February 7, 2014

Nippon Suisan's US processed foods business posts US$1.97 million operating losses

Nippon Suisan Kaisha's (Nissui) US processed food businesses posted a loss for the first three quarters of the company's financial year, in an otherwise strong period for the Tokyo, Japan-based seafood group.

For the period April 1, 2013 to the end of December, Nissui's US processed foods businesses - branded processor Gorton's and foodservice-focused King & Prince Seafood - reported an operating loss of JPY200 million (US$1.97 million).

"In North America, profit dramatically declined, due to fierce price competition between companies selling frozen prepared foods for household use," said Nissui, a clear reference to Gorton's, the market-leading frozen seafood brand in the US.

The price of shrimp rose, "but sales for restaurants and catering wholesalers remained firm", said Nissui, speaking about King & Prince, which is a major supplier of shrimp to US foodservice.

For the same period of 2012, the processed foods business for the US posted an operating profit of JPY200 million (US$1.97 million) but this segment of the company was breaking even, showing performance has worsened in the second quarter of Nissui's financial year.

Turnover for Gorton's and King & Prince for the first three quarters of 2013-14 was up 30.56% on-year, to JPY39.3 billion (US$388 million).

Nissui's marine products companies in the US, primary pollock processor Unisea and trader and supplier F.W. Bryce, fared better. The operating income for the marine products companies was down 57% on-year, to JPY600 million (US$5.9 million), with turnover at JPY27.4 billion (US$268.5 million), up 8.3% on-year. In the second quarter, the unit was only breaking even, suggesting an improvement in the pollock-focused business also cited by Maruha Nichiro, in its recent third quarter results.

"In North America, the production of Alaska pollock surimi and fillet increased while the production of roe decreased. As a result, selling prices fell," said Nissui, in reference to the much-document tough climate in the pollock market.

The total turnover for North America for Nissui was JPY53.7 billion (US$526 million), up 28.16% on-year, with operating profit down 76.45% on-year, to JPY400 million (US$3.9 million). Nissui reported total turnover of JPY448.6 billion (US$4.42 billion), up 6.17% on-year, with operating income of JPY11.6 billion (US$113.7 million), up 52.63% on-year.