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"Aiming to Complete Effect of Merger with Nichiro in Three Years"
December 12, 2008
Yuji Igarashi, President of Maruha Nichiro Holdings, Makes Statement at Year-End Press Conference
Yuji Igarashi, President of Maruha Nichiro HD, had the year-end press meeting at the headquarters in Tokyo on December 10, 2008. The President opened the press meeting by saying: "It was, as a matter of fact, the first business year, which started in April. We aim to complete the effect of a merger with Nichiro within the next three years. We created a plan to increase profit for this business term and we hope to make it come ture."
"Purchasing power of foreign countries has weakened due to a worldwide financial downturn and the appreciation of the yen, leading to a deluge of sales to Japan. Once experienced "Kaimake" (Japan's defeat at the auction) has been turned around to an increase of overstocks. Some retailers are promoting the stronger-yen-giveback sales, however consumers are reluctant to open their wallets." He continued, "This year, starting with a Tenyo Foods scandal, there were a series of problems which shook up food safety and assurance. Regaining consumers' confidence holds top priority and we will buckle ourselves up to it."
"The effect of reduced costs as a result of the merger registered \1.3 billion for the first half term and we are expecting the same result for the rest of the term, totaling \2.6 billion. Including the operational synergy, the merger effect for the first year is expected to be \4 billion. Thinking outside of typical pictures of Maruha providing materials and Nichiro processing them, we managed to add some depth to the business. We intend to complete the consolidation of production facilities through the mid-term business plan (2008-2010). The resultant effect of the consolidation will be then noticeable," said the President.
"For this fiscal term, we have been working towards total sales of \930 billion and operating proceedings of \19 billion; we reported sales of \453.6 billion and operating profit of \8.8 billion in the first half year. We are following the plans well so far. Though processed foods failed to meet the plans, the seafood segment generated more profit than planned, marking a huge profit gain compared to the same time last year. However, watching the way the market moves makes us think that the dull speed of economy after September does not give us any reason to believe that the third quarter will be bright. The month of December does not seem optimistic and the year-end gift sales are lacking heat."
He further stated on the seafood division: "Operations in North America have been performing favorably and domestic aquaculture business is also stable. The reason behind great performance of the seafood segment is the reinforcement of resource access we previously worked on. From now on, understanding the potential growth of the overseas markets, we will stress the importance of processing and distributing the products for those markets."
Regarding the product quality, he commented: "CSR and compliance will be thoroughly enforced. Maruha Nichiro group has 83 people engaging in quality assurance, which we believe is decent deployment of people; yet it is hard to say this effort is perfect, watching more problems unfolding, as Cassey Food scandal. We are going to continue our effort to reinforce and maintain the system."
Lastly, he spoke of the outlook on 2009: "In the year of 2009, we aim to achieve operating profit of \22 billion. An increase of \3 billion will be a challenging task, judging from domestic consumption and the economic trend; however, there is plenty of room for cost reductions and we will continuously pursue advantages of the meger."
Sakai President of Maruha Nichiro Foods, "Planning to Generate more Dynamism"
Michiro Sakai President of Maruha Nichiro Foods, who also participated in the press meeting, spoke of the current of food operations: "net sales of \147.4 billion were achieved in the first half year, while we planned \290 billion for this fiscal term; as for operating proceeds, the result for the first half year was \4.2 billion, when we pictured \11.4 billion for the entire business year. The operating profit result was \1 billion lower than originally planned; this is the tough number to accept. \1 billion out of \1.3 billion of the cost reductions brought by the merger was achieved by foods related operations. We further progressed with self-manufacturing of cold foods at Nichiro's processing plants, utilizing seafood materials from Maruha. Now, we endeavor to accomplish prompt creation of the merger effect and to foster excellent human resources."
Further more on the new structure of the company, President Sakai commented: "We are hoping to finalize elimination and consolidation of plants in the Hokkaido and Tohoku areas next year. Considering the higher production efficiency, we will restructure the areas of Honshu and Western Japan, as well. Reviewing the sales structure and streamlining distributions will help bring out the merger effect. We plan to generate more dynamism as a value-creation company to continue providing products our customers seek."
Regarding the fist half year results, he said: "All around rise in the costs of raw materials, related materials, and freight forced product price hikes; as soon as we structured a system to cope with the higher costs, we had to face the weakening market, preventing the effect of the price raise from fully surfacing. High-priced materials, such as horse mackerel, sardine, mackerel, and saury, are stagnating."
"Dealing with mass retailers' Private Brand (PB) depends on the content of the proposition. PB products are more reasonable than National Brand (NB) and moreover consumers favor PB products for their highly sought quality. However, creating a nationwide scale operation of PB will force a manufacturer in the red massively. How we will manage it depends on availability of production lines," further continued he.
Lastly, mentioning the Maruha Nichiro products, he said: "such health diet related products as "Ielly de Zero," functional jelly and special health food "Resara fish sausage," fortified with DHA, are moving very well."
The original article was published on December 12, 2008 and was translated by Kiyo Hayasaka.
October National Warehouse Inventory: Mackerel and Saury Increase
December 12, 2008
The October chilled seafood distribution statistics (major national cold warehouses) by the Ministry of Agriculture, Forestry, and Fishery report that, despite a decline in chilled salmon varieties, the end-month inventory amount totaled 1,257,957 tons, stemming from increases in mackerel varieties and saury. The result exhibited a five percent rise in comparison to the same month a year ago.
The original article was published on December 12, 2008and was translated by Kiyo Hayasaka.
Nippon Suisan President Says "First Half Year Settlement Was Embarrassing; Bad Factors were Noticeable"
December 15, 2008
Naoya Kakizoe President of Nippon Suisan held the year-end press meeting at the headquarters in Tokyo on December 12, 2008; he shared this year's business performance and the vision of the business from the next year on:
"The financial crisis in the US has generated the psychological contraction; on the other hand, an idea to reconstruct "a good era" with IT has been sprouting against the stream of destruction of IT and finance." He continued, "President-elect Obama cleared his intent of economic rejuvenation by reconstructing aging infrastructures, such as railways, roads, as well as bridges. His clear instructions of investment may help the economy recover quickly."
More Solid Network of Group Management
President mentioned group management: "As group management, there are 60 consolidated subsidiaries and 37 equity method affiliates; Kyowa Suisan became a consolidated subsidiary and Sasaya Shoten also became a part of the group. Hohsui and Suisan Ryutsu became Chuo Gyorui's subsidiaries and in distribution business, Hokkaido Nissui turned into a 100 percent subsidiary. Outside of Japan, we came to own 25 percent of Glacier stock; 25 percent is the maximum number in the US laws. In South America, Emdepes performed better than expected. Despite the existence of the partially uncovered areas in Africa and Europe, the overseas business network has grown solid."
As for the settlement of the first half year, President Kakizoe remarked: "The first half year results turned out to be quite embarrassing. Though surimi, salmon, trout, fish oil and fishmeal in seafood business contributed to the profit growth, Salmones Antartica in South America and King & Price Seafood in North America slumped. These bad factors became noticeable. Domestic seafood and foods operations fared relatively well. As for fine chemicals business, business clients' temporary inventory adjustment affected the outcome of this division." In terms of foods business, "Establishment of the production and distribution system to maintain monthly sales of \10 billion has been completed. Fish sausage (136 percent compared to the last year); jarred foods (140 percent); and professional prepared frozen foods contributed to the overall profit. With respect to home-use prepared cold foods are still experiencing the negative impact of Chinese food scandals. We faced a cost increase of \2.4 billion, whereas we expected an increase of \1 billion due to the higher surimi costs. Problems that happened in China adversely affected not only the companies in question, but also the entire industry."
President Kakizoe touched on an issue of food safety; "More thorough preventative management system covering the entire procedure from materials, production, freight, to storage has been implemented. A quality management center in China was turned into a company to strengthen its functions. The quality assurance committee, in which I play a central role, will continue its existence. Meetings are held three times a month with a policy to remove a problem from its source."
Kakizoe, President of Nippon Suisan, concluded: "we are drastically running behind the mid-term business plan, and yet we cannot blame it on the business environment. Further assessment of operations that lagged behind, and high-structured ones that poorly performed will be needed."
The original article was published on December 15, 2008and was translated by Kiyo Hayasaka.
Daisui May Fail to Collect \1.2 Billion Debt
December 15, 2008
Daisui reported on December 11, 2008, that the company was facing a possibility to fail or postpone collection of account and loan receivables, totaling \1.2 billion, from the company's business clients, Daicho Shoten, intermediary fresh fish wholesaler, and Kaiho Sangyo, Daicho's subsidiary.
Daisui announced; "we received a notice of an intent to file a declaration of bankruptcy from our business client company through their lawyer on December 11, 2008." The company officially expressed a concern that collection of account receivable of \20 million and loan of \898 million owed by Daicho Shoten, and account receivable of \288 million by Kaiho Sangyo, might not take place or be put off.
Daisui already posted the unrecoverable loan amount not safeguarded by collaterals as allowance for uncollectible receivables. For this reason, the impact the bad loans may cause on this fiscal year results can be minimal and the company plans to take on necessary account processing in the second quarter.
The original article was published on December 15, 2008and was translated by Kiyo Hayasaka.
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