Daiei Inc. said Friday its operating profit for its March-August half was 25.45 billion yen, up 41.9 percent from the previous year, on sales of 672.1 billion yen, due to strong sales in its credit card subsidiary OMC Card Inc.
However, the firm’s group net profit was down 96.8 percent from the prior year to 13.4 billion yen. Daiei attributed the drop to a 400 billion yen debt waiver it received in the previous period.
Daiei forecasts its group net profit will be 50 billion yen for the business year to February, on sales of 1.29 trillion yen.
Daiei’s biggest shareholder, trading firm Marubeni Corp., which has a 44.6 percent stake, has just picked supermarket chain Aeon Co. to help Daiei rebuild.
Daiei President Toru Nishimi, a former senior vice president of Marubeni who was appointed to the post earlier this month, said the company has started drafting a reconstruction plan.
“We would like to halve the 352 billion yen in interest-bearing debt as quickly as possible,” Nishimi said. “By the end of the business year, we hope to slash the debt to 150 billion yen.”
Daiei reportedly is looking to sell some of its stakes in its subsidiaries, including OMC Card, but Nishimi said the company is not considering selling the company.
Media reports said earlier in the day that Daiei plans to sell off a 7,400-sq.-meter plot of land near Kobe port to help reduce its debt, abandoning the idea of building a commercial complex there.
Daiei officials said it would not comment on the report as they said it involved other parties.
Kobe reportedly plans to sell 3,800 sq. meters of its land adjacent to the Daiei real estate.
Daiei Director Hikaru Minami said the Industrial Revitalization Corp. of Japan has helped slash costs by closing down unprofitable stores and reducing salaries. Daiei went under the control of the state-run IRCJ in December 2004 to help bail it out.
“Because of IRCJ, we were able to build a base on which to make the next step,” Minami said.
The next stage, now that IRCJ is stepping back, is to focus on boosting sales, Minami said.
IRCJ picked Marubeni and private equity firm Advantage Partner Inc. to be Daiei’s sponsors in March 2005. Marubeni became Daiei’s top shareholder in August by buying a 33.6 percent stake from IRCJ.
Analysts say Marubeni has been looking for a retail partner to back Daiei’s reconstruction since Marubeni and IRCJ failed to turn around Daiei’s business.
Aeon and Wal-Mart Stores Inc. of the U.S. were the two major contestants in the race, but Wal-Mart bowed out. Aeon was officially chosen to be the new partner on Oct. 13.
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