October 26, 2007

Japan's largest seafood company misses profit forecast due to integration expenses

Although operating profits for Maruha Nichiro Holdings, the largest seafood company in Japan, is expected to climb 24 percent from a year ago to JPY 15 billion (US$130 million.), it still fell short of earlier forecasts, The Nikkei reported.

The new figure is JPY 5 billion (US$43 million) short of the combined forecasts from Maruha Group Inc. and Nichiro Corp., which recently merged to create the holding company.

The holding firm's fiscal 2007 results will include Maruha Group's full-year earnings and October-March half-year results for Nichiro.

Sales for the combined company are expected to rise 18 percent to JPY870 billion (US$7.6 billion), partly due to a slump in sales prices for cod roe, which is imported from North America.

Futhermore, domestic demand for shrimp, salmon and other mainstay fish is down more than expected.

Net profit was initially expected to surge 150 percent to around JPY4 billion (US$35 million) as Maruha Group will not book losses from the dissolution of unprofitable businesses in fiscal 2007.

But spending on information technology systems, moving expenses from shifting operations out of Nichiro's headquarters, costs for changing product packaging, and other expenditures were not included in original plans.

Therefore, the holding company will book a portion of the JPY2 billion (US$17.5 million)  in integration costs as an extraordinary loss, thus missing the earlier target for net profit of JPY6.1 billion (US$53.4 million) .