Nippon Meat founder steps down

Related tags Japan Management occupations

Embattled Japanese meat processor Nippon Meat Packers said on
Tuesday that its founder and chairman would step down and its
president would be demoted to help restore public trust after a
beef mislabelling scandal.

Embattled Japanese meat processor Nippon Meat Packers said on Tuesday that its founder and chairman would step down and its president would be demoted to help restore public trust after a beef mislabelling scandal.

The company, Japan's biggest sausage maker, faced a fierce consumer backlash after the mislabelling was discovered this month. Leading supermarkets pulled its products from their shelves, and its share price has fallen around 35 per cent.

It is the latest in a series of scandals that have cast a shadow over Japan's food industry.

Nippon Meat said its 87-year-old founder and chairman, Yoshinori Ohkoso, would step down on September 1 to become an honorary chairman, while his son, Hiroji, would be demoted from president to senior managing director by the end of August.

"The 27,000 employees of Nippon Ham will do anything possible to win back the trust of our customers,"​ said a visibly shaken President Ohkoso.

"In order for us to start a new age for Nippon Meat, we wanted to start fresh with new leadership."

Managing director Yoshikyo Fujii will take over as president.

"Since we have betrayed the customers' trust, we felt that in order for us to rebuild Nippon Meat we needed a person with extensive sales experience,"​ President Ohkoso said.

Analysts had said the chairman's resignation would be a crucial first step towards rebuilding the tattered brand name.

Domestic media and analysts had expected chairman Ohkoso to step down, but had anticipated President Ohkoso would stay at the helm after taking a pay cut.

Nippon Meat had said its subsidiary Nippon Food Kansai passed off imported beef as domestic to get money from a government buyback scheme amid poor sales after an outbreak of mad cow disease in Japan last September.

The scam sent Nippon Meat's shares plunging before a slight recovery in recent sessions, and led major retailers such as Ito-Yokado Seiyu and Aeon to yank its products from their shelves, pummelling sales.

Before the announcement, shares in Nippon Meat closed down 1.66 per cent at 947 yen after rising for four straight sessions. The Nikkei average rose 0.22 per cent.

Vice president Heihachiro Azuma and senior managing director Motoaki Shoji, who are believed to have known that Nippon Food tried to pass imported beef off as domestic beef, would also step down.

Nippon Meat said sales of ham and sausage had fallen 60 per cent since the scandal broke, while meat and processed food sales had fallen by 50 per cent with little hope of a short-term turnaround.

"The second-half of August looks like it will be even tougher,"​ the company said.

The company said it was too early to tell what the ultimate effect would be on earnings in the year to March.

In an effort to steady its course, the firm said it had secured 90 billion yen ($759.8 million) in potential borrowing funds from creditors, including a 50 billion yen commitment line.

It said it was considering pulling out of loss-making businesses and might cut jobs if the downturn from the scandal dragged on.

The Nippon Meat scam came to light after a similar scandal earlier this year in which Snow Brand Food, Japan's sixth-largest meat packer before it was liquidated, had mislabelled imported beef.

Despite the recent sullying of its public image, some analysts believe Nippon Meat is in better shape than other scandal-racked Japanese firms and may be able to bounce back in the long-term if no further mislabellings or cover-ups arise.

"Nippon Meat is a completely different case from Snow Brand,"​ said Morgan Stanley analyst Taizo Demura.

Demura was referring to the Snow Brand Food scandal and an earlier tainted milk case involving its parent, Snow Brand Milk Products.

"In Snow Brand's case, consumers were directly harmed,"​ he said.

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