Strong pollock sales help Maruha Nichiro to profit

Published on
May 19, 2015

Alaska pollock roe and surimi sales helped Maruha Nichiro Corp. earn a slim profit margin for the 2014 fiscal year, despite slow canned salmon sales.

Executives at the Japanese conglomerate presented the company’s financial results last week with a breakdown of the company’s performance by business unit. For the fiscal year ending March 31, 2015, the company reported net income of JPY 7.2 billion (USD 59.9 million; EUR 53 million) on sales of nearly JPY 864 billion (USD 7.2 billion; EUR 6.3 billion), for a net profit ratio of only around 0.8 percent.

However, considering that the company is coming off a major health scare and complete re-organization, this may be taken as an achievement. The Tokyo-based company reorganized and re-listed on the stock exchange on 1 April 2014, the first day of the fiscal year, to make a fresh start following pesticide-contamination sabotage by a worker at a subsidiary’s frozen food processing plant. At that time, six companies in the Maruha Nichiro Group merged. 

For comparison with the previous year, the results of the old parent company, Maruha Nichiro Holdings, Inc. were used. Net sales nudged up 1.4 percent, but net income rose by 126.2 percent versus a decline of 41.4 percent in FY 2104. In the marine and food products industry the weak yen is raising raw material costs, while consumers resist price increases. This was shown by the company’s Marine Product Trading Unit, which saw volume rise but profit fall. In the Aquaculture Unit, profitability of the company’s Japanese tuna farming ventures have been hit by price competition from Mexican product.

The North American Operation Unit saw a 15.2 percent rise in net sales, from JPY 94.7 billion (USD 795 million, EUR 699 million),  but operating income dipped 1.3 percent to negative JPY 0.1 billion (USD 833,000, EUR 738,000). A slump in sales of canned salmon in Europe and of pink salmon roe weighed on profits. The company owns salmon packer Peter Pan Seafoods, with several processing facilities in Alaska, among other units.

Conversely, Alaska pollock roe and surimi were profitable. Maruha Nichiro is also the parent company of pollock processors Westward Seafoods and Alyeska Seafoods, and of Premier Pacific Seafoods, which manages two factory ships, including the SS Ocean Phoenix, the largest fish-processing vessel operating in the United States.

The company predicts its North American Operation Unit will grow net sales by 7.3 percent and operating income by 2.2 percent in FY2015.

The company also introduced a new mid-term strategic plan. The immediate focus is on successfully integrating the six recently merged companies, and ensuring that its quality assurance and food safety systems regain consumer trust. Improving profitability and paying down debt are additional goals. As of the end of the calendar year, the company had 3.85 times as much debt as equity.

In North America, the company plans to increase production capacity, build a global supply chain utilizing North American marine product, and increase its capital investment in a group seafood sales company.

Contributing Editor reporting from Osaka, Japan

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