Tokyo-based Kyokuyo plans to continue expanding its overseas operations following its fiscal 2023 report which showed rising profits despite falling sales.
Kyokuyo expects sales of 261.6 billion yen (US$1.67 billion, EUR1.55 billion) in fiscal year 2023, down 10.5 billion yen (US$67.8 million, EUR62 million), or 3.9%, from sales of 272.1 billion yen (US$1.76 billion, EUR1.61 billion) in fiscal year 2022.
The company said the drop was mainly due to lower sales of seafood. By division, the seafood and fresh food businesses were the main contributors to the decline, while the processed food business saw sales increase by 9.95 billion yen (US$64.3 million, euros 59.1 million) compared to the previous year.
The decline in revenue was offset by a strong increase in profits, as cost of sales decreased from 241.1 billion yen (US$1.56 billion, €1.43 billion) in fiscal 2023 to 228.2 billion yen (US$1.47 billion, €1.35 billion) in fiscal 2024. As a result, the company posted operating profit of 8.8 billion yen (US$56.8 million, €52.2 million), an increase of 700 million yen (US$4.5 million, €4.1 million), or 8.6%, and the highest ever for the company.
The strong results were announced as the company launched its new medium-term management plan, “Gear Up Kyokuyo 2027,” which builds on its previous plan, which transformed the company's business into a more profitable one “as a foundation for new growth.”
“Although we were significantly affected by COVID-19 from the first year, we achieved the profit targets of our previous medium-term management plan and set a new record high in profits in the fiscal year ending March 2023,” Kyokuyo said in a release. “This means that we have to some extent achieved our transformation into a highly profitable company that will build a foundation for new growth through improved profitability.”
Through the implementation of the previous medium-term plan, the company has implemented organizational reforms, expanded production capacity with the completion of a new factory in Thailand, improved infrastructure at overseas production bases, and built a new type of purse seine fishing vessel.
According to the company, the completed Kyokuyo Global Seafood facility in Thailand will specialise in the production, sale and export of sushi toppings, boiled fish and grilled fish.
On the financial side, the company is going public for the first time since 1961, which it said gives it “financial flexibility” to embark on a new growth strategy.
According to a presentation on the new venture, the company said it plans to raise 3.7 billion yen (US$23.9 million, €21.9 million) through the IPO to help expand its processed food business, expand overseas operations and strengthen access to resources.
One of the areas where the company plans to expand its business is North America, where it is working to establish a crab meat manufacturing company. According to the company, Oceans Kitchen Co., Ltd. is scheduled to be established in April 2023 and begin operations in fiscal 2024.
The company also plans to establish a food manufacturing subsidiary in Vietnam, which is also scheduled to start operations in fiscal 2024. It has also acquired shares in a company in Turkey that manufactures frozen foods and exports them to Europe.
Kyokuyo also formed a joint venture with Clear Ocean Seafoods, a British Columbia-based company in Canada, in April. The new company will focus on processing and exporting Hokkaido scallops and will aim to expand exports, the company said.
According to the company, the investment in overseas businesses is part of its “Gear Up Kyokuyo 2027” plan.
Kyokuyo stated, “We aim to further expand and strengthen our overseas and processed food businesses, which have been part of our strategy since the previous medium-term management plan.”
With all of these initiatives combined, the company aims to achieve sales of 400 billion yen (US$2.58 billion, euros 2.37 billion) and operating profit of 13.5 billion yen (US$87.1 million, euros 80.1 million) by the fiscal year ending March 2027.
In the short term, the company expects sales of 300 billion yen (US$1.94 billion, EUR1.78 billion) and operating profit of 10 billion yen (US$64.6 million, EUR59.4 million) in fiscal year 2024.
The company states that it will “strive to increase sales by expanding its business globally, increasing its supply capacity by strengthening its resources, and improving its ability to propose products to customers.”
