Sun Agro: Solid earnings foundation targeted in management plan

Sun Agro was formed in April 2007 through the merger of Nissan Agri and Mitsui Toatsu Fertilizers. Since becoming the company’s president in June 2009, Shiro Oteki has been working on integrating the two businesses and on sales optimization, with a project to improve its corporate culture advanced in 2010. He expects to lead Sun Agro into a new growth phase by maximizing synergies from the merger.

How do you feel, looking back over the years since you became president?

Our industry experienced unprecedented events such as surging prices for fertilizer materials, markets plummeting after the 2008 collapse of Lehman Brothers, and the March 11 earthquake. I steered Sun Agro under conditions never before seen by the industry. Due to continuously rising raw-material prices jacking up production costs, farmers reduced their fertilizer usage volumes, shrinking demand. We had to promote sales in a tough environment. Our earnings were lower than initially planned, but we managed to stay in the black because we used our nationwide network of sales companies and agents to understand our customers’ needs in detail in each region.

Sun Agro started a new medium-term management plan this year.

The effects of raw-material price fluctuations have calmed down, so we can look to the future in a normal way. We set sales and profit goals exceeding those of our previous fiscal 2008-2010 management plan, which we intend to achieve through an increase in the share of our functional fertilizers, across-the-board cost-cutting measures and the establishment of a stable foundation for earnings through strong corporate management. With fertilizer demand rising around the globe, we expect raw-material costs to climb, so we incorporated cost increases into our plan. We are supplying pesticides, agricultural materials, herbicides and fungicides for golf courses and fertilizers for crop cultivation. We intend to secure earnings with solid management.

As part of our cost-reduction efforts, we will review our production setup. We now produce fertilizers at our Sunagawa, Hakodate, Toyama and Osaka factories, but we will quit production at the Hakodate factory at the end of September and compensate for the loss in production by lifting the other factories’ operating rates. We will also review product inventories in our distribution channels and trim costs all along our supply chains.

Demand for fertilizers is declining in Japan.

I think our strengths will come into play in just such a situation. With our wide spectrum of products and technical-support ability, we can cater to the different needs of farmers. For example, we have rapid-acting products, delayed-release products, organic and liquid fertilizers, high-analysis compound fertilizers, soil-improvement agents and nursery soil. Many farmers put off farm work this year because of the earthquake, so they will need fertilizing schedules that are different from those of normal years. We are stepping up our technical-support services, deploying sales engineers to guide our customers on how to effectively use our fertilizers. We are also exporting our Chiyoda chemical-fertilizer line to other Asian countries. In China, we are targeting markets like Shandong Province, which has a prosperous agricultural industry. We are promoting local demonstration projects to spread the world about our products, so that local farmers understand our products’ performance.

Source: JCWeb