Nichirei Corp., Japan's top maker of frozen foods, said Tuesday it has cut its net profit forecast for the fiscal first half to Sept. 30 and the full year to next March 31, due to tainted spinach from China, capital losses on sales of stock and fixed-asset holdings.
Recalls of frozen spinach products the firm imported from China adversely affected earnings, it said.
But the company said it has revised upward its forecast for operating profit, thanks mainly to strong performance in processed foods, its core business.
In its revised group earnings forecast for the first half, Nichirei expects a net profit of 2.7 billion yen, down from 2.8 billion yen estimated in May, and an operating profit of 9.4 billion yen, up from the earlier-projected 7.1 billion yen, on sales of 287 billion yen, up from 285 billion yen.
For the full year, the company projects a net profit of 6 billion yen, down from 7.2 billion yen forecast in May, and an operating profit of 17.9 billion yen, up from 17 billion yen, on sales of 579 billion yen, unchanged from the previous forecast.
Nichirei said it plans to take 1.7 billion yen in charges against capital losses resulting from the sales of holdings of two listed stocks for the first-half period.
It also plans to book an additional 800 million yen in capital losses from the sale of fixed assets in the second half.
The company said its earnings were adversely affected by recalls of frozen spinach products imported from China and the voluntary suspension of their sale.
Nichirei recalled the products in June because they were found to contain excessive pesticide residue.
The suspension is expected to reduce sales by 640 million yen and pretax profit by 400 million yen in the first half, and by 1.6 billion yen and 550 million yen, respectively, for the full year, the company said.