[Company analysis] Hitachi Zosen Corporation (日立造船)

「Hitachi Zosen Corporation (日立造船)」is a plant manufacturer that produces environmental equipment, factory equipment, industrial machinery, power generation equipment, etc. Although meaning of the company name is "shipbuilding", but it completely withdraw from the shipbuilding business. Instead, the environment / plant business is the main business. They have the world's top share in waste incineration power generation facilities. The number of consolidated employees is approximately 10,580.

 

1. Company Profile

2. Summary and Features

3. Major Business

4. Financial Information

 

 

 

1. Company Profile

 

※Unit is JPY million, as of 2019

Company name	Hitachi Zosen Corporation
Company name (Japanese)	日立造船
Date of establishment	April 1, 1881
Headquarters location	〒559-8559 大阪市住之江区南港北1丁目7番89号
Capital	45,442
Consolidated sales	378,140
Consolidated operating profit	7,358
Consolidated total assets	429,040
Consolidated capital	120,410
Capital adequacy ratio	28.1%
Consolidated number of employees	10,580

 

 

 

2. Summary and Features

 
In the past, because it was one of the companies belong to the「Hitachi Group」, that is why it has the name of "Hitachi". But due to the dismantling of the conglomerate after World War II, this company became outside of the 「Hitachi Group」. As a countermeasure against the recession in shipbuilding industry, they have been conducting business diversification. Even they conducted a beverage business and an internet accommodation reservation business that are not completely related to their shipbuilding business. At present, the beverage business and internet lodging business were sold to「Kobayashi Pharmaceutical Co., Ltd.(小林製薬)」and「Rakuten Travel(楽天トラベル)」.

On April 1, 1881「Hitachi Zosen」was established in Osaka, by British entrepreneur Edward Hazlett Hunter to develop Japan's steelmaking and shipbuilding industry. "Tora Maru(虎丸)", Japan's first tanker, was fabricated in 1908 by this company whose has facilities for building ships that have a displacement of more than 1,000 tons.

By 1934,「Hitachi Zosen」was placed under the control of「Hitachi Conglomerate(日立財閥)」, and the name of company name was changed to「New Osaka Iron Works Ltd.((新)大阪鉄工所(」. At this time, they manufactured a large number of small military ships and even built a transport aircraft carrier in 1945. Due to the dismantling of the conglomerate after World War II, this company became independent from the Hitachi Group.

After the end of the war, this company quickly resumed operations as a fishing ship manufacturer, and in 1955 became one of the largest shipbuilders in Japan. In 1957, they developed the world's largest diesel engine through the technical cooperation with「B & W Diesel」in Denmark. As for the busines diversification, they built a chemical fertilizer plant in India in 1964. And they also purchased「Maizuru Works(舞鶴重工業)」in 1971, and operated the Ariake Works in Kyushu in 1973.

However, the Oil shock of 1973 drastically reduced the demand for ships worldwide, and critically damaged shipbuilding of「Hitachi Zosen」who depended on the shipbuilding business for more than 50% of its sales. They tried to improve the situation through opening a new businesses such as oil rigs, oil storage facilities, steel structures, pipes, bridges, etc., but material costs and losses due to fixed price contracts increased, so they were forced to conduct restructure on them. As a result, the number of employees has been significantly reduced from 24,660 in 1978 to 5,596 in 1988.

After that, due to the pursuit of companies from South Korean and China, their comparative advantages have been steadily decreasing. Eventually, in 2002, they made a joint venture with「JFE Engineering Corporation(JFEエンジニアリング)」and decided to separate and integrate the shipbuilding divisions of both companies. So「Universal Shipbuilding Corporation(ユニバーサル造船)」was formed by and「Hitachi Zosen」withdraw completely from the shipbuilding business exception of  the marine diesel engine business. As for the above-mentioned「Universal Shipbuilding Corporation」merged with「IHI Marine United Inc.」 a wholly owned subsidiary of「IHI Corporation」, and now they become「Japan Marine United Corporation(ジャパン マリンユナイテッド)」.

Current core business of 「Hitachi Zosen」is, full-scale operation of the industrial and municipal waste treatment business. Especially in 1965, they initiated constructing of the Japan's first waste incineration power generation facility in Sakai City, Osaka Prefecture, and now they are the world's top waste incineration facility engineering and operating company with more than 400 cases in Japan and abroad. Because「Hitachi Zosen」is operating the the facilities itself, so unlike the general construction business, it become a stable source of income. Currently, this maintenance and operation services for waste treatment facilities account for about 40% of total sales.

 

 

 

3. Major Business

 

■ Environment / plant business
Waste incineration power generation facility, water / sludge treatment facility, etc.

■ Machinery business
Marine engine etc.

■ Social infrastructure business
Bridges, breakwaters, seawalls, etc.

■ New business
Wind power generation business, functional materials business, etc.

 

 

 

4. Financial information

 

※Unit is JPY million

		2016	2017	2018
Consolidated sales		399,331	376,437	378,140
Consolidated operating profit		14,947	5,907	7,358
Consolidated total assets		393,587	391,860	429,040
Consolidated net assets		117,810	119,014	120,410
Breakdown of sales	Environment / plant business	254,612	231,798	228,352
	Machinery business	103,721	100,627	106,570
	Social Infrastructure business	29,236	28,248	31,852
	Healthcare business
	Others	11,760	15,762	11,365