Maruha Nichiro would consider upstream seafood acquisitions in Europe, North America
Maruha Nichiro [TYO:1333], the Tokyo, Japan-based seafood company, would consider upstream acquisitions in Europe and North America to broaden its access to marine resources, a company IR spokesperson said.
The JPY 219.8bn (USD 1.99bn) market cap company could look at fisheries and aquaculture companies to this end, he said.
It often receives referrals on potential targets from advisors and is receptive to further approaches to this end, he said.
With the increase in price of fish in recent years, the company would look to secure its access to marine resources to maintain a stable supply chain, possibly through such buys, he said.
According to a 2017 report from Sumitomo Mitsui Banking Corporation, the price for marine products in Japan increased by 1.6% between 2002 to 2016 from around JPY 800 to JPY 1,000 per kg. Prices for the tuna family increased by 2.3% while the rest, including salmon, yellowtail, trout, bonito and red snapper families, saw prices increase by an average of 6.8% for the same period.
Maruha Nichiro would eye Europe and North America specifically, as they have stricter regulations on the hauling of fish than other regions. The volume and price of marine products are less likely to fluctuate due to this, the spokesperson said.
Maruha Nichiro has not yet determined how much it could consider spending on such acquisitions, but could consider using cash on hand and bank loans, he said.
It had cash and cash equivalents of JPY 15.2bn for the year ended March 2018 (FY17), according to company documents.
Maruha Nichiro acquired the Netherland-based seafood company Weerstand Beheer through its Dutch subsidiary of Seafood Connection Holdings for an undisclosed sum in October 2017, according to Mergermarket data.
Meanwhile, the company would also consider new market entry to expand its frozen and prepared food businesses, which could involve setting up a local subsidiary, the spokesperson said.
Northern Europe could be among regions for its overseas expansion, through which it seeks to cultivate new sales channels for its original brand, he said.
However, the company is still in the very early stage of consideration and has yet to decide where and how it could pursue such plans, he added. For now, it would seek organic growth to this end.
Its frozen and prepared food businesses include the production of prepared deli foods for boxed lunches, ready-to-eat meals with rice and noodles, retort pouched foods and jelly desserts, as well as Western-style dishes such as pizzas and gratins, among others. It also manufactures canned mackerels and sardines under the Akebono brand.
For its general growth strategy in the midterm (FY18-FY21), Maruha Nichiro is looking to boost its profits by optimizing its domestic production facilities and logistic operations for processed food and increasing the volume of egg-to-harvest bluefin tuna farming, according to company documents. It is also looking to beef up new business streams such as its fine chemical operation, which includes production of pharmaceutical and health products using marine materials, and its nursing care food operation.
By the end of FY21, Maruha Nichiro is aiming to reach total net profit of around JPY 11.1bn from its current JPY 8.3bn, according to company documents. It is also targeting compound annual growth rate of 10% for its overseas business by FY21.
It posted sales of JPY 918.8bn and an operating income of JPY 24.5bn for FY17. It marked sales of JPY 873.3bn and an operating income of JPY 26.3bn in the previous year.
The company had a total of 153 group companies in Japan and overseas, 79 of which are overseas subsidiaries in the US, the Netherlands, New Zealand and Australia, among other countries.
It had 11,237 consolidated employees as of the end of March 2017, according to company documents.