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Fuji Oil Holdings Shares Plunge as Net Profit Forecast is Cut

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Andrew R. Michaud

• January 24, 2024

Fuji Oil Holdings, a Japanese producer of food ingredients, has announced a reduction in its fiscal-year net profit forecast. This downgrade is primarily due to special losses incurred by its U.S. chocolate-making subsidiary. As a result, Fuji Oil Holdings shares have experienced a significant decline.

Challenging Circumstances for Blommer Chocolate Acquisition

In 2019, Fuji Oil Holdings acquired Blommer Chocolate, based in Chicago. Unfortunately, the acquisition did not deliver the expected results due to various factors. The Covid-19 pandemic, higher borrowing costs, and inflation have all played a role in hindering the success of this venture.

To address the adverse impact on the company's financials, Fuji Oil Holdings has made the decision to write down the value of goodwill and tangible assets for Blommer Chocolate. Consequently, this has resulted in special losses amounting to $71 million.

Revised Net Profit Forecast

In light of these challenges, Fuji Oil Holdings has adjusted its net profit forecast for the fiscal year ending in March. The revised projection now stands at Y6.50 billion ($43.8 million), significantly lower than the previous estimate of Y16.00 billion. It is worth noting that the net profit for the previous fiscal year was Y6.13 billion.

Steady Projections for Revenue and Operating Profit

Despite the challenges faced by its subsidiary, Fuji Oil Holdings maintains its projections for fiscal-year revenue and operating profit. The company anticipates a marginal decline of 1.3% in revenue, which is expected to amount to Y550.00 billion. Conversely, operating profit is projected to increase by an impressive 51%, reaching Y16.50 billion for the current fiscal year.

This revised forecast reflects the company's ongoing determination to navigate through these difficult times successfully.