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Kikkoman's North America profit seen swinging higher

Dollar's surge buoys Japanese condiment producer

TOKYO -- Kikkoman's operating profit in North America likely will inch up to nearly 17 billion yen ($147 million) for the year through March, riding the tailwinds of the dollar's appreciation against the yen.

The Japanese soy sauce maker projected a 6% decline for the segment to 15.6 billion yen, but the dollar's unexpected rise has lifted yen-based earnings of the company's North American business. The segment contributes almost half of Kikkoman's operating profit.

The company's estimates are based on rates of 103.5 yen per dollar for the full year, and 100 yen to the dollar for just the latter half of the fiscal year. But if current rates of 115 yen to the greenback continue, the full-year rate will reach 110 yen, likely boosting operating profit in the North American business by roughly 1 billion yen.

Demand for soy sauce is growing in North America, and sales of Kikkoman's mainstay soy sauce and condiments such as teriyaki sauce are expected to increase. Dollar-denominated sales likely will grow 4% on the year, thanks to the promotion of recipes that use soy sauce to cook Western dishes. If the greenback remains at the current rate, sales converted to yen figures apparently will fall 3% to 172 billion yen.

Kikkoman projects total operating profit to drop 3% to 31.5 billion yen for the year ending in March. But that figure may improve due to solid domestic sales of products such as an unpasteurized soy sauce and earnings growth in the North American segment.

(Nikkei)

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