CORRECT: Japan insecticide maker Earth Corp. enters Malaysia targeting China and region

13, May. 2019

――Corrects figures to 186.5 billion yen in 10th paragraph and to 3.6 percent in 13th paragraph

By Max Sato

TOKYO, NNA – Leading Japanese bug-killer manufacturer Earth Corp. plans to expand sales in China and Southeast Asia via a subsidiary in Malaysia, as the risk of dengue fever and malaria in the region drives up demand for repellents.

The company said in a statement Thursday that it had set up a wholly owned unit in Kuala Lumpur to market insecticides and air fresheners. It plans to start operations by October.

Earth Corp. has three sales offices in China and production and sales operations in Thailand and Vietnam that will supply Malaysia.

“We picked Malaysia because its middle-income earners have high disposable income in the region,” Sohei Yamamoto, assistant manager of Earth Corp.’s corporate planning department, told NNA on Friday. “In a broader sense, Indonesia and the Philippines are also targets but we want to focus on one market at a time.”

Yamamoto declined to reveal sales target figures for Malaysia. Earth Home Products (Malaysia) Sdn. Bhd. is capitalized at 5.5 million Malaysian ringgit ($1.3 million).

Demand for bug repellent is high in Southeast Asia where insect-borne tropical diseases are common, while middle-income consumers in China are a target market for Earth Corp.’s cockroach traps.

Earth Corp. aims to increase overseas sales from last fiscal year by 13.4% to 11.3 billion yen ($103 million) in fiscal 2019 ending in December, and to 15 billion yen in fiscal 2020.

“We believe we can reach the break-even point when we clear 15 billion yen in overseas sales,” Yamamoto said. “Beyond 2020, we would like to see overseas sales grow to a range of 20 billion to 30 billion in five years.”

The company has revised down its overall sales target for fiscal 2020 to 190 billion yen from an initial 200 billion yen after seeing fiscal 2018 come in weaker than projected, at 181.1 billion yen. A severe heat wave last summer kept many people indoors, hurting sales of outdoor goods like bug repellent.

Earth Corp. set a “conservative” overall sales target of 186.5 billion yen for the current fiscal year, Yamamoto said, but the company left its overseas sales target unchanged.

“The U.S.-China trade dispute is not having a direct impact on our sales,” Yamamoto explained. “We may be affected if consumption slows in China or China’s economic growth slows down sharply, but we haven’t seen any signs of that.”

U.S. and Chinese negotiators have yet to reach agreement, prompting Washington to double its tariffs on Friday on $200 billion worth of Chinese goods.

Earth Corp. wants to increase overseas sales to 7.5 percent of total sales by the end of 2020, compared to 3.6 percent at the end of 2015, according to its medium-term business plan released in 2016.

In 2017 it acquired A My Gia Joint Stock Company (AMG), which makes detergents and other household products in Vietnam.