January 28, 2010

Maruha Nichiro Oct-Dec profits likely to fall 28%

Japanese major seafood company Maruha Nichiro Holdings Inc. is expected to report a combined operating profit of about JPY6 billion (US$66.4 million) for the October-December quarter of 2009, down 28% on year.

Its fishing and fish-farming operations have continued to face difficulties. Prices on marine products - mainly for tuna - have declined, causing fixed costs to weigh on earnings. In addition, North American operations were sluggish due to the sharp drops in prices for white-meat fillets and minced fish.

Meanwhile, the company's seafood-trading and -distribution operations are believed to have secured higher profits than they did a year earlier. The company had already reduced inventories and booked valuation losses by the fiscal first half ended September 30.

Although sales prices are down, lower purchasing costs likely resulted in a slower drop in profit. In the first half, operating profit had plunged 50% on the year.

For the full fiscal year through March 31, Maruha Nichiro is expected to keep its earlier forecast of a 16% drop in operating profit to JPY13 billion (US$143.9 million) unchanged because of difficulties in predicting how far seafood demand will recover.