July 24, 2017 / 12:03 PM / in 2 days

Japan's FamilyMart considering CITIC and CP Group partnerships

Koji Takayanagi, new President and Executive Officer of FamilyMart UNY Holdings Co, poses for a photo after an interview with Reuters at the company's headquarters in Tokyo, Japan, May 9, 2017.Toru Hanai

(This version of the May 9 story corrects operating profit and forecast in the third paragraph)

By Sam Nussey and Ritsuko Shimizu

TOKYO (Reuters) - Japan's FamilyMart UNY Holdings (8028.T), Japan's second largest convenience store chain, is considering partnering on new business with China's CITIC Ltd (0267.HK) and Thailand's Charoen Pokphand Group, its president told Reuters.

The companies are looking at a range of opportunities beyond convenience stores, said Koji Takayanagi, previously head of the food division at trading house Itochu Corp (8001.T).

FamilyMart UNY Holdings, formed from the merger with Uny Group to become the second biggest convenience store chain behind Seven & i Holdings Co (3382.T), has forecast operating profit to grow to more than double to 100 billion yen ($901.39 million) in four years from 41.2 billion yen in the current fiscal year.

This will be driven by converting its Circle K and Sunkus stores into more profitable FamilyMart ones, increasing stores sales by 10-15 percent, Takayanagi said.

"There is plenty of room for growth," he said of the company, which also runs supermarkets and general stores.

While FamilyMart is profitable in Taiwan and China, it is reviewing its loss-making businesses in Thailand, Vietnam and Indonesia. "If we can get them to rally we will, but we cannot continue to pour in resources," Takayanagi said.

While its rival Seven & i Holdings, which owns Japan's largest convenience store chain 7-Eleven, expands overseas, most recently in the United States, FamilyMart will remain focused on the domestic market, Takayanagi said.

"It is easier to achieve results domestically and we know what we need to do," he said.

Japan's worsening labor shortage, which is leaving convenience stores scrambling to find workers to man tills and stack shelves, will force companies to adapt and innovate, he said.

Even the country's declining birthrate and aging population does not phase Takayanagi.

"Even if the amount an individual eats declines... if we offer items with added value people will buy them."

Reporting by Sam Nussey and Ritsuko Shimizu, editing by Louise Heavens

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