* Higher coal, iron ore prices buoy profits
* Mitsubishi, Mitsui return to profit after first losses
* Top five trading houses forecast profit growth (Adds company executives' quotes, analyst comments)
By Yuka Obayashi
TOKYO, May 9 (Reuters) - Mitsubishi Corp and Mitsui & Co, Japan's biggest and second-biggest trading houses by assets, returned to profitability in the financial year ending in March, boosted by rising prices for coal and iron ore.
Even after years of trying to diversify their operations into non-cyclical businesses, the results from Japan's "big five" trading houses have underlined their continued vulnerability to swings in commodities prices.
Mitsubishi on Tuesday reported net profit of 440 billion yen ($3.88 billion) in the last financial year, against a loss of almost 150 billion yen a year earlier, while Mitsui posted a 306 billion yen profit, up from an 83 billion yen loss.
"Higher prices and lower operation costs at our coking coal mines in Australia contributed to a rebound in our earnings," Mitsubishi's Chief Financial Officer (CFO) Kazuyuki Masu told a news conference.
Also on Tuesday, Sumitomo Corp said profit for the financial year more than doubled to just over 170 billion yen, while Marubeni Corp reported a 150 percent gain in profit to 155 billion yen.
Itochu Corp, the least dependent among the big five trading houses on resources, last week reported record profit, driven by the rise in commodities prices.
All of them forecast that profits for this financial year would improve, even as prices have come off in recent weeks.
Like global miners, the Japanese traders are profiting from higher commodity prices after a renewed appetite in China for raw materials.
In the year before, the five companies clocked up a total of about 1 trillion yen in write-offs due to a slump in valuations, with Mitsubishi and Mitsui announcing their first annual losses since they were founded after World War Two.
Commodity prices, however, remain volatile.
The price of coking coal - a steelmaking ingredient - more than tripled between March and late November 2016, then halved through March 2017. Iron ore prices have gained 48 percent in the past year to March, but have dropped recently as Chinese steel demand faltered.
"Trading houses' earnings are still very correlated to commodities and their share prices have a high correlation with what's happening in China and the larger macro pictures," said Thanh Ha Pham, an equity analyst at Jefferies.
"Earnings were helped by favourable metals and energy prices but looking at the share performance, there seems to be concerns about the future outlook," he said.
Commodity prices have risen enough to spur greater investment in exploration, but traders remained cautious.
"Our plan to freeze natural resource assets growth through the end of March 2019 will remain unchanged," Mitsubishi's Masu said.
Sumitomo CFO Koichi Takahata said: "We are not yet in a stage to make aggressive investment in resources." ($1 = 113.2900 yen) (Reporting by Yuka Obayashi, Additional reporting by Aaron Sheldrick; Editing by Richard Pullin and Christian Schmollinger)