Japanese food and seasonings maker Ajinomoto Co.'s (AJINY, 2802.TO) Chief Executive Masatoshi Ito said Thursday he expects Japan's economy to largely recover from the effects of the March earthquake and tsunami by the autumn of this year.

"Before [the event] I think that the economy was just about to get over the Lehman Brothers shock [from 2008] and just getting into a mode of growth," Ito told Dow Jones Newswires in an interview at the Consumer Goods Forum's Global Summit. "The fundamental infrastructure was [there] for the recovery mode and, although there were effects from the earthquake, the final impact will not be that great.

"Especially in consumer goods, sales for April and May have been very stable," he said. "Although there are certain sectors of the industry that have been heavily affected by the earthquake, we believe that by the autumn much of the economy will recover."

Ito also said that, as the company bids to recover some costs from rising commodity prices, it will increase prices on its products in some of its overseas markets first as its customers in Japan don't have the appetite for hikes.

"Because we had the earthquake this year, [it] will be very difficult for customers to accept price increases," he said. "We will probably have the price increases initially in the overseas [markets]." The company forecasts an impact of $130 million from raw material price increases this year, $70 million lower than last year.

In May, the Tokyo company, which competes with Nestle SA (NSRGY, NESN.VX) and Unilever PLC (UL, ULVR.LN) in seasonings, recorded an 83% jump in its net profit to Y30.4 billion for the year ended March 31, boosted by to robust sales of processed foods and flavored seasonings.

Stronger sales of amino acids for animal feed fueled by growing demand in China and other emerging economies, contributed to the profit expansion.

Ajinomoto, which also sells condiments, frozen food, noodles and soft drinks, suffered extraordinary losses of Y25.2 billion, of which Y3.2 billion was due to damage from the March 11 earthquake and tsunami and asset impairment costs, but they were offset by an increased bottom line. Sales grew 3% to Y1.21 trillion.

The company, which is also the world's largest maker of amino acids used in both animal feed and pharmaceuticals, is also targeting overseas acquisitions and partnerships to expand its profile globally.

"The basic business model is to understand the local needs and local tastes of the consumer," Ito said. "If there are companies that could speed up this process, that fit in with our model, that would make acquisitions [a possibility]. The Japanese market is very stagnant, so I would like to expand globally by utilizing Japanese technology and experience. It will take time [but] we believe once we tend to the roots, then the growth will be rapid."

-By Simon Zekaria, Dow Jones Newswires; +44 207 842-9410; simon.zekaria@dowjones.com

Ajinomoto (PK) (USOTC:AJINY)
Historical Stock Chart
From May 2024 to Jun 2024 Click Here for more Ajinomoto (PK) Charts.
Ajinomoto (PK) (USOTC:AJINY)
Historical Stock Chart
From Jun 2023 to Jun 2024 Click Here for more Ajinomoto (PK) Charts.