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Kyokuyo emphasizes profit over scale expansion

December 20, 2007

Kyokuyo showed that it will strengthen its global expansion and processed value-added directions.

"I am confident that we are steering our business to the right directions. We will expand our presence based on global and processed value-added strategies. We place greatest emphasis on profit over scale expansion," said Kiyokazu Fukui, president of the company.

Fukui said that the company will rebuild structure to stabilize profitability based on the result of misjudged salmon and velvet shrimp purchases.

"In the first half, we made errors in sourcing salmon and velvet shrimp. Taking a hard look at failures, we will improve the ability to gather information, timely appropriate amount supply and thorough inventory control. We will maintain routes to stably secure mackerel, herring, Spanish mackerel and saury and use them as raw materials in a proactive manner."

Asked what sectors the company weighs heavily, Fukui said tuna farming and sushi business are promising.

"We lay weight on tuna farming year after year. We will consider farming sea bream and yellowtail farming, as well. Tuna, bonito operation is related to sushi business and it`s considered our third pillar. Sushi boom overseas is more than you envision. We will work tenaciously with our value-added and moderate priced, double featured products," he said.

Kyokuyo`s consolidated first-half sales achievement rate was 93%, while it was 79% in current earnings. Non-consolidated sales percentage achievement was 93%, while current earnings` ratio was far from the target.

"Non-consolidated first half`s current earnings were disappointing due to shaky seafood trades, but on a consolidated basis Kyokuyo Suisan and Kyokuyo Kaiun alleviated the drop. High prices of bonito and marine transportation help bring good profitability"

Nissui sets higher profits and overseas shares

December 19, 2007

Naoya Kakizoe, CEO of Nissui emphasizes that the company will seek further growth and profit-earning capacity through its global and local links.

"Since we acquired capital in the Sealord Group, we have forged our global foundation under the TGL, True Global Links plan. But the global market has come to a point where our global link can`t respond to all the demands. We need to coordinate the global links closely with local links to create dual structure to pursue profitability and further growth", said Kakizoe.

One of challenges the company faces is poor profits of seafood and processed foods, said Kakizoe.
"King& Prince and Salmon Antartica fell short of our expectations. Shrimp farming business in Indonesia didn`t turn out as planned. We have already taken the necessary actions and hope that will bring better results in a couple of years. We aim to hit a target of \30 billion in operating profit in 2011, and that`s quite attainable. We expect to increase margin percentage of seafood and processed foods to 5%, which is 2 to 3 % at present"

To avoid skinny margins Japan`s seafood giant also plan to expand global markets. The company`s market ratio outside of Japan is 18.3% and the Japanese seafood giant sees even more shares abroad.

"Markets outside of Japan will constitute up to 30% by 2011. I don`t mean to take the Japanese market slightly, but if we find it less attractive and penetrating, the share will be even larger", said Kakizoe.

Asked what factor decides future M&As, he said sharing values is vital.

"Since I became CEO in 1999, I have become keenly aware how difficult it is for a Japanese firm to sell products outside of the country. I have no intention of forcing our cultures to overseas enterprises, but if we cannot reflect the same values of do-the-right-thing attitude, we can never join hands", he said.

Maruha Nichiro executives see future global markets

December 18, 2007

Yuji Igarashi, president of Maruha Nichiro Holdings and Tatsuhiko Tanaka, chairman of the company said the integrated seafood giant endured a relentless year in 2007 thanks to rising prices of raw materials and weaker yen.

They told Suisan Times at Maruha Nichiro`s headquarter in Tokyo last week.

"Prices of seafood raw materials are on the rise due to growing demand worldwide and curbing quotas. Some species have become double-priced. Inflationary fuel prices made fishing operations more costly", Igarashi lamented.

Maruha`s first half sales were \363.6 billion, 2% shy of the original target, while operating profits were \5.1billion, 64% achievement rate from the original projection. Seafood sector gained \700 million compared to the previous year to \272.5 billion. On the other hand, operating earnings decreased \800 million.

"We have been in a harsh environment this year. The reason behind the profit slide is higher trading costs of procurement, while we never succeeded in jacking up selling prices domestically. Quotas for the North-sea fishery decreased. Higher water temperatures forced us to operate fishing in farther locations and high quality surimi and fillet dwindled."

Nichiro`s performance will add to the company`s latter half earnings and it expects sales will increase \112.5 billion to \850 billion, it hopes its full business year operating earnings will be \12.5 billion.

The newly born seafood giant eyes the global market and future M&As for its future expansion.

"We secure raw materials from 70 companies worldwide. We firmly believe our supplier should be of great advantage of doing business with us. Therefore, it is necessary to sell our products in Europe, as well. Sales of Maruha and Nichiro overseas will exceed \100 billion. We won`t be able to enjoy considerable amount of benefits unless we expand markets globally", Igarashi stated.

Tastuhiko Tanaka, chairman said the company will remain Maruha and Akebono brands.

"Our products will be marketed under Maruha and Akebono. Some people say it is simpler to use one corporate brand name, but consumers recognize these brands more than our company name"

The merged company stresses the importance of synergy to develop more attracting items.

"Processed foods are short-lived and we have to keep on developing innovative items. For example, we need to think how we can evolve Maruha`s surimi into new frozen foods" said Tanaka.

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