February 22, 2012

Itoham seen to suffer decline in 2012 earnings

Japanese meat processor, Itoham Foods Inc, has revised a lower forecast of earnings for the 2012 financial year to the end of March, in light of recent business performances.

Net sales for fiscal 2012 are expected to be lower than initially forecast - down from a previously anticipated JPY454 billion (US$6 billion) to JPY448 billion (US$5.6 billion).

The company said that lower beef demand due to concerns over the potential for radioactive caesium contamination, along with other factors, has created adverse conditions for sales in the fresh meat business and sales of midsummer and winter gift packs were lower than anticipated, due in part to the March 2011 earthquake.

Operating income and ordinary income increased from the previous fiscal year following cost reductions achieved through Group realignment.

Despite these advances however, the company now expects significantly lower performance than initially forecast, due mainly to lower profitability caused by a decline in poultry prices and the lower sales of gift packs. Operating income is expected to fall from JPY6 billion (US$75 million) to JPY3.4 billion (US$43 million), while net income will fall from a forecast of JPY4 billion (US$50 million) to JPY1.9 billion (US$24 million).

However, this is still up on the previous year when net income stood at JPY478 million (US$6 million).