The MoatNarrow moat

Sumitomo Corporation (8053) — moat facet

Sumitomo rebuilt itself around aircraft leasing, IT services and power after two decades of losses on a Madagascar nickel mine.

Sumitomo's advantage is a portfolio that has moved away from the resource projects that gave it its losses. Its largest positions now are the world's second-largest aircraft lessor, held through a partnership1; an IT services company, SCSK, bought outright for about ¥882 billion2; overseas power plants under long-term contract3; half of JCOM4; and a real estate business in Japan. Mineral resources produced about 19% of underlying profit in the latest year56.

Return on equity (%, years to March)12.520186.4202016.220229.4202412.4202512.92026Sumitomo financial data workbook and results
Volatile, and back above 12% for two years.

The change was paid for. Ambatovy, the Madagascan nickel project it joined in 2005, produced repeated write-downs789 before Sumitomo agreed to sell it in May 202610. The company's two net losses in twelve years, in the years to March 2015 and 2021, both came in years of resource charges11.

The moat is narrow because each piece faces real competition. Aircraft leasing has a larger leader in AerCap12; IT services in Japan is crowded; power contracts expire and are renegotiated. What Sumitomo adds is capital, relationships and a willingness, now published, to measure each business against its return: the group ROIC has been 8% for three years13, and about ¥1 trillion of capital still earns almost nothing14.

Return on equity recovered to 12.4% and 12.9% in the last two years, from 9.4%1516, helped by the fall in equity after the SCSK purchase17.

The company distinguishes the profit it considers recurring from gains on selling assets. Underlying profit was ¥515.0 billion in the year to March 2025 and ¥528.0 billion in 2026, with ¥47.0 billion and ¥72.0 billion of asset replacement and extraordinary items on top18. The forecast for the current year is ¥620.0 billion of underlying profit and ¥40.0 billion of the rest19.

That split matters for judging the moat. A portfolio whose recurring profit grows is building something; one whose profit depends on selling assets is liquidating it. Sumitomo's underlying profit has grown, and the forecast is for a larger step.

The measure is return on equity against the company's target of 12% or higher20. Holding it while net debt to equity returns to about 0.621 would show the new portfolio earning without leverage.

Moat trajectory: Holding steady

The portfolio is more diversified; returns rose while leverage rose with them.

The number that tests this moat
Reported
Return on equity against the 12% target
12.9% in the latest year

The single test of the rebuilt portfolio; leverage has to fall at the same time.

Source: Sumitomo Corporation results, year to March 2026 ↗
Aspects of the moat
DIG DEEPER 01
Leasing: Aircraft, Engines and Cars
Sumitomo and its partners run the world's second-largest aircraft lessor, and just bought another.
DIG DEEPER 02
SCSK and the Digital Business
Sumitomo paid ¥882 billion to own an IT company outright, and needs its contribution to reach ¥75 billion.
DIG DEEPER 03
Power and Energy Transformation
Sumitomo's power business is its largest earner, and part of its profit comes from selling plants it built.
DIG DEEPER 04
Capital Discipline After Ambatovy
Sumitomo spent twenty years learning from a Madagascar nickel mine, and now publishes the trillion yen that still earns almost nothing.
References
  1. ReportedIts largest positions now are the world's second-largest aircraft lessor, held through a partnership; an IT services company, SCSK, bought outright for about ¥882 billion; overseas power plants under long-term contract; half of JCOM; and a real estate business in Japan.
    Sumitomo Corporation, results presentation for the year to March 2026 - leasing and aviation: SMFL, SMBC Aviation Capital, the lessor rankings, Air Lease and the automotive businesses. — FY to March 2026 · publ. May 2026 · source ↗
  2. ReportedIts largest positions now are the world's second-largest aircraft lessor, held through a partnership; an IT services company, SCSK, bought outright for about ¥882 billion; overseas power plants under long-term contract; half of JCOM; and a real estate business in Japan.
    Sumitomo Corporation presentation on the SCSK tender offer, 29 October 2025 - total consideration of approximately ¥882.0 billion. — October 2025 · publ. 29 October 2025 · source ↗
  3. ReportedIts largest positions now are the world's second-largest aircraft lessor, held through a partnership; an IT services company, SCSK, bought outright for about ¥882 billion; overseas power plants under long-term contract; half of JCOM; and a real estate business in Japan.
    Sumitomo Corporation, results presentation for the year to March 2026 - leasing and aviation: SMFL, SMBC Aviation Capital, the lessor rankings, Air Lease and the automotive businesses. — FY to March 2026 · publ. May 2026 · source ↗
  4. ReportedIts largest positions now are the world's second-largest aircraft lessor, held through a partnership; an IT services company, SCSK, bought outright for about ¥882 billion; overseas power plants under long-term contract; half of JCOM; and a real estate business in Japan.
    Sumitomo Corporation, results presentation for the year to March 2026 - leasing and aviation: SMFL, SMBC Aviation Capital, the lessor rankings, Air Lease and the automotive businesses. — FY to March 2026 · publ. May 2026 · source ↗
  5. ReportedMineral resources produced about 19% of underlying profit in the latest year.
    Sumitomo Corporation, results presentation for the year to March 2026 - mineral resources: copper, iron ore, aluminium, coal and the Madagascar nickel exit. — FY to March 2026 · publ. May 2026 · source ↗
  6. Moat Explorer calcMineral resources produced about 19% of underlying profit in the latest year.
    Moat Explorer calculation from Sumitomo Corporation's reported figures. Per-share figures divided by four for the 1 July 2026 split: EPS 499.09 / 4 = 124.77, 463.66 / 4 = 115.92; DPS 150 / 4 = 37.5. Trailing twelve months to June 2026: profit 600.3 - 170.9 + 190.1 = 619.5; revenue 7,337.3 - 1,787.9 + 1,949.4 = 7,498.8; EPS 124.77 - 35.29 + 39.95 = 129.43. Market value at March year-ends (close x shares issued, including treasury shares): 1,118.5 x 1,250.6m = ¥1,399bn (2016), 5,780 x 1,211.4m = ¥7,002bn (2026); P/E 1,399 / 74.5 = 18.8 and 7,002 / 600.3 = 11.7. Trailing P/E 8.51 trillion / 619.5 billion = 13.7; P/S 8.51 / 7.4988 = 1.13. Revenue by region, year to March 2026: Japan 2,840,605 / 7,337,259 = 38.7%; United States 1,391,341 / 7,337,259 = 19.0%. Equity-method profit over profit before tax: 266.7 / 702.0 = 38%. Mineral share of underlying profit: 99 / 524 = 19%. Profit growth over two years: 600.3 / 386.4 = 1.55. Profit against the plan target: 630.0 / 650.0 = 97%. Lifestyle and corporate band: 14.1 - 4.5 = 9.6 (2025) and -3.6 + 33.5 = 29.9 (2026). Largest four segments, year to March 2026: 102.4 + 88.9 + 82.3 + 81.5 = 355.1, 59% of 600.3. Berkshire market value over cost: 4,022 / 1,907 = 2.1 times; dividends on cost 102 / 1,907 = 5.3%. SCSK premium: 5,700 / 4,359 - 1 = 30.8%. Share count since 2013: 1,195.1m pre-split equivalent against 1,250.6m = -4.4%. Buyback: 47.65m shares against 4,780.5m issued = 1.0%. Q1 progress: 190.1 / 630.0 = 30%. Segment return on assets, year to March 2026: Energy Transformation 102.4 / 1,977.8 = 5.2%; Steel 74.3 / 1,199.5 = 6.2%; Automotive 63.2 / 861.7 = 7.3%; Transportation & Construction Systems 88.9 / 1,874.9 = 4.7%; Diverse Urban Development 81.5 / 1,792.9 = 4.5%; Media & Digital 51.2 / 1,492.7 = 3.4%; Mineral Resources 82.3 / 2,463.7 = 3.3%; Chemical Solutions 26.5 / 942.7 = 2.8%. Dividend per share, split-adjusted: 70 / 4 = 17.5 (2021) to 150 / 4 = 37.5 (2026) and 40 forecast; 37.5 / 17.5 = 2.1 times. Commercial Aviation underlying: 38.7 / 19.7 = 1.96 times. Eight growth areas: 382.7 / 279.9 - 1 = 36.7%. Low-ROIC capital: ¥3.0 bn / ¥1 trillion = 0.3%. Commercial Aviation forecast increase: 38.7 - 19.7 = 19.0; 19.0 / 330 = 5.8%. SCSK charge against comprehensive income: 722.7 / 1,029.6 = 70%. SCSK price rise: (5,700 - 5,050) x 154.7m = ¥100.6bn. Construction systems margin: 18.8 / 718.3 = 2.6%. Planned investment raised from 1.8 to 3.0 trillion = +67%. Low-return plus asset-turnover capital: (1.0 + 0.7) / 9.44 = 18%. Eight growth areas forecast increase: 382.7 - 305.0 = 77.7, against 15.0 added in the latest year. Forecast dividends over forecast profit: 191.0 / 630.0 = 30.3%. Value against the big three: 8.51 / 17.62 = 0.48, 8.51 / 14.63 = 0.58; their value over Sumitomo's 1.72-2.07; profit 619.05 / 936.38 = 0.66 and 619.05 / 895.86 = 0.69. Low-ROIC capital against total invested capital: 1.0 / 9.44 = 10.6%. — FY to March 2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in Sumitomo Corporation's results, presentations, annual financial report and market data; operands shown in the source line.
  7. ReportedAmbatovy, the Madagascan nickel project it joined in 2005, produced repeated write-downs before Sumitomo agreed to sell it in May 2026.
    Bloomberg, 13 January 2016 - Sumitomo Corp withdraws forecasts after a ¥77 billion charge on the Ambatovy nickel project. — January 2016 · publ. 13 January 2016 · source ↗
  8. ReportedAmbatovy, the Madagascan nickel project it joined in 2005, produced repeated write-downs before Sumitomo agreed to sell it in May 2026.
    Sumitomo Corporation release, July 2020 - impairment loss of approximately ¥55 billion on the Ambatovy nickel project in Madagascar in the first quarter of FY2020. — July 2020 · publ. July 2020 · source ↗
  9. ReportedAmbatovy, the Madagascan nickel project it joined in 2005, produced repeated write-downs before Sumitomo agreed to sell it in May 2026.
    Sumitomo Corporation, Annual Financial Report for the year to March 2025 (English) - including the Ambatovy impairment of ¥75,462 million and the Myanmar telecom loss of ¥35,215 million in the year to March 2024. — FY to March 2025 · publ. June 2025 · source ↗
  10. ReportedAmbatovy, the Madagascan nickel project it joined in 2005, produced repeated write-downs before Sumitomo agreed to sell it in May 2026.
    Sumitomo Corporation, results presentation for the year to March 2026 - mineral resources: copper, iron ore, aluminium, coal and the Madagascar nickel exit. — FY to March 2026 · publ. May 2026 · source ↗
  11. ReportedThe company's two net losses in twelve years, in the years to March 2015 and 2021, both came in years of resource charges.
    Sumitomo Corporation, Financial Data workbook for the year to March 2026 - historical revenue, profit, EPS, ROE, balance sheet, cash flows and share prices from the year to March 2014, and the risk buffer against risk assets. — FY to March 2014-2026 · publ. May 2026 · source ↗
  12. ReportedAircraft leasing has a larger leader in AerCap; IT services in Japan is crowded; power contracts expire and are renegotiated.
    Sumitomo Corporation, results presentation for the year to March 2026 - leasing and aviation: SMFL, SMBC Aviation Capital, the lessor rankings, Air Lease and the automotive businesses. — FY to March 2026 · publ. May 2026 · source ↗
  13. ReportedWhat Sumitomo adds is capital, relationships and a willingness, now published, to measure each business against its return: the group ROIC has been 8% for three years, and about ¥1 trillion of capital still earns almost nothing.
    Sumitomo Corporation, results presentation for the year to March 2026 - return on invested capital and invested capital by segment, the eight growth areas and the low-growth, low-return capital. — FY to March 2026 · publ. May 2026 · source ↗
  14. ReportedWhat Sumitomo adds is capital, relationships and a willingness, now published, to measure each business against its return: the group ROIC has been 8% for three years, and about ¥1 trillion of capital still earns almost nothing.
    Sumitomo Corporation, results presentation for the year to March 2026 - return on invested capital and invested capital by segment, the eight growth areas and the low-growth, low-return capital. — FY to March 2026 · publ. May 2026 · source ↗
  15. ReportedReturn on equity recovered to 12.4% and 12.9% in the last two years, from 9.4%, helped by the fall in equity after the SCSK purchase.
    Sumitomo Corporation, Consolidated Financial Results for the year ended March 31, 2025 (IFRS) - including restated segment information for the year to March 2024. — FY to March 2025 · publ. May 2025 · source ↗
  16. ReportedReturn on equity recovered to 12.4% and 12.9% in the last two years, from 9.4%, helped by the fall in equity after the SCSK purchase.
    Sumitomo Corporation, Consolidated Financial Results for the year ended March 31, 2026 (IFRS) - results, segment profit, the financial position, dividends, the share split and the forecast for the year to March 2027. — FY to March 2026 · publ. May 2026 · source ↗
  17. ReportedReturn on equity recovered to 12.4% and 12.9% in the last two years, from 9.4%, helped by the fall in equity after the SCSK purchase.
    Sumitomo Corporation, Annual Financial Report for the year to March 2026 - consolidated financial statements and notes, including the SCSK acquisition accounting. — FY to March 2026 · publ. June 2026 · source ↗
  18. ReportedUnderlying profit was ¥515.0 billion in the year to March 2025 and ¥528.0 billion in 2026, with ¥47.0 billion and ¥72.0 billion of asset replacement and extraordinary items on top.
    Sumitomo Corporation, results presentation for the year to March 2026 - cash allocation, asset replacement, shareholder returns and the financial-soundness target. — FY to March 2026 · publ. May 2026 · source ↗
  19. ReportedThe forecast for the current year is ¥620.0 billion of underlying profit and ¥40.0 billion of the rest.
    Sumitomo Corporation, results presentation for the year to March 2026 - consolidated results, underlying profit, forecasts, sensitivities and the loss buffer. — FY to March 2026 · publ. May 2026 · source ↗
  20. ReportedThe measure is return on equity against the company's target of 12% or higher.
    Sumitomo Corporation, results presentation for the year to March 2026 - consolidated results, underlying profit, forecasts, sensitivities and the loss buffer. — FY to March 2026 · publ. May 2026 · source ↗
  21. ReportedHolding it while net debt to equity returns to about 0.6 would show the new portfolio earning without leverage.
    Sumitomo Corporation, results presentation for April-June 2026 - progress against the forecast, one-time items, the Madagascar sale, investment and the balance sheet. — April-June 2026 · publ. 31 July 2026 · source ↗
Sources
Generated September 24, 2026