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Food giants seen earning half of profit overseas

TOKYO -- Major Japanese food companies including Yakult Honsha and Ajinomoto are increasingly counting on customers abroad, as incomes rise in emerging economies.

     While overseas markets pose uncertainties -- as shown by China's economic slowdown and currency depreciation in resource-rich countries -- popular Japanese food products are joining the list of daily necessities in some countries.

     Total overseas operating profit at Japan's five food giants is expected to rise 10% to 110 billion yen ($909 million) for the year ending March 2016, accounting for 50% of the total. Their sales abroad are likely to surge 20% to 1.07 trillion yen.

     At Yakult Honsha, overseas operating profit is expected to grow 11%, accounting for a little over three-fifths of the total. Profit from the Asia and Oceania region is expected to grow 15%.

     Ajinomoto is likely to see strong demand continuing for seasoning products in Brazil as well as four other key markets in Southeast Asia.

     Kikkoman's mainstay soy sauce is likely to grow in North America, with the company expecting a 10% increase in both overseas profit and consolidated operating profit. Exports of Japanese food products are also expected to rise thanks to a weak yen.

     Nissin Foods Holdings and Yakult Honsha are seeing signs of slowing sales in China, amid concerns over the country's economic outlook. In Russia, Kikkoman's soy sauce sales have turned soft due to the weaker ruble.

     But all of the companies believe that emerging markets will continue to grow for the medium to long term -- they do not see demand falling considerably, as food items are closely tied to lifestyles.

     "We plan to extend sales in China by delving further into each city," said Nissin Foods Holdings President Koki Ando.

     In China, Kewpie has enjoyed growing demand for its mayonnaise and salad dressing, while House Foods' curry products have gained in popularity.

     An increasing number of food companies are expected to seek profit growth through overseas operations, launching products suited for food cultures of the various nations.

(Nikkei)

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