Japanese company Kyowa Hakko has announced that consolidated sales declined by 1.5%, at JPY353bn (US$3.1bn) in the 2005 financial year compared the previous year, with food sales falling by 4.6%

Kyowa Hakko operating income declined 23.8% overall, partially due to increased pharmaceuticals R&D expenses that grew 14.3% on fiscal 2004.

In its food business, sales decreased 4.6%, to JPY42.4bn, while operating income decreased 3.6%, to JPY1.6bn. In seasonings, sales of natural seasonings and extract-type seasonings for take-out food were higher than in fiscal 2004, but sales decreased slightly overall. In bakery products and ingredients, sales improved from fiscal 2004 due to increased sales of sweet bread premixes, bread flavour enhancers and milk preparations.

The company forecasts a 3.8% decline in net sales in the next financial year and a 1.8% increase in operating income – higher than the business plan target.

Kyowa Hakko president Yuzuru Matsuda said: “Fiscal 2005 was the first year of the business plan that we announced in May last year. In a challenging operating environment we exceeded our business plan profit target for fiscal 2005, and we expect to do so again in fiscal 2006.

“We will continue to invest to achieve sustained growth, by taking further steps to advance our research and development, invest in production facilities, promote sales growth, and implement cost reductions as we build the foundations for sustained growth in shareholder value.”

Food business net sales and operating income at Kyowa Hakko are forecasted to increase compared to fiscal 2005 as sales volumes of natural seasonings for take-out food and food service industries are expected to increase, driven by marketing.

Kyowa Hakko said it is looking towards future growth by carrying out active investments while implementing comprehensive cost-cutting measures, and increasing marketing spends. The company expects net sales to decline to JPY340.0bn but to maintain operating income of JPY26.0bn.