a ceiling in the latter 1990s as the globalization of automotive and electrical machinery industries accelerated. Mitsubishi and others soon began tapping their extensive overseas networks to ramp up investments in resource concessions and infrastructure operations in emerging markets and other growth areas.

Total foreign investments by the seven firms this fiscal year are expected to reach 3.18 trillion yen, topping fiscal 2007's record 2.35 trillion yen. Overseas outlays could stay at around 3 trillion yen in fiscal 2012 as well.

Mitsubishi, which expects investments to total around 1 trillion yen this fiscal year, acquired a stake in a Chilean copper mining company for 420 billion yen in November. It also decided to expand a coal mine project in Australia.

Meanwhile, Itochu and a U.S. investment firm partnered to acquire an American oil and natural gas company for roughly 540 billion yen.

The strong yen has enabled trading houses to aggressively invest abroad.

European financial institutions, hit by fallout from the region's debt crisis, have also stepped up asset sales at relatively bargain prices.

(The Nikkei Feb. 3 morning edition)