Japan's House Foods seen cooking up 24% profit gain
TOKYO -- House Foods Group's operating profit apparently climbed 24% for the April-September half, far exceeding expectations of a 1% dip as sales of curry products in Japan bounced back from price hikes last year.
The Japanese food producer likely logged around 5 billion yen ($48.3 million) in profit for the half, beating guidance of 4 billion yen. Sales apparently climbed 25% to around 140 billion yen, 2.3 billion yen shy of projections.
The company raised prices on key product lines, such as curry roux, by 8-10% in February 2015. This sank sales volume in the year ended this past March, but that drag looks to have faded. Curry chain Ichibanya, which House Foods made a subsidiary in fiscal 2015, is performing well also. These successes apparently offset a slump in health food operations, such as weak demand for a turmeric-based hangover preventative.
Boil-in-the-bag curry products made sizable gains, driven by the Pro-quality brand introduced in February. A four-pack of the new brand, which contains fewer ingredients such as vegetables and meat but a more flavorful sauce, sells for a relatively affordable 400 yen or so. The offerings have been a hit with a variety of customers.
The performance overseas has been less sunny. The yen averaged 105 or so to the dollar during the half. This was a good deal stronger than the forecast of 120 yen to the dollar, chipping away at foreign units' earnings in conversion.
Operating profit at Chinese operations, which had been booming, looks to be roughly unchanged from the first half of fiscal 2015, with higher marketing costs offsetting gains from better curry roux sales.
Curry sales are seen continuing to drive business in the second half, though a stronger-than-anticipated yen and higher spending on marketing to reinvigorate health food operations are seen keeping profit growth slimmer than in the first.
For the full year, operating profit is now seen rising 4% to 11 billion yen or so, exceeding the company's guidance of a 3% dip to 10.4 billion yen.