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Interview with Maruha-Nichiro HD President Igarashi

March 17, 2009

It has been close to a year since the start of new business operations. We interviewed Yuji Igarashi, President of Maruha-Nichiro HD, about the effect of a merger with Nichiro and the new fiscal year's plans. He said that the merger's contribution would mean a great deal to overcome the worldwide financial crisis.

Q: Seemingly, there has been the effect of the merger, such as cost reductions.
A: We started to detect duplication and waste in the division of Foods in particular. The cost reductions in the first year of the merger amounted to \2.6 billion. Last year, we let go of about 200 employees and in March, another 150 will have to leave.

Q: What about the forecast of the current fiscal year?
A: Sales will come to about \900 billion. Operating profit will be \16 billion; this amount doesn't meet the original estimate of \19 billion, however, \14.5 billion is what we got last year after combing the numbers from old Nichiro, and therefore it means a profit increase of \1.5 billion. In the harsh business environment, I cannot say that we didn't perform well. The seafood division was a breadwinner for the first part of the year, however it performed poorly for the third quarter, and the fourth quarter looks even worse. High-end products with high margin won't move at all, and wholesalers refuse to stock up products.

Confidence in Defeating the Economic Slowdown

Q: For the time being, low-priced products will sell.
A: I don't assume that price competition will get fierce; however, we run our business based on the assumption of a consumer freeze. Though the economy is quite unfavorable, costs of raw materials, other materials, and logistics are considerably going downward; adding this factor to the rationalized advantages of the business merger, I am confident that we can fight through this economic downturn.

Q: What about the merger's effect on business operations?
A: Transaction amounts of fisheries products will become 1.5 times larger than old Maruha. Most of our fish species hold top market shares, which make business easier. We also deal with major wholesalers. The transaction amount of this fiscal year is 250,000 to 260,000 tons. Maruha used to deal with 200,000 tons and Nichiro 100,000 tons, and therefore now we look at a 300,000-ton base. For the first part of this term, we experienced kaimake (defeat at the auction) and the last part was kaigachi (victory at the auction). In the medium-term perspective, there is obviously tremendous demand of marine products in the world. Global scale demand for seafood will steadily keep rising, so procurement power will hold the key.

Q: Foods operations seem to have been enriched, as well?
A: Overall sales volume is \300 billion. Maruha's frozen foods business has expanded from \20 billion to \120 billion. Nichiro, who had weakness in sales of kneaded fish products and retort foods, has also broadened its business network. Almost every canned seafood product, except for canned tuna, boasts of top market share. Chilled foods are well accepted as a result of Maruha's procurement power and Nichiro's expertise in chilled foods.

Q: How about plans of the new fiscal year?
A: Each group company presents strong numbers. The food industry possesses a different level than automobile and electronics. Human begins cannot live without food. The numbers provided are the results of what each group company estimated based on consideration of the merger's effect and an objective understanding of favorable course of business; that's not what the Holdings imposed on them, so we just want to respect the presented numbers.

Wholesaler Reorganization Looks up to Kyushu's Result

Q: Tell us about wholesaler restructure.
A: There is a sense of urgency regarding the restructure of the business model. A custom to have a 70 or 80 year-old president needs to be questioned. Looking at it as a structural issue is important, and reorganization is one of them. Within the group, Kyushu is advancing its restructuring attempt and it is exhibiting fruitful results, compared to Tokyo and Knasai. In April, Kumamoto and Kagoshima will be integrated. We would like to construct a business model from examples of Kyushu.

Q: What about the strengthening of overseas business?
A: In the medium-term standpoint, this is the area we wish to aggressively approach, however, with the appreciation of the yen creating risks, we cannot help but becoming cautious about M&A, among others. Some cases may possibly end in all losses. But, if there is a deal with the preferable conditions, we are interested.

The original article was published on March 17, 2009 and was translated by Kiyo Hayasaka.

Ajinomoto: Executive Director Ito Appointed As President

March 16, 2009

Ajinomoto reached an unofficial decision to appoint Representative Director/Senior Executive Managing Officer Masatoshi Ito, as President. Ajinomoto also decided to select President Norio Yamaguchi as Chairman with a representation right, at a board meeting held on March 13. The decision will be finalized at a board meeting after a general shareholders' meeting late June. The decision to rename the company president was made to commemorate the 100th year of establishment of the company this year, in the attempt of 1) starting a new management structure and 2) reinforcing corporate governance.

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

Trade Show of Hachinohe Processed Products: Maeoki Mackerel Promoted

March 16, 2009

The 6th Hachinohe processed seafood products trade show was held by processed seafood manufacturers of the Hachinohe district, in Aomori Prefecture, on March 11. Each manufacturer showed off its products proudly, mostly ones made from mackerel and squid caught off of Hachinohe Maeoki. At a booth of the Hachiohe Maeoki Saba Brand Promotion Council, which was launched last year, the company displayed the appeal of its superior products by providing samples of mackerel sashimi and skewered mackerel of outstanding freshness and fattiness.

With a theme of "DA KA RA Hachinohe e" (That's why, go to Hachinohe), 19 manufacturers of Hachinohe participated in the event. Wide arrays of products "unique to Hachinohe," where a variety of fresh marine resources and superior technologies are available, were displayed. About 850 people from market and fisheries stakeholders, distributors, and retailers visited the event.

Yamayo presented its HACCP certified products. The company promoted differentiated products, such as marinated kelp of Ohma, Aomori and fermented squid with no color additives; the company used frozen squid it harvested on its own.

Demer introduced popular "cold-smoked mackerel" and a frozen bo-zushi series. Bo-zushi products, which utilized Aomori's high quality materials, Hachinohe mackerel, Ohma tuna and scallop, and Kaikyo salmon, attracted visitors' attention.

Ajino Kakunoya of the Hachinohe Kanzume Enterprise Group presented its new products of "Yakisaba Meshi no Moto (Mackerel Rice Mix)" and "Saba Nuka Tokoni," (mackerel cooked with rice bran paste). "Yakisaba Meshi no Moto" conveniently comes with a whole broiled mackerel filet, which is then cooked with rice.

Other than product displays from each manufacturer, menu ideas and samplings of products were also enjoyed. In addition, the operations of "the Hachiohe Maeoki Saba Brand Promotion Council, " which was established last year for the purpose of local community invigoration, were shared, and then its first promotional song "Hachinohe Maeoki Saba Samba" was featured, creating a happy mood in the event. At the Council's booth, Hiroshi Sawagami, who runs a mackerel specialty restaurant "Saba no Eki" (Mackerel Station) at a street food vendor village in Hachinohe City, exhibited mackerel sashimi and skewered mackerel.

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

Kyokuyo: Construction of Purse Seiner Enhances Integrated System

March 13, 2009

One of the Kyokuyo Group companies, Kyokuyo Suisan, will complete construction of an overseas purse seiner, the 7th Wakabamaru, 760-ton model with a cargo capacity of 1,200 tons, in September. The 7th Wakabamaru will replace the 8th Wakabamaru. The vessel will be a highly competitive large ship fitted with the cutting-edge technology. A total of four Wakabamarus will enable Kyokuyo Group to enhance its integrated system, from harvest, processing to marketing. In response to the upgraded integrated system, establishment of a comprehensive processing system centering around the Ooikawa Plant of Kyokuyo Suisan and sales expansion of bonito products have been promoted.

At the height of a season, seared bonito products, "Katsuo Tataki Sumibi (charcoal-seared bonito)" and "Toro Bonito Skinless Loin" are the flagships of the company, differentiating the products by taking advantage of strength of self-procured materials. Mass retailers and the restaurant industry speak highly of them as high-value added products.

For the product of "Katsui Tataki Sumibi," bonito, which is self-procured and quickly frozen on the boat, is utilized. Using special charcoal from Fukushima Prefecture, which is well known for "its ability to broil evenly and suitability of fire for searing bonito," bonito's surface is seared. Various different ways of enjoying seared bonito are being born, such as "Nokke Mori" with a refreshing tataki sauce and carpaccio.

"Toro Bonito Skinless Loin" makes the best of rich bonito caught in cold waters off of the Sanriku and then speedily frozen on the ship. Its characteristic mellow flavor is popular among sushi boat restaurants in particular.

Jun Nakano, manager of the processing and marketing division in the Department of Skipjack and Tuna said, "The fish sections of mass retailers, izakaya (Japanese drinking spot) chain restaurants, and sushi boat restaurants try to expand their customer bases by taking advantage of seasonal and regional foodstuff materials; this trend has been getting more intense. Making the best use of the integrated system, we aim to aggressively construct projects to strengthen relations with our clientele. In addition, we are considering a commemorative campaign for the completion of the new vessel."

The original article was published on March 13, 2009 and was translated by Kiyo Hayasaka.

Daito Gyorui Signs \45B. Contract with Atlantis of Iceland

March 12, 2009

Fish wholesaler Daito Gyorui signed a sales contract with an Icelandic company, the Atlantis Group, to purchase mainly salmon and tuna. The contract reads an annual purchase amount of 11,000 tons (approx. \9 billion) and \45 billion over the next five years. Amounts of fish traded are 8,000 tons of Chilean coho salmon and other salmon species, 2,500 tons of ranched tuna, and about 500 tons of demersal fish. A signing ceremony was held with Ambassador to Japan Stefan Larus Stefansson as a witness on March 3.

The companies involved signed a five-year contact worth about \50 billion to mostly buy salmon in September 2005; the recent volatile shifts in the financial environment affecting both Japan and Iceland compelled them to sign another five-year contract. Delegates of the Icelandic trade association who visited Japan in hopes of rebuilding the Icelandic economy and Ambassador Stefansson attended the signing ceremony.

Based on the contract, Daito Gyorui will annually purchase 7,000 tons of Chilean coho salmon, 1,000 tons of Chilean and Norwegian trout, ranched tuna (Croatian 750 tons, Mexican 750 tons, and Australian 1,000 tons), and 500 tons of Icelandic halibut and other demersal fish.

Daito Gyorui said, "Our business for the most part revolved around salmon, but other items, such as ranched tuna will be added to the list. In the short term, "kaimake" (defeat at the auction) of imported goods will not happen, however in the long-term perspective, it will certainly take place. It is of tremendous importance to secure stable suppliers."

The original article was published on March 12, 2009 and was translated by Kiyo Hayasaka.

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