Scandal-ridden meat packer Snow Brand Foods (SBF) announced earlier today [Friday] that its restructure plan is to be abandoned in favour of liquidation.
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SBF had earlier said that it would only withdraw from the meat business, but now it will seek buyers for all four of its businesses by the end of next month. The move puts over 1,000 jobs on the line, which will be lost if buyers are not found.
The 52-year-old company explained that the move was forced due to its plunging stock price and the consumer backlash that followed news that it had mislabelled imported beef as domestic product in order to take advantage of a government subsidy scheme introduced after BSE appeared in Japan’s national herd last September. Sales of SBF products have plummeted by about 85% since the deception was uncovered; the company expects to post a negative net worth of ¥5bn (US$37.2m) by the end of March.
Furthermore, SBF expects to accrue some ¥24bn in losses from the liquidation, which is likely to occur by the end of April.
Parent company Snow Brand Milk Products (SBMP), itself still recovered from a food poisoning scandal in the summer of 2000, has pledged to extend financial assistance of up to ¥25bn to help the SBF meet its obligations. The 65%-owned subsidiary generates over 40% of SBMP’s sales, and market watchers are expecting this financial support to place a huge burden on its earnings forecast.
Analysts have also pointed to the need for a revision of the restructuring scheme of the Snow Brand group as a whole after SBF’s liquidation.
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By GlobalDataSBF’s president Koshiro apologised earlier today for allowing the chain of events that have led to the downfall of the company, Japan’s fifth-largest processed meat producer. He told a news conference: “I feel as if my heart has been broken when I think of the workers and their families who had nothing to do with the scandal.”
“We are painfully aware of our responsibility for losing the public’s trust in meat labelling.”
“We feel utmost regret over the scandal that led to a series of cancellations from clients and no foreseeable recovery in our sales.”
The Tokyo Stock Exchange (TSE) said that SBF would be delisted from the its second section on 23 May. Trading in the company’s stock was suspended earlier today.
