MSG Maker Ajinomoto Seeks to Expand in Emerging Markets to Drive Growth
Ajinomoto Co., the Japanese seasonings maker that first sold monosodium glutamate, aims to increase operating profit by 26 percent in three years by expanding in overseas markets including Asia and Africa.
Operating profit, or sales minus the cost of goods sold and administrative expenses, may rise to 87 billion yen ($1.1 billion) in the 12 months ending March 2014, from an estimated 69 billion yen this fiscal year, Tokyo-based Ajinomoto said in a statement today. The company expects sales of 1.37 trillion yen in the year ending March 2014.
Ajinomoto, which began selling the food flavoring known as MSG more than a century ago, is expanding sales abroad as domestic demand eases with a shrinking population. The company plans to set up offices in Turkey, Egypt, Myanmar and the Ivory Coast, and expects overseas sales of consumer products to increase by an average 11 percent a year, President Masatoshi Ito said at a briefing in Tokyo.
“We will focus on emerging and developing countries to speed up our growth, Ito said.
Ajinomoto, whose name means ‘‘the essence of taste,’’ rose 3.3 percent, the biggest gain since Nov. 18, to 937 yen at the 3 p.m. close on the Tokyo Stock Exchange. The stock has added 11 percent in 2011 after falling for the past four years.
Operating profit may climb to 100 billion yen by the year ending March 31, 2017, the company said. The maker of Royal Dragon chicken powder is targeting 180 billion yen in capital expenditure for the year through March 2014.
In addition to food products, Ajinomoto makes amino acids used in animal feed. The company is revamping its production of lysine, an amino acid, to cut costs, Ajinomoto said in October.
Ajinomoto’s last acquisitions were in 2007, when it made three purchases. The company bought the 75 percent it didn’t already own in Calpis Co., a maker of dairy-based beverages, for 82.5 billion yen. It acquired New Season Foods Inc., an Oregon- based supplier of ingredients for instant soup, and also bought 33 percent of Yamaki Co., a Japanese maker of soup stocks.
Ito said the company is seeking to buy food brands and sales channels, without saying how much it plans to spend. The company will increase prices and cut costs as rising raw materials prices raise expenses by a projected 17 billion yen this financial year, he said.
Sales at the company fell 1.6 percent to 1.17 trillion yen in the 12 months ended March 31, the second year of declines. Of the total, revenue from Japan dropped to 812.5 billion yen from 843.4 billion yen a year earlier.
Net income will surge 62 percent to 27 billion yen in the year ending March 31, and sales may gain 3.1 percent to 1.21 trillion yen, Ajinomoto forecast on Jan. 31. Operating profit is expected to climb 7.8 percent to 69 billion yen, it said.
Ajinomoto, which sells Rosdee seasoning powder in Thailand, will invest 14.7 billion yen to build a seasonings factory in the country, it said in November.
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