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Kyokuyo's 2Q: Operating Profit Slashed in Half Despite Two Digit Sales Increase

November 1, 2010

Kyokuyo released its second quarter results for FY03/2011: sales marked a 10.2 percent rise from the corresponding quarter last year to \77.6 billion; operating profit however plunged 54 percent to \556 million; ordinary earnings tumbled 55.4 percent to \691 million; and the quarterly loss came to \244 million.

Marine Products Trading and Tuna Businesses registered revenue and profit rises above the performance of the same quarter last year. On the other hand, a sputtering recovery of global freight rates worsened revenues in Logistics, adversely affecting overall profit. A loss on revaluation of investments in securities, a total of \879 million, pushed the company further to the red in net income.

Smooth Going of Marine Products Trading and Tuna Businesses

The Marine Products Trading segment increased sales and profits well above the previous year. It is attributable to the segment's aggressive efforts to expand sales of Northern fish varieties, such as flounder and hokke (Arabesque greenling), as raw materials and/or final products, and to bolster sales in add-value products, e.g. salt preserved salmon and stripped crab.

In the Tuna segment, processing and sales of bonito/tuna products performed better than last year thanks to a streamlined production system and expanded foodservices sales channel. However, higher raw material costs resulted in a middling gain, remaining similar to the previous term. Far seas purse seining landed larger sales proceeds than last year, originating in better harvesting and swollen fish prices. Despite that, increased expenses ate up profits. Bluefin aquaculture operations have been progressing as planned as distribution of the second-year tuna has begun.

The original article was published on November 1, 2010 and was translated by Kiyo Hayasaka

Nichire's Q2: Processed Foods and Seafood Both Flourish

October 27, 2010

Nichirei announced its second quarter report card for the fiscal year ending March 2011 as follows: sales of \219.2 billion, down 1.4 percent; operating profit of \8.971 billion, up 19.4 percent; ordinary earnings of \8.6 billion, up 25.8 percent; and net income of \5.151 billion, up 10 percent.

Sales dipped \3 billion. Processed Foods Business reported a revenue decline as a result of concentrating on certain items and a transfer of acelora beverages business that took place in the previous year. In addition to increased sales accomplished by Marine Products Business, Logistics Network Business was a profit maker in Chilled Logistics Business.

Marine Products Business Profit Doubles, Phasing Into Plateau Period

The Company racked up an increase of \1.4 billion in operating profit. There was a \1.9 billion profit growth achieved by Processed Foods Business ascribable to reduced product and raw material costs and revamped productivity. Compared to the last financial year, that was a whopping 377 percent increase. Marine Products Business likewise accomplished to double its gain from \318 million recorded last year to \668 million. Logistics Business had to register a \100 million drop in proceeds, resulting from a depreciation of a newly constructed distribution center and diminished inventory volume.

Ordinary proceeds surged \1.7 billion because of the soared operating profit. With a \700 million extraordinary loss due to "changes to the lease accounting standard," the quarterly net income ended in an increase of \400 million.

Consumer tendency for lowered prices triggered unit price markdown, yet sales volume pulled off an increase, leading Marine Products Business to sales and profit rises for the first half year. Amid continuously spurting demand of shrimp in the US market and resultant blistering purchasing prices, the transaction and sale volume of main Southeast Asian shrimp exhibited growth.

Octopus, despite prices nudging upwards fueled by insipid landings, steadily brought home some profits. The transaction volume of frozen fish varieties hiked; nevertheless sales prices plunged.

The forward-looking statements of the current fiscal year are sales \435.2 billion (down 0.7 percent year over year); operating earnings \17 billion (up 1.1 percent); ordinary proceeds \16 billion (up 3.6 percent); and net profit \9.1 billion (up 0.4 percent). A quarterly dividend is \4 and \9 for the fiscal year.

The original article was published on October 27, 2010 and was translated by Kiyo Hayasaka

Kyokuyo Shores Up Sushi Toppings By Reinforcing Processing Bases

October 25, 2010

With its medium term business plan "Kyokuyo Group: Challenge 2012" aimed for the fiscal year ending March 2012, Kyokuyo intends to expand its sushi toppings operation, excluding bonito and tuna, to \20 billion. The sushi toppings operation is an area reflecting the Group's dictums "processing strategy" and "overseas strategy."

Placing its joint company K&U Enterprise (KUE) in Thailand as the chief production station, Kyokuyo consistently provides sushi toppings for sushi boat chains, take-out sushi services, and mass retailers; in addition, sales volume of frozen sushi is rising mainly in Europe and the US year by year.

Spurred Full-Fledged Operation of "Kyokuyo Fresh"

As a deflation experienced in the domestic restaurant industry is becoming increasingly severe for suppliers, the situation surrounding raw materials is overall looking unfavorable, no change to "high-priced raw materials and low-priced products."

Amid this business circumstance, Processed & Frozen Marine Products Dept Manager Kunio Akiyama expressed his high spirit: "We aspire to exert our comprehensive power by ramping up mainstay products at KUE, adding Kyokuyo Fresh as a new marine food processing station in Japan, and simultaneously developing added-value products in the chilled food category. We have the intention to offer sushi toppings that excite consumers and users."

The company has a wide array of fish varieties as sushi shrimp, spear squid, cuttlefish, sweet shrimp, salmon, salmon roe, and eel, in which "Yari-ika Rice" (spear squid rice), a spring new release, shows the most favorable move. Spear squids harvested in the sea near Indonesia are quickly boat-frozen to retain the freshness. The product that offers the original flavor of a squid is retailed at mass merchants. "In the midst of the disadvantageous condition of squid varieties, we can offer this product with pride in its quality," said Mr. Akiyama. Creating a new salmon sushi topping is under way, which may debut next spring.

Networking within the group that involves each Processed Marine Products Dept belonging to the headquarters and the Skipjack and Tuna Business Dept., is a future pivotal aspect. Kyokuyo Fresh in particular will be the central processing site at a point of consumption; therefore starting with fresh and chilled tuna commodities, "we seek to try seasonal sushi toppings and fish varieties that we haven't before," Manager Akiyama said.

In addition to the Kyokuyo Suisan Ohikawa Plant, the establishment of Kyokuyo Fresh this summer has enabled the Skipjack and Tuna Business Dept. to register a bigger product group, such as "Tuna Mentai," "Tuna Cheese," and "Katsuo Namero."

Moreover, the Skipjack and Tuna Business Dept., according to Processed Products Marketing Dept 2 Manger Yasufumi Hayashi, "is now working on a system to meet the accelerating demand of toro at sushi boat chains as a result of booming business of sushi boats."

As "Honmaguro no Kiwami" raised at Sukumo, Kochi Pref. by Kyokuyo Marine Farm just began full-blown harvesting of bluefin tunas in September and Kyokuyo Marine Ehime commenced the releasing of juveniles in June, both locations will handle the domestic tuna demand from this point on.

Picture 1: Kyokuyo Fresh

The original article was published on October 25, 2010 and was translated by Kiyo Hayasaka

Maruha Nichiro's "Sushi Topping" Project

October 25, 2010

Supplying Bluefin, Kampachi, and Buri

The annual transaction volume of Maruha Nichiro Suisan attains 300,000 tons. A bountiful amount of seafood materials are processed at joint companies and subcontract factories with a well-maintained quality assurance system in China, Thailand, Vietnam, and Indonesia. The company has a plan now for product development to utilize bluefin tuna, kampachi (grater amberjack), buri (Japanese amberjack) - farm operations aggressively conducted by the Maruha Nichiro Group, including Taiyo A&F - as sushi toppings.

The Seafood Processing Department was set up for the purpose of integrating fresh foodstuffs that also contains sushi toppings and bolstering fish fillets and grilled fish products. Since its inception, the department has prepared for cooperative work relationships with other departments in an attempt to establish a comprehensive production and marketing system of fresh foodstuffs. With the formation of a sushi toppings project team, the "procurement ability" and "marketing power" of the Maruha Nichiro Group will be further shored up in the area of sushi toppings.

The original article was published on October 25, 2010 and was translated by Kiyo Hayasaka

Maruha Nichiro Builds New Bluefin Tuna Farm in Kushimoto

October 20, 2010

Maruha Nichiro Suisan (President Shigeru Ito) is slated to construct a 700-ton tuna farm in Kushimoto, Wakayama Prefecture. The company is to spend \1.6 billion on 16 large-scale fish preserves (80m x 48m), the biggest size as a single bluefin tuna aquaculture farm in the nation.

A permit was already issued by the prefectural government through a local fisheries cooperative association; sometime this month a new company that will join the local fishery cooperative group will be founded.

The fish preserves will be installed by next March and the releasing of fish will begin in April or May. Yokowa, juvenile tuna, raised for six months at the company's Kumano Farm, will be transferred and therefore "we can ship the fish out in as early as two years," said Mr. Ito. The company plans to send out 50-55kg size fish, a slightly larger than a conventional size of 40kg.

Maruha Nichiro Suisan has already run bluefin tuna farms in Amami Oshima, Kagoshima Pref. and Kumano, Mie Pref., that racked up about 1,000 tons in production last year. The output is estimated to increase to 2,300 tons in 2014 on account of an occupancy rate of existing fish preserves not reaching 100 percent, a possibility of increasing fish sizes, and an added yield of 700 tons from Kushimoto. Furthermore, combined with the total output of five locations managed by a subsidiary Taiyo A&F, the Maruha Nichiro Group will produce 4,000 tons of bluefin, accounting for 40 percent of the domestic share.

Picture 1: Harvesting of bluefin at Amami OshimaPicture 2: President Ito

The original article was published on October 20, 2010 and was translated by Kiyo Hayasaka

Bolstered Distribution of Live Kampachi from Kagoshima to Major Metro Areas

October 15, 2010

In Parallel With Expanded Live Fish Center of Daito Gyorui

Kagoshima JF Hanbai (Tarumizu City, Kagoshima; President Nobuyoshi Umekita) has now geared itself up for direct selling of live-farmed kampachi (greater amberjack) to metropolitan users by large live fish transportation trucks, in parallel with Daito Gyorui's expanded live fish center within the Ota Market of the Metropolitan Central Wholesale Market in Tokyo.

The existing method of transporting live kampachi from Kagoshima is mainly done via sea; however this practice causes a protracted period from producer to retailer, resulting in diminished fish weight. Land transportation by large live fish rigs allows a significantly shortened procedure: kampachi hauled in the morning arrive at the Ota Market on the following night.

Daito Gyorui's live fish center at the Ota Market welcomed an additional three 10-ton tanks in September this year. 300-400 kampachi can be stored in the tanks, enabling shipment of ikejime or live kampachi around the clock.

A live fish carrier rig of the largest class in Japan can convey 850 kampachi at a time; 50,000 kampachi this year and 140,000 in 2011 are expected to hit the markets of the Tokyo metro area, Hokkaido, Tohoku, and Koshinestu.

Kagoshima JF Hanbai aims for marketing the fish at a fixed price immune to market fluctuations by a constant year-around supply of the high quality farmed fish. Maruha Nichiro Suisan commented, "We have a goal to construct a system that producers, distributors (wholesaler and retailer), and consumers can all find satisfying."

Picture 1: Tie-up among Daito Gyorui,
Maruha Nichiro, and fish farmers in Kagoshima

The original article was published on October 15, 2010 and was translated by Kiyo Hayasaka

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