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Maruha Nichiro HD: Food Operations Record Significant Profit Increase

May 11, 2010

Maruha Nichiro Holdings posted its financial report for the year ended in March 2010: the net sales of \828.7 billion, down 7.7 percent year over year; the operating income of $10.7 billion, down 30.7 percent; and the ordinary earnings of \7.751 billion, down 4.1 percent. In spite of decreases in revenue and profit, the fact that there was no report of share appraisal losses as in last year resulted in a net profit of \1.586 billion, a turnaround from a net deficit of \6.2 billion recorded in the previous fiscal year. Due to slacked business operations of consolidated subsidiaries, there was a reversal of deferred income tax asset.

Fisheries Operations Report Sales and Profit Declines, Ending With Operating Income of \1B

Fisheries Operations reported the sales of \526.3 billion, a decrease of 8.9 percent from the previous year, and the operating earnings of \1.006 billion, a whopping loss of 88.6 percent. In contrast, Food Operations marked the operating proceeds of \12.2 billion, up 37 percent, despite a 5.7 percent decline in sales to \274.4 billion.

Storage & Logistics Business Operation registered the sales of \15 billon, down 2.3 percent from the prior year, and the operating earnings of \1.282 billion, a decline of 3.9 percent.

The projected figures for the fiscal year ending in March 2011 are the sales of \850 billion, the operating proceeds of \18 billion, the ordinary profit of \14 billion, and the net income of \4.5 billion.

Fisheries & Aquaculture Unit in Fisheries Operations sorted out such underperforming operations as longlining and a business in Madagascar; regardless of the efforts, poor haul of purse seine fisheries and the slumped market condition of tuna farming led to reduced sales and profit. North American Operation Unit, in the face of a shrinking fishing quota of pollack, experienced plunges in prices of surimi-related products, finishing in reduced revenue and income. Although shrimp, shellfish, and squid displayed effective sales, Marine Products Tradings Unit continuously suffered due to the slumped tuna market trend.

Contracted transaction amounts resulted from a consumer freeze and markdowns of high-end foodstuffs adversely pressured profits in Storage & Logistics Unit. Strategic Sales Unit continued its efforts for restaurant sales channel expansion and focused on the marketing of highly profitable products. Resultantly, this unit successfully posted increases both in revenue and proceeds.

In Food Operations, Meat & Products Unit faced a challenging fight; however Frozen Foods Business Unit, Processed Foods Business Unit, Foods & Fine Chemical Unit, as well as Asia & Oceania Operations Unit (frozen and canned foods) all registered increased earnings. Cold Foods Operations Unit beat a tough business environment by cheaper raw material prices, cost reductions, and improved production rates of group plants.

The original article was published on May 11, 2010 and was translated by Kiyo Hayasaka.

Federation of Japan Skipjack and Tuna Fisheries Cooperatives Chairman Ishikawa Discusses This Year's Concerns About Tuna/Bonito

May 11, 2010

The Federation of Japan Skipjack and Tuna Fisheries Cooperatives Chairman Ishikawa referred to this year's issues involving bonito/tuna fisheries: "We managed to get the listing of Atlantic bluefin tuna disapproved at the Washington Convention. In order to make regulations more effective, I understand that it is the greatest challenge of this year to structure a system that enables the all-out control of imported tuna history management." His statements are as follows:

"With the leadership of Mr. Akamatsu, Minister of Agriculture, Forestry, and Fishery, we were able to prevent Atlantic bluefin tunas from being listed at the Washington Convention. Tuna fisheries were pleased with this significant result of the governmental fishery diplomacy. On the other hand, there is a speculated condition of the current tuna imports that is that bluefin tunas processed overseas are imported as bigeye tunas. There are loopholes allowing this type of activity. The goal of this year is to demand that the country obey regulations of international tuna fishing organizations with rigorous tuna history management i.e. DNA testing of imported tunas."

Need to Take on Structural Reform of Management

Pertaining to tuna fishing business management: "We will maintain a structure of 200 ocean-going tuna fishing boats. In terms of each individual management, there is a reality that a shipowner, who runs only one boat, cannot sustain himself. Such a shipowner can transfer his fishing right to a better performing shipowner and he can manage multi-ship operation or co-operate a fishing business. We need to come up with a way to restructure a management system that makes that kind of scenario possible. After May, we will lay out this restructure reform plan with the Japan Fisheries Association and push it as a fishery policy proposal to the Democratic Party of Japan."

"As for energy-saving measures of tuna fishing boats, there is no change in tuna quality when the currently accepted temperature of -60°C is raised up to -40°C. We produced evidence that with this it was possible to reduce fuel costs by 8 percent. However, we have failed to obtain a consensus from the tuna distribution industry, and therefore we haven't been able to carry this out, at all. From the point of view of environmentally friendliness and management cost reductions, we would like to keep promoting this idea. Presenting a mascot of the Federation, 'Maguro' as 'Eco-Maguro' we are considering advocating this move."

Regarding deep-sea skipjack pole and line fishing: "Bled bonito as a product has an advantage that its color doesn't change. Currently, bonito fishing vessels belonging to the Makurazaki and Yaizu City fisheries cooperatives are equipped with this machine. I wish to install it in all of deep-sea skipjack vessels to expand and invigorate the seared bonito (katsuo tataki) market. Other than that, we want to review an idea of direct outlet at Koto City, Tokyo, again to come up with different ways of management."

The original article was published on May 11, 2010 and was translated by Kiyo Hayasaka.

Uoriki, Leading Seafood Retailer, Manages to Report Profits

May 11, 2010

Net Income of \400M; Dividend of \20 Per Share

A leading fresh fish retailer, Uoriki, located in Tokyo under management of President Shigenori Ito, announced that the company recorded \414 million in net income for the business year ended in March 2010. The company managed to make a huge turnaround from the net deficit of \78 million in the previous fiscal year. Additionally, the board meeting decided on a dividend of \20 per share.

The consolidated results were the sales of \ 24.885 billion, down 2 percent year over year and the operating earnings of \841 million, down 3.1 percent. Non-operating expenditures, as exchange rate losses and a derivative appraisal loss of \90 million, were attributed to the ordinary earnings of \852 million, a decrease of 16.7 percent. The company's net profit came to \414 million, as opposed to the net deficit of 78 million in the previous term.

Retail Sales Maintain Previous Year's Level

In the retail division, the company dispatched veteran personnel to each store as 'an fish advisor' starting from August in an attempt to broaden fish consumption and attract more customers. Up until July '09 the company maintained the previous-year level sales; however a decline of 2-3 percent for 3Q and another drop of 3-4 percent for 4Q were recorded.

According to the numbers released by the Japan Chain Stores Association, marine product sales posted a 5.3 percent drop for 2009; a 3.5 percent fall for 1Q, a 2.7 percent reduction for 2Q, a 7 percent tumble for 3Q, and a 5.7 percent contraction for 4Q. However, Uoriki, specializing in fresh fish, managed to keep its sales declines minimal.

In addition, the company opened three new stores and the first store style take-out sushi joint. Resultantly, total sales came to \20.214 billion (no percentage change from the previous year) and operating earnings ended in \1.147 billion (down 8.3 percent).

Uoriki's restaurant operations employed reasonably priced menus responding to consumer needs and produced promotional tools designed for different store locations. Lunch sales went up, while dinner sales struggled to grow, leading to an existing store sales drop of 3.7 percent year over year. Total sales amounted to \1.115 billion, a decline of 3.2 percent, and operating deficit finished in \15 million, as opposed to an operating loss of \13 million in the last term.

Wholesaling Operations Post Sales of \3.555B, 12% Decline

As major clients of food supermarkets faced tough business circumstances, the sales of Uoriki's wholesale division went along with them and recorded a decline. Moreover fish roe sales for manufacturers fell sharply to 7 percent over the previous year, and domestic wholesaling operations registered 78 percent in sales year over year.

A subsidiary in the US, Uoriki Fresh Inc., posted the sales of \1.138 billion and the operating profit of \9 million. From this point on, the company is slated to expand its operations and also establish a business structure of UK Trading, which started in April and specializes in the trading of marine foods.

The total sales of wholesaling operations of the group amounted to \3.555 billion, a drop of 12 percent, and operating deficit added up to \10 million, as opposed to a operating loss of \97 million in the previous year.

The original article was published on May 11, 2010 and was translated by Kiyo Hayasaka.

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