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Maruha Nichiro HD President Igarashi Speaks About
This Year’s Growth Strategies at Year-End Press Meeting

December 16, 2009

At a year-end press meeting held on Dec. 14, Maruha Nichiro Holdings President Yuji Igarashi commented on the on-going three year midterm plan: “The market condition has been the toughest ever and we cannot avoid downward revisions.” The President further made the following remarks:

[This Year’s Business Environment and Performance] Since the Lehman shock a consumer freeze has been hovering around and it’s increasingly getting worse. High priced items just don’t sell in both seafood and foods. Even reasonably priced products don’t move in volume; overall, consumers just purchase the minimum amount of what’s necessary for them, though there was a time when they were stockpiling for the flu pandemic.

Deflation seems to last until next year; we are rather concerned about a double dip recession. The Japanese market is completely mature, making it quite difficult for us to stabilize new products.

In this type of environment, Maruha Nichiro Group’s seafood business is undergoing a tricky time. North America operations, which were performing great, witnessed the situation turning upside down; and they are walking very close to the red line this fiscal year. Far seas purse seine fisheries that thrived well in the past two to three years encountered a double punch of slumping catches and fish prices. The past favorable performances are creating the greatest fall.

Tuna and surimi in the Marine Products Trading Unit got a devastating hit. Scallop, octopus, and shrimp are doing well, nevertheless I am not sure if we can expect sales growth during the year-end sales glitz.

In contrast, food operations managed to stay within the limit of budget up until November. With decreasing raw material costs, cost reductions progressively materialized. With consumer preference to eat in, sales of cold foods for home use and canned fish are rising. Jelly products are also moving quite well.

As a group, this fiscal term’s forecast, the sales of \850 billion and the operating earnings of \13 billion, will be hard to realize. I hope we will somehow reach our goals from the end of the year to January through March, or get closer to them.

[Double Wave 21] The operating profit of \24 billion will be inevitably downgraded; but the actual number cannot be figured out until next March.

In terms of the direction of the plan, it is steadily coming true. Maruha Nichiro Kita-Nihon which reorganizes food factories in Hokkaido and Aomori, was launched on April 1. Production efficiency will climb up and also the streamlining will progress. \200 to 300 million for the first year and from the point on \700 to 800 million worth of a merger effect will be anticipated.

[Growth Strategy] We cannot realize further growth by just looking at the domestic market any more. Once M&A under deliberation and/or business alliances come to fruition, the figures will drastically change; however, these are serious matters that require careful deliberations.

We will continuingly reinforce our access to natural resources. Agrobest, a shrimp aquaculture company in Malaysia, is in excellent shape, and now it’s on an earning base. Sakurajima Yoshoku (amberjack farm) also conquered the primary red and now we can anticipate profitability next year. Taiyo A&F completed the construction of a vessel this August and another one coming in February. Considering tougher international fishing regulations, a global population increase, and ever expanding fish consumption, access to natural resources is quite important in the medium term.

The original article was published on December 16, 2009 and was translated by Kiyo Hayasaka.

Year-End Press Meeting of Maruha Nichiro Suisan and Maruha Nichiro Foods

December 16, 2009

Maruha Nichiro Suisan President Shigeru Ito and Maruha Nichiro Foods President Michiro Sakai held a year-end press meeting to speak about the situation of each business segment.

[Comment by President Ito] We are experiencing an extremely tough time because of poor bonito catches by far seas purse seiners, decreasing fish prices, as well as unprofitable tuna aquaculture business. We will launch a new brand of farmed amberjack and strengthen sales.

It appears that prices have hit bottom in surimi operations in North America and that they are bouncing back to what was seen before the Lehman shock. We are going to increase the supply of fillet for Europe. As an international fish store we want to take responsibility for the seafood supply; however, with the current lackluster economy, we are left with no other choice but to reduce supply in order to raise the value of fish. We are experiencing huge appraisal losses from tuna and surimi.

In the past, sales to the receiving department (Maruha Nichiro Gyoeikai) accounted for 60 percent of all, but it’s now reduced to 50 percent. To put it simply, it is an overabundance of players, which results in unavoidable reorganization. Three to four companies will be just enough for Tsukiji Market itself. The strategic sales unit is remarkably growing its business mainly from sales of sushi toppings.

[Comment by President Sakai] The key words for this year are “deflation,” “influenza,” and “merger effect.” It was a year when we frazzled our nerves away over how we could bring about the merger effect, coping with the flu under the circumstance of deflation. A bento (lunch box) series and frozen noodles for home use were a big hit. We managed to maintain a new product contribution rate of nine percent and to foster a stronger product development capability. Yet, since September due to the accelerating deflation sales in chikuwa, kamaboko, and fish sausage have been tumbling. Realizing the merger effect, further rationalization is needed. We aim to regain our lost ground with our new packaging methods, “Magic Cut” and “Eco-Pake.”

Maruha Nichiro Kita-Nihon (Northern Japan) started out its operation with one office and six plants. We estimate the first year production amount will be \19 billion; in the future, we want to raise the amount to a \23 to 24 billion level. We will carry out a promotion next year, marking the 100th anniversary of canned salmon.

The original article was published on December 16, 2009 and was translated by Kiyo Hayasaka.

Report on Maruha Nichiro Suisan Aquaculture Sites:
Attempt to Differentiate Products by Liquid Freezing Amberjack

December 11, 2009

One of the products of the Maruha Nichiro’s cultured fish series “Yokatoto” is called “Satsuma Kanpachi-don” and there are some noted characteristics that help differentiate the product.

The number of farmed kanpachi (amberjack) nationwide is estimated to be 11 million; more than 60 percent of which can be found in Kagoshima Prefecture. In Kagoshima Prefecture proud of the overwhelming share of kanpachi aquaculture, Maruha Nichiro Suisan’s Sakurajima Yoshoku possesses 650,000 kanpachi at Higashi Sakurajima and 150,000 at Ibusuki; and Amami Yoshoku runs a farm operation of 500,000 kanpachi at Amami Oshima.

120,000 kanpachi, ten percent of all, are processed for fillet and loin, which are sold to wholesalers at central wholesale markets, mass retailers, and restaurant chains. For processing, a business alliance was made with the Tarumizu City Fishermen’s Cooperation, which owns a HACCP certified plant.

A strong point is that a cliff height is high enough for corves (basic measure of 8m x 8m) to be towed away to an appropriate handling area of the Fishermen’s Coop. This is an advantageous point in terms of streamlining operations as well as product freshness preservation.

Once kanpachi is landed, it’s bled. After weigh-in, the fish is cooled in an icebox for 30 minutes. Then, the fish is transported to an adjacent processing facility. The subsequent process is smooth and quick: its fin, head, and organs are removed; then, the fish is casted and washed. After the dark flesh of the fish is detached, the fish is again chilled, dressed to three slices, casted, and then washed. After water removal, the fish is air vacuumed. This commercialized product “Satsuma Kanpachi” is boxed after walking through the metal detector, weighted in, iced, and packaged.

On the other hand, kanpachi shipped frozen is also noteworthy. A freezer, called “liquid freezer” which uses -30 °C frozen liquid, is employed here and a freezing speed is 20 times faster than an air freezer. A passing speed of the -1 to -5°C temperature zone is so quick that crystals are small and the fish gets frozen without the destruction of cells. For that reason, the taste components, protein and amino acid, are well preserved. Furthermore, the liquid freezer’s powerful, complete freezing capacity enables a long-term storage and freshness after thawing. The company’s thorough handling of freezing kanpachi could be observed. (to be continued to the next issue)

The original article was published on December 11, 2009 and was translated by Kiyo Hayasaka.

Nippon Suisan President Kakizoe’s Interview:
“Next Year Will Be Year to Finish Off What We Started ”

December 11, 2009

Nippon Suisan President Naoya Kakizoe held a year-end interview on Dec. 10 and touched on the following topics: 1) comment on this year; 2) progressing condition of the New TGL Plan; and 3) reactions to the outside changes. With the key concept of “reform,” the company undertook a large scale organizational restructure and group business management reform.

“It was never an easy year for both marine and foods businesses this year and it was a year when Nissui Group went through big reforms. Other than separating the corporate board from the executive committee, we launched the business promotion headquarters responsible for uniform management of marine and foods businesses. We expected a great deal of confusions; however, unexpectedly, things functioned well.”

“It’s not an easy thing to try to change the current realities regardless of the time you live in. Before and after the Great Depression in 1931, Nissui underwent drastic reforms. In 1930 an on-boat rapid freezing machine was introduced to a trawler for the first time in Japan. We developed frozen foods first ever in Japan, as well. We succeeded in the artificial breeding of Japanese tiger prawn in 1933 and by 1939 we realized its complete aquaculture process. The company principle at the time “Extreme care, ceaseless effort, and courage to overcome hardships can attain reforms” by Kosuke Kunishi, person of merit, rings true even today.”

“In Marine Product Business, other than salmon and trout, the unit prices of shrimp, meal, cod roe, and surimi have been all low, compared to last year. Salmon aquaculture operations by Salmones Antartica S.A. in Chile that had suffered in the past few years have finally turning profitable. Salmon farm operation in Onagawa is going well, too. Kurose Suisan’s amberjack aquaculture is performing better by dealing with “young amberjack.” Nakatani Suisan’s tuna farm operation is grudgingly facing plunges in prices. First, it was \3,500/kg; then, the unit price sharply fell more than \1,000 and now it’s dropped to below \2,500; the company is barely making a profit. Shrimp operation in Indonesia is also one more step away.”

“In Processed Food Business, there was an incident where a plastic foreign object was detected in a broiled rice ball product for home use; thereafter, we managed favorable business. New gratin and oven cooked curry products are gradually becoming popular. For professional use products, how to prevent prices from dropping is an issue. It will depend on how we evolve products and marketing, placing a focus on quality.”

“Fine Chemicals Business, in which we invested a great deal, successfully expanded its operations from pharmaceutical, foods, cosmetic, feed, to industrial materials. We are moving from a phase of building up the defenses to another phase of attacking and defending simultaneously. Next year, we ought to finish off the reforms we started to take on.”

The original article was published on December 11, 2009 and was translated by Kiyo Hayasaka.

MSC Promotes Its Activities at Eco-Products 2009

December 11, 2009

The Marine Stewardship Council (MSC) is taking part in the Japan’s largest environment show, “Eco-Products 2009,” being held in Tokyo until Dec. 12. At its stall, MSC labeled products are showcased; and Tosakatsuo Suisan Group’s pole and line skipjack, which just got certified in November, is also introduced. This is the third time for the MSC to participate in the event. Sharing its activities and undertakings, the MSC is promoting environmentally friendly ways and activities that can be taken from the kitchen. Moreover, in order for the Japan’s traditional pole and line skipjack fishery to be widely understood, other than panel displays, fishing gears used for this particular way of fishing are exhibited and also bonito sampling is offered. During the event, MSC CEO Rupert Howes is scheduled to visit the event.

The original article was published on December 11, 2009 and was translated by Kiyo Hayasaka.

October Household Expenditure: Seafood Consumption Drops 3.4%

December 7, 2009

According to the household expenditure report for the month of October (family income and expenditure survey and nomenclature) summarized by the Ministry of Internal Affairs and Communications, the monthly expenditures of households of two or more persons declined 1.3 percent to \287,789 per household, of which expenditure on food was down 0.9 percentage points to \73,564.

An average household expended \6,712 on marine foods, a decrease of 3.4 percent. Decreases in seafood consumption were displayed across the board in comparison to the same month last year: fresh fish (down 3.7 percent); salted-dried seafood (down 6.6 percent); kneaded fish products (down 4.0 percent); and other processed marine foods (down 1.7 percent).

Increases in Mackerel, Octopus, and Shrimp

Expenditure on fresh marine foods came to \4,017, a 2.6 percent drop. Drastic contractions were seen in the following fresh fish: bonito 20.5 percent, Japanese horse mackerel 18.7 percent, squid 15.5 percent, crab 14.2 percent, and saury 7.5 percent. Other than said varieties, sardine, flounder, salmon, sea bream, and yellowtail also exhibited declines. On the other hand, mackerel, octopus, and shrimp showed favorable rises of 10.8, 10, and 3.6 percent respectively.

In the category of shellfish, there was a 9.9 percent increase to \368; oyster and scallop grew a great deal by 24.4 and 12.5 percent respectively. Fresh water clam also went up. Japanese littleneck slumped 4.1 percent.

Money expended on salted-dried marine foods came to \1,197, down 6.6 percent. Boiled-dried fish (niboshi) plunged 36 percent. In addition, salted salmon (16.5 percent), cod roe (13 percent), and dried whitebait (10.1 percent) displayed contractions.

\746 was spent on kneaded fish products with a decrease of 4 percent. Fried kamaboko and kamaboko slumped 13.4 and 2.1 percent respectively. In contrast, Chikuwa showed a 2.5 percent rise.

Expenditure on other processed marine products was \752, down 1.7 percent. Cooked marine foods, canned seafood, shredded dried bonito, and shredded dried fish all decreased. Dried goods and seaweed increased 1.4 percent to \732; kelp exhibited a favorable rise of 20.4 percent. Dried laver seaweed (nori) and undaria pinnatifida (wakame) however tumbled.

Consumers spent \8,269 on prepared foods, which was up 0.6 percent. Though BBQ eel swelled 21.3 percent, take-out sushi dropped 1.7 percent. Money expended at restaurants shrank 0.5 percent to \12,707; however, sushi grew 11.7 percent.

The original article was published on December 7, 2009 and was translated by Kiyo Hayasaka.

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