January 27, 2011

Maruha Nichiro profits 50% from seafood price hike

Maruha Nichiro Holdings Inc.'s group operating profit in April-December 2010 appears to have surged 50% on-year to JPY16.5 billion (US$200.91 million) due to higher seafood prices and growth in year-end cargoes.

Revenue looks to have been on a par with the on-year period at around JPY640 billion (US$7.79 billion). Profitability improved as a result of better inventory management in the seafood division. In the year ended March 2010, the company booked nearly JPY2 billion (US$24.35 million) in inventory valuation losses on imported tuna alone. Adjusted domestic inventories and a rebound in the market have made it less likely that such losses will be reported again this year.

The price of frozen tuna at the Tokyo Metropolitan Central Wholesale Market stood at JPY3,391 (US$41.29) per kilogramme in December, 17% higher than a year earlier. Farmed amberjack prices were up 32% and frozen octopus prices jumped 19%. Shortages caused frozen scallop prices to soar 43%.

Maruha Nichiro has also benefited from plant restructuring in the food products division. In addition, frozen-food sales rebounded beginning in October after a sluggish summer.

One key issue going forward will be how to absorb higher ingredient prices.