Snow Brand Milk Products (SBMP), whose scandal-hit subsidiary Snow Brand Foods (SBF) was recently found to have been wrongly labelling imported beef as domestic produce to take advantage of a BSE government subsidies programme, revealed earlier today [Tuesday] that it will map out a group restructuring plan by the end of March.
Kohei Nishi, president of Japan’s leading producer of dairy products, said at a press conference: “We aim to finish mapping out a group restructuring plan, including concrete measures, within this business year.”
It will, however, show “the most substantial reforms in our 77-year management history,” he added.
A major part of this plan will be the appointment of a major investment partner to help boost business. Nishi explained: “The group is in a critical position. As a first step we are considering cooperation with other companies including a capital tie-up. We have already started negotiations with several candidates.
“I want to find a partner by the end of March, but we will keep our own brand. (The investment) cannot be a 4%-5% share, it would have to be [a controlling stake of] 33.4% or 49% or 51% but we would like to discuss details of the ratio.”
The company will seek to keep its Snow Brand name for milk and some other products, however it is currently mulling marketing more products under the US brand of Dole Food Co, which it already uses.
Snow Brand Food future?
News of the labelling fraud has hit SBMP subsidiary SBF hard. Shares have plummeted and supermarkets withdrew products from their shelves. Shozo Yoshida, president of the unit, resigned last week over the scandal.
The meat packaging giant remains in “a very severe condition,” said Nishi, who stressed that the parent company’s 66% stake would not be sold. Japan Broadcasting Corp and the Kyodo News agency had already reported that SBF would be dissolved and sold to a third- party company. Media reports have also said that 1,000 SBF workers would lose their jobs by 10 March.
SBMP, which expects a group net loss of ¥24bn (US$180m) for the current fiscal year ending March, is already struggling after its products were found to be at the source of a food poisoning scandal less than two years ago that left 13,000 people ill.
Its shares plunged a further 13% early this morning on the Tokyo Stock Exchange (TSE), slipping below the ¥100 line generally seen as a signal of financial distress in the TSE.