MITSY » Topics » Foods & Retail Segment

This excerpt taken from the MITSY 6-K filed Nov 4, 2009.

Foods & Retail Segment

Gross profit for the three-month period ended September 30, 2009 was ¥20.3 billion, a decline of ¥2.1 billion from ¥22.4 billion for the corresponding three-month period of the previous year.

The food resources and food materials businesses demonstrated solid performance even under a severe economic climate. In addition, this segment continued to make progress on reducing costs in the food processing & distribution business.

 

 

In the food resources and materials businesses, juice business reported an increase in gross profit reflecting the price increase; on the other hand, soy bean and wheat transactions reported a decline in gross profit.

 

 

PRI Foods Co., Ltd. (Japan), a meat packing company, reported a decline in gross profit due to a decline in meat prices.

 

 

Mitsui Norin Co., Ltd. (Japan) reported an increase in gross profit, reflecting the firm performance of the beverage raw materials business.

 

 

MITSUI FOODS CO., LTD. (Japan) recorded an increase in gross profit due to improved margins gained through restructuring unprofitable businesses.

Reflecting the decline in gross profit, operating income for the three-month period ended September 30, 2009 was ¥4.8 billion, a decline of ¥1.7 billion from ¥6.5 billion for the corresponding three-month period of the previous year.

Equity in earnings of associated companies for the three-month period ended September 30, 2009 was ¥2.4 billion, an increase of ¥2.0 billion from ¥0.4 billion for the corresponding three-month period of the previous year. VENTURA FOODS, LLC (United States), in which this segment invested via WILSEY FOODS, INC. (United States), reported an increase of ¥2.4 billion reflecting a reduction in the cost of ingredient oils.

Net loss attributable to Mitsui & Co., Ltd. for the three-month period ended September 30, 2009 was ¥11.4 billion, a decline of ¥13.6 billion from net income of ¥2.2 billion for the corresponding three-month period of the previous year. In addition to the above mentioned factors, this segment recorded a ¥15.1 billion impairment loss on Seven & i Holdings Co., Ltd. reflecting a decline in share price (*1) for the three-month period ended September 30, 2009. A valuation allowance was set up against deferred tax assets established for this impairment (*1).

 

(*1) Mitsui records an impairment loss on a marketable security if a decline in the share price is other than temporary. Basically a 30% or more decline in fair value of a security leads to the conclusion that the security has an other-than-temporary impairment. Among those determined as security of other-than-temporary impairment, a 50% or less decline in fair value of a security is an undeductible impairment loss based on Japanese tax laws and regulations. Mitsui evaluates the realizability of the deferred tax assets for undeductible impairment losses and set up valuation allowances unless they are considered recoverable with reasonable grounds.
This excerpt taken from the MITSY 6-K filed Aug 4, 2009.

Foods & Retail Segment

Gross profit for the three-month period ended June 30, 2009 was ¥22.1 billion, an increase of ¥2.4 billion from ¥19.7 billion for the corresponding three-month period of the previous year.

The food resources and food materials business demonstrated solid performance. With the macroeconomic environment changing dramatically, this segment continued to take various cost reduction initiatives in the food processing & distribution business and the retail support business.

 

   

The food resources and food materials businesses reported an increase in gross profit reflecting solid performance of maize and raw sugar transactions.

 

   

MITSUI FOODS CO., LTD. (Japan) recorded an increase of ¥0.3 billion in gross profit due to improved margins gained through restructuring unprofitable businesses.

 

   

Mitsui Norin Co., Ltd. (Japan) reported an increase of ¥0.4 billion in gross profit reflecting the firm performance of the beverage raw materials business and the household tea business, in addition to the improvement of production costs in spite of a weak food-service market for wholesale tea products.

Operating income for the three-month period ended June 30, 2009 was ¥6.9 billion, an increase of ¥2.9 billion from ¥4.0 billion for the corresponding three-month period of the previous year. MITSUI FOODS CO., LTD. reported a slight increase in operating income, and Mitsui Norin Co., Ltd. reported an increase in operating income reflecting the improvement in gross profit and selling, general and administrative expenses.

Equity in earnings of associated companies for the three-month period ended June 30, 2009 was ¥1.4 billion, an increase of ¥0.7 billion from ¥0.7 billion for the corresponding three-month period of the previous year.

VENTURA FOODS, INC. (United States), in which this segment invested through WILSEY FOODS, INC. (United States), reported an increase of ¥1.3 billion reflecting a cost reduction of ingredient oil.

Reflecting these developments, net income attributable to Mitsui & Co., Ltd. for the three-month period ended June 30, 2009 was ¥4.9 billion, a increase of ¥1.7 billion from ¥3.2 billion for the corresponding three-month period of the previous year.

This excerpt taken from the MITSY 20-F filed Jul 17, 2009.

Foods & Retail Segment

The Foods & Retail Segment consists of one business unit, the Foods & Retail Business Unit, which has 25 subsidiaries including Mitsui Norin Co., Ltd. (Japan), PRI Foods Co., Ltd. (Japan), San-ei Sucrochemical Co., Ltd. (Japan), MITSUI FOODS CO., LTD. (Japan), Toho Bussan Kaisha, Ltd. (Japan), VENDOR SERVICE CO., LTD. (Japan), WILSEY FOODS, INC. (United States), Mitsui Alimentos Ltda. (Brazil) and MCM FOODS B.V. (Netherlands) ; and 17 associated companies including MIKUNI COCA-COLA BOTTLING CO., LTD. (Japan), Mitsui Sugar Co., Ltd. (Japan), The Kumphawapi Sugar Co., Ltd. (Thailand) and Multigrain AG (Switzerland).

Gross profit and net income for this segment for the year ended March 31, 2009 were ¥82.4 billion or 8.1% and ¥1.5 billion or 0.8% of our consolidated totals, respectively.

 

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The Foods & Retail Segment engages in:

 

   

Import and domestic/offshore trade of wheat, barley, soybeans, corn, rapeseed, raw sugar, rice;

 

   

Import and domestic/offshore trade of processed foods such as canned products, frozen foods and condiments, liquor, beverages such as coffee, tea and juice, dairy products, foodstuffs such as marine products, stock farm products and vegetables;

 

   

Manufacture of beverages and beverage ingredients, sugar manufacturing and broiler chicken raising business in Japan;

 

   

Investment in the food raw material production and distribution businesses abroad such as production and export of grain, dairy farming, canola oil processing, shrimp farming, broiler chicken raising, egg producing and sugar manufacturing businesses abroad;

 

   

Domestic distribution and sales through the nationwide wholesaler subsidiary MITSUI FOODS CO., LTD. (Japan);

 

   

Import and domestic trade of containers, packaging materials, and miscellaneous daily goods; and

 

   

Support services, such as supply chain management including logistics management, and product planning and development for retailers.

The Foods & Retail Segment is involved in a wide range of fields in a value chain of foods, from the global procurement of food material and production of foodstuffs to the traffic and wholesale of foods, packaging materials and sundry goods.

To secure a stable supply source, this segment purchases grain, oilseeds, and raw sugar from the United States, Canada, Brazil, Australia, Thailand and China and sell them in Japan and other Asian countries. This segment sells coffee to Japan and United States, mainly from Brazil. This segment purchases raw materials for beverages, such as tea leaves and juice, marine products, stock farm products, and dairy products from major supply sources around the world and deliver them primarily to Japan. This segment is also engaged in domestic broiler chicken raising, processing, and sales through the subsidiary PRIFOODS CO., LTD. (Japan),

This segment has positioned the Americas as their main base of operations and the core of their global food supply strategy. In collaboration with the Americas Segment, this segment has developed and maintained the following businesses:

 

   

In the cereals and grains area, this segment has formed a joint venture, United Harvest, LLC (United States), with CHS Inc., an agricultural cooperative-based company in the United States. United Harvest, LLC is the largest exporter of wheat from the United States. This segment invested in this company through United Grain Corp. (United States).

 

   

VENTURA FOODS, LLC, another joint venture formed with CHS Inc., is one of the largest suppliers of edible oil for the institutional market in the United States. This segment invested in this company through WILSEY FOODS, INC. (United States).

 

   

In August and November 2007, this segment purchased shares in Multigrain AG (Switzerland), parent company of Multigrain S.A. in Brazil, an agricultural business operating company dealing with origination and export of grains, mainly soybeans. In October 2008, this segment made an additional investment of US$124 million, which was a part of the total capital increase made by Multigrain AG in response to capital needs resulting from an expansion of Multigrain S.A’s agricultural business. The total investment amounts to US$210 million. CHS is also a partner in this business and has the same largest ownership interest of 39.4% as Mitsui’s.

 

   

In December 2007, this segment, together with the Americas Segment, agreed to establish a joint venture of canola oil processing business in Canada with Louis Dreyfus Group. Ownership interests of this segment and the Americas Segment are 28% and 12%, respectively. Currently the canola oil processing facilities is under construction aiming to start-up of the commercial production in autumn, 2009.

 

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In the period from 2007 through 2009, this segment made several investments in food production abroad, such as the above-mentioned agricultural business in Brazil and canola oil processing facilities in Canada, a dairy farming business in New Zealand and a shrimp farming business and broiler chicken raising and egg producing businesses in China. This segment aims to secure safe and stable supply sources of food, considering rapidly increasing food demand from emerging countries and conflict in supply capacity for bio-fuel purpose production. This segment intends to expand market channels to Japan and Asia, starting from the above-mentioned joint operations with the most reliable partners in major food material producing countries.

In food-manufacturing operations, Mitsui Norin Co., Ltd. (Japan) is engaged in beverage business as one of the major manufacturers of tea leaves in Japan. This segment put Mitsui Norin Co., Ltd. as a core of beverage business. In overseas wholesale operations, MCM Foods B.V. (Netherlands) engages in the import and sales of canned food products and groceries in England and other European market.

Competition varies depending on raw materials and products in the upstream areas of grain, feed, raw sugar and food materials, but is primarily based on price and quality of products. Many Japanese trading companies, international producers and others are competitors to varying degrees with respect to food raw materials this segment handles.

MITSUI FOODS CO., LTD. (Japan) plays a vital role in this segment’s wholesale operations. Its wide-range business activities and customers include general merchandise stores, supermarkets, convenience stores, and catering and restaurant chains throughout Japan, focusing on processed food and liquor transactions. MITSUI FOODS CO., LTD. meets the sophisticated and diversified needs for reduced distribution costs, secure temperature-controlled supply, and faster delivery. In April 2006, MITSUI FOODS CO., LTD. and Mitsui agreed with KOKUBU CO., LTD. (“KOKUBU”), a major Japanese food wholesaler, to form a business alliance, which includes cooperation in product categories to be reinforced by both companies. MITSUI FOODS CO., LTD has been planning and implementing the management improvement plan centering on restructuring of unprofitable businesses and streamlining of distribution. In October 2007, this segment transferred 70% of the shares of Hokushuren Co., Ltd. (Japan), formerly a foods and liquor wholesale subsidiary, to KOKUBU, following transfer of MITSUI FOODS CO., LTD.’s business in the Hokkaido area (excluding Seven & i Holdings Co., Ltd.-related businesses) to Hokushuren Co., Ltd. In January 2009, Hokushuren Co., Ltd. and HOKKAIDO KOKUBU CO., LTD., KOKUBU’s wholly owned subsidiary, merged to form SHUREN KOKUBU CO., LTD., in which this segment holds a 26.3% ownership interest as a result of the merger.

Mitsui maintains a comprehensive alliance with Seven & i Holdings Co., Ltd., Japan’s nationwide diversified retailer, which mainly engages in convenience stores, general supermarkets, department stores, food supermarkets, food services, financial services and IT services. Seven & i Holdings Co., Ltd. maintains operation through Seven-Eleven Beijing Co., Ltd. in China and 7-Eleven, Inc. in the United States.

Mitsui offers the following supply services to Seven & i Holdings Co., Ltd. through the domestic subsidiaries, such as MITSUI FOODS CO., LTD., Retail System Service Co., Ltd. (Japan) and VENDOR SERVICE CO., LTD. (Japan), Bussan Logistics Solutions Co., Ltd. (Japan).

 

   

supply sundry goods and consumables, such as processed food, liquor, fast food, toys, and games, to more than twelve thousand 7-Eleven stores in Japan;

 

   

supply food materials, containers, and packaging materials to vendors who supply boxed lunches, pre-cooked meals, and processed food to 7-Eleven stores in Japan;

 

   

supply various products to 7-Eleven stores in Japan by temperature-controlled transportation; and

 

   

provide services to 7-Eleven stores through the subsidiaries, BUSSAN BEIJING LOGISTICS ENTERPRISE LTD. in China and MITSUI BUSSAN LOGISTICS, INC. in the United States.

As of the end of February 2009, Mitsui owned 1.8% of Seven & i Holdings Co., Ltd.’s outstanding shares. Mitsui purchased the shares for a total cost of ¥50 billion in 2005, seeking to strengthen business ties with them.

 

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Competitors in the wholesale and retail businesses are mainly general trading companies and wholesalers in Japan. In the traffic area, competitors are also traffic companies that operate third party logistics providing customized and integrated warehousing and transportation services. Domestic wholesalers are facing fierce competition with others, and from time to time they conduct mergers and acquisitions to increase revenues and reduce logistics costs.

This excerpt taken from the MITSY 6-K filed May 8, 2009.

Foods & Retail Segment

Gross profit for the year ended March 31, 2009 was ¥82.4 billion, an increase of ¥1.2 billion from ¥81.2 billion for the year ended March 31, 2008. Food raw material business showed firm performance reflecting the sharp commodity market rise in the first half of the year ended March 31, 2009. On the other hand, under severe business circumstances such as higher raw material and oil costs in the first half of the year ended March 31, 2009 and weak consumer sentiments due to economic downturn in the second half of the year ended March 31, 2009, this segment has been taking various cost reduction initiatives in the food distribution and retail operations in Japan. The major developments were as follows:

 

   

In the food raw material business, broiler business displayed robust performance due to increases in prices of the products in addition to steady results from soybean and wheat transactions.

 

   

MITSUI FOODS CO., LTD (Japan) recorded an increase of ¥1.1 billion over the year ended March 31, 2008 due to improved margins gained through restructuring unprofitable businesses.

 

   

Mitsui Norin Co., Ltd. (Japan) reported a decline of ¥1.1 billion in gross profit due to the weaker market for wholesale tea products and beverage raw materials as the food service industry has been dull despite firm performance of tea business for the household use. In addition, Mitsui Norin Co., Ltd. recorded a loss on a write down of inventories.

Operating income for the year ended March 31, 2009 was ¥19.0 billion, an increase of ¥2.4 billion from ¥16.6 billion for the year ended March 31, 2008. MITSUI FOODS CO., LTD. showed an improvement in operating income reflecting the increase in gross profit. Mitsui Norin Co., Ltd. reported a decline in operating income although the decline in gross profit was partly offset by a slight improvement in selling, general and administrative expenses.

Equity in losses of associated companies—net (after income tax effect) for the year ended March 31, 2009 was ¥3.8 billion, a decline of ¥6.9 billion from earnings of ¥3.1 billion for the year ended March 31, 2008. This segment recognized a ¥4.8 billion impairment loss on MIKUNI COCA-COLA BOTTLING CO., LTD., reflecting the sharp decline in the equity market in Japan. In addition, overseas food business suffered and reported a decline in equity in earnings.

Net income for the year ended March 31, 2009 was ¥1.5 billion, a decline of ¥8.9 billion from ¥10.4 billion for the year ended March 31, 2008. Other than the above-mentioned factors there are following factors:

 

   

Loss on write-down of securities for the year ended March 31, 2009 was ¥3.6 billion. For the year ended March 31, 2008, this segment recognized a ¥5.6 billion loss mainly due to the write-down of the shares of Seven & i Holdings Co., Ltd of ¥4.5 billion.

 

   

This segment recorded a ¥3.2 billion gain on sales of securities, mainly related to listed securities, for the year ended March 31, 2008.

 

   

Other expenses-net increased by ¥3.1 billion, major part of which was foreign exchange losses, over the year ended March 31, 2008.

This excerpt taken from the MITSY 6-K filed Feb 4, 2009.

Foods & Retail Segment

Gross profit for the nine month period ended December 31, 2008 was ¥64.0 billion, an increase of ¥2.7 billion from ¥61.3 billion for the corresponding nine month period of the previous year. Although entering into the three month period ended December 31, 2008, inflation of raw material prices has peaked out and started to decline, food raw material business transactions showed firm performance carrying over the positive trend of the previous periods into the current period. On the other hand, Under business circumstances where food manufacturers has been passing the higher raw material and oil costs along to consumers and these price increases as well as the economic downturn have been negatively affecting consumer sentiments, the segment has been taking various cost reduction initiatives in the domestic food distribution and retail operations. The major developments were as follows:

 

   

In the food raw material business, broiler business displayed robust performance due to increases in prices of the products in addition to steady results of soybeans and wheat transactions.

 

   

MITSUI FOODS CO., LTD (Japan) recorded an increase of ¥1.1 billion over the corresponding nine month period of the previous year due to improved margins gained through restructuring unprofitable businesses.

 

   

Mitsui Norin Co., Ltd. (Japan) reported a decline of ¥1.3 billion in gross profit due to the weaker market of whole sales tea products and raw materials of beverages in addition to a loss on write down of inventories under the inactivity on food service industry despite firm performance of tea business for the household use.

 

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Operating income for the nine month period ended December 31, 2008 was ¥15.8 billion, an increase of ¥2.9 billion from ¥12.9 billion for the corresponding nine month period of the previous year. MITSUI FOODS CO., LTD. showed an improvement in operating income reflecting the increase in gross profit. Mitsui Norin Co., Ltd. reported a decline in operating income although the decline in gross profit was partly offset by a slight improvement in selling, general and administrative expenses.

Equity in earnings of associated companies for the nine month period ended December 31, 2008 was ¥1.4 billion, a decline of ¥0.9 billion from ¥2.3 billion for the corresponding nine month period of the previous year.

Reflecting these developments, net income for the nine month period ended December 31, 2008 was ¥6.9 billion, a decline of ¥2.2 billion from ¥9.1 billion for the corresponding nine month period of the previous year. Other than the above-mentioned factors there are following factors:

 

   

Loss on write-down of securities for the nine month period ended December 31, 2008 was ¥2.4 billion. For the corresponding nine month period of the previous year, Mitsui recognized a ¥4.9 billion loss mainly due to the write-down of the shares of Seven & i Holdings Co., Ltd of ¥4.5 billion.

 

   

This segment recorded a ¥2.6 billion gain on sales of securities, mainly related to listed securities, for the corresponding nine month period of the previous year.

 

   

Other expenses-net increased by ¥3.4 billion, major part of which was foreign exchange losses, over for the corresponding nine month period of the previous year.

This excerpt taken from the MITSY 6-K filed Jan 30, 2009.

Foods & Retail Segment

Gross profit for the three month period ended September 30, 2008 was ¥22.4 billion, an increase of ¥1.1 billion from ¥21.3 billion for the corresponding three month period of the previous year. Under business circumstances where inflation of raw material costs has risen, food raw material business transactions showed firm performance. In addition, the Segment has been taking various cost reduction initiatives in the domestic food distribution and retail operations facing severe conditions in terms of profitability.

 

 

In the food raw material business, broiler business displayed robust performance due to increases in prices of the products in addition to steady results of soybeans and wheat transactions.

 

 

MITSUI FOODS CO., LTD (Japan) recorded a slight increase in gross profit over the corresponding three month period of the previous year due to improved margins gained through by restructuring unprofitable businesses.

 

 

Mitsui Norin Co., Ltd. (Japan) reported a decrease of ¥0.6 billion in gross profit due to the weaker market of whole sales of food product and raw materials of beverages in addition to a loss on write down of inventories.

Operating income for the three month period ended September 30, 2008 was ¥6.5 billion, an increase of ¥1.4 billion from ¥5.1 billion for the corresponding three month period of the previous year. MITSUI FOODS CO., LTD. reported a slight decrease in their operating income. Mitsui Norin Co., Ltd. also reported a decrease in operating income reflecting the decrease in gross profit.

Equity in earnings of associated companies for the three month period ended September 30, 2008 was ¥0.3 billion, a ¥0.2 billion decrease from ¥0.5 billion for the corresponding three month period of the previous year.

 

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Reflecting these developments, net income for the three month period ended September 30, 2008 was ¥2.2 billion, an increase of ¥0.3 billion from ¥1.9 billion for the corresponding three month period of the previous year. Other than the above-mentioned there were following factors:

 

 

Loss on write-downs of securities for the three month period ended September 30, 2008 was ¥1.5 billion, a decrease of ¥3.3 billion from loss of ¥4.8 billion for the corresponding three month period of the previous year including a ¥4.5 billion loss on the write-down of the shares of Seven & i Holdings Co., Ltd.

 

 

Gain on sales of securities for the three month period ended September 30, 2007 was ¥1.6 billion.

This excerpt taken from the MITSY 6-K filed Nov 7, 2008.

Foods & Retail Segment

Gross profit for the three month period ended September 30, 2008 was ¥22.4 billion, an increase of ¥1.1 billion from ¥21.3 billion for the corresponding three month period of the previous year. Under business circumstances where inflation of raw material costs has risen, food raw material business transactions showed firm performance. In addition, the Segment has been taking various cost reduction initiatives in the domestic food distribution and retail operations facing severe conditions in terms of profitability.

 

 

In the food raw material business, broiler business displayed robust performance due to increases in prices of the products in addition to steady results of soybeans and wheat transactions.

 

 

MITSUI FOODS CO., LTD (Japan) recorded a slight increase in gross profit over the corresponding three month period of the previous year due to improved margins gained through by restructuring unprofitable businesses.

 

 

Mitsui Norin Co., Ltd. (Japan) reported a decrease of ¥0.6 billion in gross profit due to the weaker market of whole sales of food product and raw materials of beverages in addition to a loss on write down of inventories.

Operating income for the three month period ended September 30, 2008 was ¥6.5 billion, an increase of ¥1.4 billion from ¥5.1 billion for the corresponding three month period of the previous year. MITSUI FOODS CO., LTD. reported a slight decrease in their operating income. Mitsui Norin Co., Ltd. also reported a decrease in operating income reflecting the decrease in gross profit.

Equity in earnings of associated companies for the three month period ended September 30, 2008 was ¥0.3 billion, a ¥0.2 billion decrease from ¥0.5 billion for the corresponding three month period of the previous year.

 

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Reflecting these developments, net income for the three month period ended September 30, 2008 was ¥2.2 billion, an increase of ¥0.3 billion from ¥1.9 billion for the corresponding three month period of the previous year. Other than the above-mentioned there were following factors:

 

 

Loss on write-downs of securities for the three month period ended September 30, 2008 was ¥1.5 billion, a decrease of ¥3.3 billion from loss of ¥4.8 billion for the corresponding three month period of the previous year including a ¥4.5 billion loss on the write-down of the shares of Seven & i Holdings Co., Ltd.

 

 

Gain on sales of securities for the three month period ended September 30, 2007 was ¥1.6 billion.

This excerpt taken from the MITSY 6-K filed Nov 4, 2008.

Foods & Retail Segment

Gross profit for the three month period ended June 30, 2008 was ¥19.7 billion, a decrease of ¥0.8 billion from ¥20.5 billion for the corresponding three month period of the previous year. Under business circumstances where inflation of raw material costs, food raw material business transactions showed firm performance, however, this segment continues to face severe conditions in terms of profitability, particularly for food raw material manufacturing subsidiaries. In addition, the segment has been taking various cost reduction initiatives in the domestic food distribution and retail operations.

Operating income for the three month period ended June 30, 2008 was ¥4.0 billion, no variance from ¥4.0 billion for the corresponding three month period of the previous year. MITSUI FOODS CO., LTD. (Japan) and Mitsui Norin Co., Ltd. (Japan) succeeded in decreasing general, selling and administrative expenses. As a result, their operating income showed small improvement and remained at the same level respectively.

Equity in earnings of associated companies for the three month period ended June 30, 2008 was ¥0.7 billion, a ¥0.4 billion increase from ¥0.3 billion for the corresponding three month period of the previous year.

Reflecting these developments, net income for the three month period ended June 30, 2008 was ¥3.2 billion, which is the same as that of the corresponding three month period of the previous year.

 

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This excerpt taken from the MITSY 6-K filed Aug 5, 2008.

Foods & Retail Segment

Gross profit for the three month period ended June 30, 2008 was ¥19.7 billion, a decrease of ¥0.8 billion from ¥20.5 billion for the corresponding three month period of the previous year. Under business circumstances where inflation of raw material costs, food raw material business transactions showed firm performance, however, this segment continues to face severe conditions in terms of profitability, particularly for food raw material manufacturing subsidiaries. In addition, the segment has been taking various cost reduction initiatives in the domestic food distribution and retail operations.

Operating income for the three month period ended June 30, 2008 was ¥4.0 billion, no variance from ¥4.0 billion for the corresponding three month period of the previous year. MITSUI FOODS CO., LTD. (Japan) and Mitsui Norin Co., Ltd. (Japan) succeeded in decreasing general, selling and administrative expenses. As a result, their operating income showed small improvement and remained at the same level respectively.

Equity in earnings of associated companies for the three month period ended June 30, 2008 was ¥0.7 billion, a ¥0.4 billion increase from ¥0.3 billion for the corresponding three month period of the previous year.

Reflecting these developments, net income for the three month period ended June 30, 2008 was ¥3.2 billion, which is the same as that of the corresponding three month period of the previous year.

 

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This excerpt taken from the MITSY 6-K filed May 7, 2008.

Foods & Retail Segment

Gross profit for the year ended March 31, 2008 was ¥81.2 billion, a decrease of ¥0.1 billion from ¥81.3 billion for the year ended March 31, 2007. Food raw material business transactions showed solid performance partly reflecting run-up on prices. At the same time, this segment has been taking various cost reduction initiatives in the competitive domestic food distribution and retail operations.

 

   

In October 2007, this business unit transferred 70% shares of Hokushuren Co., Ltd. (Japan), formerly a foods and liquor wholesale subsidiary, to Kokubu, following transfer of MITSUI FOODS CO., LTD.’s business in Hokkaido area (excluding Seven & i Holdings Co., Ltd.-related businesses) to Hokushuren Co., Ltd. As a result, gross profit of Hokushuren Company Limited (Japan) decreased by ¥2.9 billion. Gross profit of MITSUI FOODS CO., LTD. (Japan) decreased by ¥1.1 billion, primarily reflecting reorganization of domestic distribution centers and exiting from unprofitable businesses.

 

   

There was an increased gross profit in feed grain businesses, mainly in corn due to increased price and trading transactions for the year ended March 31, 2008.

 

   

Gross profit of Mitsui Norin Co., Ltd. (Japan) decreased slightly by ¥0.1 billion due to fierce competition mainly in tea leaves business and rising material costs.

Operating income for the year ended March 31, 2008 was ¥16.6 billion, an increase of ¥5.7 billion from ¥10.9 billion for the year ended March 31, 2007. MITSUI FOODS CO., LTD. (Japan) and Mitsui Norin Co., Ltd. (Japan) succeeded in decreasing general, selling and administrative expenses, which resulted in a substantial improvement in their operating income although their gross profit declined marginally due to less sales transactions as a result of exiting from unprofitable businesses.

Equity in earnings of associated companies for the year ended March 31, 2008 was ¥3.1 billion, a ¥0.7 billion decrease from ¥3.8 billion for the year ended March 31, 2007.

Net income for the year ended March 31, 2008 was ¥10.4 billion, an significant improvement of ¥22.7 billion from ¥12.3 billion net loss for the year ended March 31, 2007. In addition to the above-mentioned development, major factors were as follows:

 

   

For the year ended March 31, 2007, Mitsui Norin Co., Ltd. recorded impairment losses on intangible assets and goodwill of ¥12.1 billion and ¥16.5 billion, respectively, and moreover established valuation allowance for deferred tax assets. At the same time, an ¥8.3 billion minority interest in income from these losses was also recorded. For the year ended March 31, 2008, its operating results recovered to a marginally positive amount of income from continuing operations before minority interests and equity in earnings, which brought a reversal effect from the above-mentioned minority interest (in income) for the year ended March 31, 2007.

 

   

For the year ended March 31, 2008, Mitsui recognized a ¥4.5 billion loss on the write-down of the shares of Seven & i Holdings Co., Ltd. following a decline in its share price.

 

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This excerpt taken from the MITSY 6-K filed Jan 31, 2008.

Foods & Retail Segment

Gross profit for the nine month period ended December 31, 2007 was ¥61.3 billion, a decrease of ¥2.5 billion from ¥63.8 billion for the corresponding nine month period of the previous year. Under business circumstances where inflation of food raw material prices in the Japanese domestic market continued, food raw material business transactions showed firm performance. At the same time, this segment has been taking various cost reduction initiatives in the competitive domestic food distribution and retail operations. For the nine month period ended December 31, 2007, this segment saw a ¥1.9 billion decrease resulting from reorganization of Hokushuren Company Limited (Japan) changing its status from a subisidiary to associated company in October 2007.

Operating income for the nine month period ended December 31, 2007 was ¥12.9 billion, an increase of ¥1.5 billion from ¥11.4 billion for the corresponding nine month period of the previous year. MITSUI FOODS CO., LTD. (Japan) and Mitsui Norin Co., Ltd. (Japan) succeeded in decreasing general, selling and administrative expenses, which resulted in a slight improvement in their operating income although their gross profit declined marginally due to less sales transactions as a result of exiting from unprofitable businesses.

Equity in earnings of associated companies for the nine month period ended December 31, 2007 was ¥2.3 billion, a ¥0.2 billion decrease from ¥2.5 billion for the corresponding nine month period of the previous year.

Net income for the nine month period ended December 31, 2007 was ¥9.1 billion, an improvement of ¥10.0 billion from ¥0.9 billion net loss for the corresponding nine month period of the previous year. In addition to the above-mentioned development, major factors were as follows:

 

   

For the corresponding nine month period of the previous year, Mitsui Norin Co., Ltd. recorded impairment losses on intangible assets and goodwill of ¥7.8 billion and ¥16.5 billion, respectively, and ¥8.3 billion minority interest in these losses in income (at 48% minority share) related to these impairment losses was also recorded. For the nine month period ended December 31, 2007, it’s operating results recovered to a marginally positive amount of income from continuing operations before minority interests and equity in earnings, which caused a reversal effect from the above-mentioned minority interest (in income) for the corresponding nine month period of the previous year.

 

   

For the nine month period ended December 31, 2007, Mitsui recognized a ¥4.5 billion loss on the write-down of the shares of Seven & i Holdings Co., Ltd. reflecting a decline in its share price.

This excerpt taken from the MITSY 6-K filed Nov 6, 2007.

Foods & Retail Segment

Gross profit for the six month period ended September 30, 2007 was ¥41.8 billion, an increase of ¥1.2 billion from ¥40.6 billion for the corresponding six month period of the previous year. Under business circumstances where inflation of raw material costs and deflationary pressure on Japanese domestic consumption continued, food raw material business transactions showed firm performance. However, this segment continues to face severe conditions in terms of profitability, particularly for food raw material manufacturing subsidiaries. Accordingly, the segment has been taking various cost reduction initiatives in the domestic food distribution and retail operations.

Operating income for the six month period ended September 30, 2007 was ¥9.1 billion, an increase of ¥2.0 billion from ¥7.1 billion for the corresponding six month period of the previous year. MITSUI FOODS CO., LTD. (Japan) and Mitsui Norin Co., Ltd. (Japan) succeeded in decreasing general, selling and administrative expenses, which resulted in a slight improvement in their operating income although their gross profit declined marginally.

Equity in earnings of associated companies for the six month period ended September 30, 2007 was ¥0.8 billion, a ¥0.7 billion decrease from ¥1.5 billion for the corresponding six month period of the previous year. Net income for the six month period ended September 30, 2007 was ¥5.1 billion, an improvement of ¥9.3 billion from ¥4.2 billion net loss for the corresponding six month period of the previous year. In addition to the above-mentioned development, major factors were as follows:

 

 

For the corresponding six month period of the previous year, Mitsui Norin Co., Ltd. recorded impairment losses on intangible assets and goodwill of ¥7.8 billion and ¥16.5 billion, respectively, and ¥8.3 billion minority interest in these losses in income (at 48% minority share) related to these impairment losses was also recorded. For the six month period ended September 30, 2007, it’s operating results recovered to a marginal amount of income from continuing operations before minority interests and equity in earnings, which caused a reversal effect from the above-mentioned minority interest (in income) for the corresponding six month period of the previous year.

 

 

For the six month period ended September 30, 2007, Mitsui recognized a ¥4.5 billion loss on the write-down of the shares of Seven & i Holdings Co., Ltd. reflecting a decline in its share price.

 

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This excerpt taken from the MITSY 20-F filed Sep 26, 2007.

Foods & Retail Segment

The Foods & Retail Segment consists of one business unit, the Foods & Retail Business Unit, which has 28 subsidiaries including Wilsey Foods Inc. (United States), MITSUI FOODS CO., LTD. (Japan), Mitsui Norin Co., Ltd. (Japan), DAI-ICHI BROILER CO., LTD. (Japan), Hokushuren Company Limited (Japan) and VENDOR SERVICE CO., LTD. (Japan); and 12 associated companies including Mikuni Coca-Cola Bottling Co., Ltd. (Japan), Mitsui Sugar Co., Ltd. (Japan) and SAN-EI Sucrochemical Co., Ltd. (Japan).

Gross profit for this segment for the year ended March 31, 2007 was ¥81.3 billion or 9.0% of our consolidated totals. This segment recorded a net loss of ¥12.3 billion or minus 4.1% of our consolidated total.

The Foods & Retail Business Unit engages in:

 

   

Import and domestic/offshore trade of wheat, barley, soybeans, corn, fats and oils, raw sugar, and rice;

 

   

Import and domestic/offshore trade of processed foods such as canned products, frozen foods and condiments, liquor, beverages such as coffee, tea and juice, dairy products, and foodstuffs such as marine products, animal products and vegetables;

 

   

Import and domestic trade of packaging, wrapping materials, and miscellaneous daily goods;

 

   

Manufacturer of beverages, beverage ingredients, broiler chicken raising;

 

   

Domestic distribution and sales through the nationwide wholesaler subsidiary MITSUI FOODS CO., LTD. (Japan); and

 

   

Support services, such as supply chain management including logistics management, and product planning and development for retailers.

The Foods & Retail Business Unit is involved in a wide range of fields in a value chain of foods, from the global procurement of food material and production of food products to the traffic and wholesale of foods, packaging materials, and sundry goods.

To secure a stable supply source, we purchase grain, oilseeds, and raw sugar from the United States, Canada, Brazil, and Australia and sell them in Japan and other Asian countries. We sell coffee to Japan and United States from our production bases primarily in Brazil. We purchase raw materials for beverages, such as tea leaves and juice, marine products, animal products, and dairy products from major supply sources around the world and deliver them primarily to Japan. We are also engaged in domestic broiler chicken raising, processing, and sales through a subsidiary DAI-ICHI BROILER CO., LTD. (Japan).

 

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We have positioned the United States as our main base of operations and the core of our global food supply strategy. In collaboration with Mitsui & Co. (U.S.A.), Inc., this business unit has developed and maintained the following businesses:

 

   

In the cereals and grains area, we have formed a joint venture, United Harvest, LLC, with CHS Inc., an agricultural cooperative-based company in the United States. Our exports of wheat from the United States are among the best, amounting to approximately four million tons per annum.

 

   

Ventura Foods, LLC, another joint venture formed with CHS Inc., is one of the largest suppliers of cooking oils for the institutional market in the United States. We invest in this company through WILSEY FOODS, INC. (United States).

In food-manufacturing operations, Mitsui Norin Co., Ltd. (Japan), which became our subsidiary during the year ended March 31, 2004, is engaged in beverage business as one of the major manufacturers of tea leaves in Japan.

Competition varies depending on products in the upstream areas of grain, feed, sugar and food materials, but is primarily based on price and quality of products. Many Japanese general trading companies, international producers, and traders are competitors to varying degrees with respect to most of the food products we handle.

MITSUI FOODS CO., LTD. (Japan) plays a vital role in this unit’s wholesale operations. Its wide-range business activities and customers include general merchandise stores, supermarkets, convenience stores, and catering and restaurant chains throughout Japan, focusing on processed food and liquor transactions. The Foods & Retail Business Unit is developing and strengthening its nationwide distribution chain focused on MITSUI FOODS CO., LTD., including investments and business tie-ups from Mitsui with regional wholesalers.

In the foodstuffs distribution field, the needs for reduced distribution costs, secure temperature-controlled supply, and faster delivery are becoming more sophisticated and diverse. To meet these challenges, this business unit is engaging in wholesale transactions with and providing support services to retailers. These include:

 

   

inventory management and procurement of foodstuffs, processed foods, and packaging based on sales information obtained from retailers; and

 

   

proposals for developing new products and services, and support in the form of traceability for securing food safety.

In April 2006, MITSUI FOODS CO., LTD. and Mitsui agreed with KOKUBU & CO., LTD., a major Japanese food wholesaler, to form a business alliance, which includes support by KOKUBU & CO., LTD. for improvement of management and operations of MITSUI FOODS CO., LTD. and cooperation in product categories to be reinforced by both companies. 1)

Mitsui maintains a comprehensive alliance with Seven & i Holdings Co., Ltd., Japan’s nationwide diversified retailer, which mainly engages in convenience stores, general merchandise stores, department stores, restaurant chains, retail banking service. Seven & i Holdings Co., Ltd. maintains operation in China such as SEVEN-ELEVEN (BEIJING) established in April 2004.

 


i) In April 2007, Mitsui agreed with Kokubu &Co., Ltd. to enter into an equity alliance in wholesale businesses of foods and liquor in Hokkaido area, Japan. The agreement includes a capital restructuring of Hokushuren Co., Ltd. (Japan), a foods and liquor wholesale subsidiary, by capital reduction and allocation of new shares to Mitsui; transfer of MITSUI FOODS CO., LTD.’s business in Hokkaido area (excluding Seven & i Holdings Co., Ltd.-related businesses) to Hokushuren Co., Ltd.; and Kokubu’s purchase of 70% share in Hokushuren Co., Ltd. in October 2007.

 

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Mitsui offers the following supply services to Seven & i Holdings Co., Ltd. through our domestic subsidiaries, such as MITSUI FOODS CO., LTD., Retail System Service Co., Ltd. and VENDOR SERVICE CO., LTD.

 

   

supply sundry goods and consumables, such as processed food, liquor, fast food, toys, and games, to more than eleven thousand 7-Eleven stores in Japan;

 

   

supply food materials, containers, and packaging materials to vendors who supply boxed lunches, pre-cooked meals, and processed food to 7-Eleven stores in Japan;

 

   

supply various temperature-controlled products to 7-Eleven stores in Japan; and

 

   

supply cold products through the affiliate company Beijing Sanxin Refrigeration Logistics Co., Ltd. to 7-Eleven stores in Beijing.

This business unit owns 1.67% of Seven & i Holdings Co., Ltd.’s outstanding shares as of end of February 2007. This business unit purchased shares totaling ¥50 billion in Ito-Yokado Co., Ltd. and Seven-Eleven Japan Co., Ltd. in 2005 seeking to strengthen our business ties with them. Later on, in September 2005, Seven & i Holdings Co., Ltd. was established as a holding company of the Ito-Yokado Group.

Our competitors in the wholesale and retail businesses are mainly general trading companies in Japan. In the traffic area, our competitors are also traffic companies that operate third-party logistics providing customized and integrated warehousing and transportation services. In domestic wholesaling, there is fierce competition among suppliers, and we are making efforts to increase revenues and reduce logistics costs by achieving better economies of scale through mergers and acquisitions from time to time.

This excerpt taken from the MITSY 6-K filed Jul 31, 2007.

Foods & Retail Segment

Gross profit for the three month period ended June 30, 2007 was ¥20.5 billion, an increase of ¥0.6 billion from ¥19.9 billion for the corresponding three month period of the previous year. Under business circumstances where inflation of raw material costs and deflationary pressure on Japanese domestic consumption continued, food raw material business transactions showed firm performance, however, this segment continues to face severe conditions in terms of profitability, particularly for food raw material manufacturing subsidiaries. Accordingly, the segment has been taking various cost reduction initiatives in the domestic food distribution and retail operations.

Operating income for the three month period ended June 30, 2007 was ¥4.0 billion, an increase of ¥0.6 billion from ¥3.4 billion for the corresponding three month period of the previous year. MITSUI FOODS CO., LTD. (Japan) and Mitsui Norin Co., Ltd. (Japan) succeeded in decreasing general, selling and administrative expenses, which resulted in slight improvements in their operating income although their gross profit showed little decline.

Equity in earnings of associated companies for the three month period ended June 30, 2007 was ¥0.3 billion, a ¥0.3 billion decrease from ¥0.6 billion for the corresponding three month period of the previous year.

Reflecting these developments, net income for the three month period ended June 30, 2007 was ¥3.2 billion, an increase of ¥0.5 billion from ¥2.7 billion for the corresponding three month period of the previous year.

 

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This excerpt taken from the MITSY 6-K filed May 2, 2007.

Foods & Retail Segment

Gross profit for the year ended March 31, 2007 was ¥81.3 billion, an increase of ¥1.4 billion from ¥79.9 billion for the year ended March 31, 2006. The major factors were as follows:

 

   

Gross profit of MITSUI FOODS CO., LTD. (Japan) decreased by ¥1.1 billion, primarily reflecting the termination of business relations with The Daiei, Inc, a Japanese national retailer.

 

   

Gross profit of Mitsui Norin Co., Ltd. (Japan) decreased by ¥2.9 billion due to poor performance in beverage and beverage materials businesses and divestiture of non-core businesses.

 

 

 

There was a full year contribution from Hokushuren Company Limited (Japan) which was acquired in the 2nd quarter of the year ended March 31, 2006.

Operating income for the year ended March 31, 2007 was ¥10.9 billion, an increase of ¥1.7 billion from ¥9.2 billion for the year ended March 31, 2006. In addition to improvement in gross profit, there was a marginal reduction in selling, general and administrative expenses. Among others, a ¥3.2 billion reductions were reported by MITSUI FOODS CO., LTD. reflecting decreased personnel expenses and depreciation costs.

Equity in earnings of associated companies for the year ended March 31, 2007 was ¥3.8 billion, a ¥0.3 billion increase from ¥3.5 billion for the year ended March 31, 2006.

The segment recorded net loss of ¥12.3 billion for the year ended March 31, 2007, a ¥9.1 billion deterioration from ¥3.2 billion net loss for the year ended March 31, 2006. This decline was mainly attributable to the following reasons:

 

   

Mitsui Norin Co., Ltd. recorded impairment losses on intangible assets and goodwill of ¥12.1 billion and ¥16.5 billion, respectively; and moreover established valuation allowance for deferred tax assets. As a result, a ¥8.3 billion minority interests of loss was also recorded.

 

   

For the year ended March 31, 2006, this segment recorded a ¥4.2 billion gain from the exchange of shares of Ito-Yokado Co., Ltd. and Seven-Eleven Japan Co., Ltd., for newly issued shares of Seven & i Holdings Co., Ltd., one of Japan’s leading diversified retailers.

For the year ended March 31, 2006, MITSUI FOODS CO., LTD recorded ¥6.0 billion impairment losses on land and distribution facilities which became idle as a result of reorganization of distribution bases. For the year ended March 31, 2007, it reported a further ¥2.2 billion impairment losses and a ¥1.4 billion other expenses incurred from its business reorganization. In addition Hokusyuren Company Limited reported the sum of ¥1.4 billion impairment losses on fixed assets and other expenses.

 

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