Ailing supermarket operator Daiei Inc. announced Friday a consolidated net loss of 332.51 billion yen for the business year that ended in February, blaming the losses on increased restructuring costs.
The dismal figure is a major turn-around from the net profit of 45.89 billion yen the retailer posted on a group basis the previous year.
However, Daiei said it plans to return to profitability in the current business year, to the end of February 2003, with the help of financial support from its creditors, UFJ Bank, Sumitomo Mitsui Banking Corp. and Mizuho Corporate Bank.
It expects to reduce its interest-bearing group debts from the current 1.66 trillion yen, which does not include the 475.4 billion yen debt at its credit card unit Daiei OMC Inc., to 1.21 trillion yen by the end of next February.
Daiei also announced the company will take on two executives, one each from SMBC and Mizuho, as board members. It has had a UFJ official on its board since last year.
During its latest business year, the Daiei group wrote off 284.7 billion yen in special losses to cover restructuring costs, including expenses incurred in the closure of 13 stores and allowances for 1,400 employees who took advantage of the firm’s early retirement program.
According to its earnings report, the company’s consolidated pretax profit increased 45.7 percent from the previous year to 1.52 billion yen, but its operating profit fell 3.5 percent to 44.29 billion yen and sales fell 14.2 percent to 2.5 trillion yen.
Daiei President Kunio Takagi said removing Lawson Inc., Japan’s second-largest convenience store chain, from the group was a major factor that caused the mixed results. The sale of its shares in Lawson, part of the group’s efforts to reduce its debts, affected its operating profit and sales on a consolidated basis.
On a parent-only basis, Daiei suffered a net loss of 458.21 billion yen, larger than the 192.18 billion yen loss it suffered the previous year.
But its operating profit rose 77.2 percent to 21.72 billion yen, due to reduced operational costs resulting from a new salary system, closure of unprofitable outlets and lower rents for its stores, company officials said.
Its pretax profit climbed to 14.12 billion yen from 2.04 billion yen in the previous year. Sales, however, dropped 12.6 percent to 1.73 trillion yen.
For the current business year, the retailer expects an operating profit of 50 billion yen, a pretax profit of 12 billion yen, a net profit of 120 billion yen and sales of 2.2 trillion yen, all on a group basis. On a parent-only basis, it forecasts an operating profit of 30 billion yen, a pretax profit of 20 billion yen, a net profit of 136 billion yen and sales of 1.62 trillion yen.
In February, Daiei announced a new three-year restructuring program that features 520 billion yen in financial support from its three main banks.
The bailout is expected to enable it to close 60 unprofitable stores by the end of February 2003, liquidate unprofitable businesses and cut 1,400 jobs.
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