[Company analysis] Mitsubishi Heavy Industries, Ltd. (三菱重工業)

「Mitsubishi Heavy Industries, Ltd. (三菱重工業)」is a leading Japanese heavy industry company and the largest machine manufacturer in Japan. It is one of the three major heavy industry companies in Japan, 「Mitsubishi Heavy Industries, Ltd.(三菱重工業)」,「Kawasaki Heavy Industries, Ltd.(川崎重工業)」and「IHI Corporation」, and at the same time, it is one of the core companies of the Mitsubishi Group. It is one. They have strengths in forklifts, steel-making machines, thermal power plants, chemical plants, etc., and sales in overseas markets such as North America and Asia account over 50% of total . The number of consolidated employees is approximately 80,744.

 

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	Mitsubishi Heavy Industries, Ltd.
Company name (Japanese)	三菱重工業
Date of establishment	July 7, 1884
Headquarters location	〒100-8332　東京都千代田区丸の内三丁目2番3号
Capital	265,600
Consolidated sales	4,078,344
Consolidated operating profit	186,724
Consolidated total assets	5,142,723
Consolidated capital	1,748,821
Capital adequacy ratio	34.0%
Consolidated number of employees	80,744

 

 

 

2. Summary and Features

 
The beginning of「Mitsubishi Heavy Industries」was started by the founder of Mitsubishi, Iwasaki Yataro(岩崎弥太郎), leased and operated the government-owned「Nagasaki Shipyard(長崎造船所)」in 1870. Eventually, in 1934, it became Japan's largest company,「Mitsubishi Heavy Industries」and manufactured combat planes, trains, and ships during the Imperial Japanese era, and their sales were expanded through compulsory recruitment.

Even right after the World War II, they sold military weapons to United States for Korean War, so they constantly keep the position of the largest machine manufacturers in Japan. Now, they are the core company of「Mitsubishi Group」who peer with「Mitsubishi Corporation(三菱商事)」and「Mitsubishi UFJ Financial Group, Inc.(三菱UFJフィナンシャル・グループ)」. The number of products that「Mitsubishi Heavy Industries(三菱重工業)」 has more than 700, so it has nickname of "Department Store of Machine"

Currently, their main products are thermal power generation systems, aircraft engines, industrial machinery, etc. Among them,「Mitsubishi Heavy Industries」is particularly strong in the thermal power generation field. Thermal power generation-related business accounts for about 75% of total sales, and has the world's top share in the gas turbine field. Besides in Japan, they are the only manufacturer who can handle with manufacturing passenger aircraft in-house. 

One of the features of this company is the existence of defense business. In the field of weapons production, they manufacture battleships, helicopters, battleships including Aegis ships, submarines, tanks, misters, etc., and the delivery record to the Japanese Ministry of Defense is the top volume in Japan. In fact, it is no exaggeration to say that「Mitsubishi Heavy Industries」is in charge of Japan's defense.

However, as for the sales, it has been declining steadily since it exceeded 4 trillion yen in 2014. In fact, the increase to 4 trillion yen in the past was due to the increase in consolidated sales in relation to other companies, such as the absorption of the thermal power generation division of「Hitachi, Ltd.(日立製作所)」and the establishment of a steel manufacturing company with「Siemens」. Their own sales itself by sales did not change significantly.

The overseas sales account for 53%, and are currently leveling off. The operating income is almost the same. In fact, heavy industries such as shipbuilding are labor-intensive industries. Therefore, it is inevitable that a country with a low labor price has competitive advantages. Nevertheless,「Mitsubishi Heavy Industries」still keep their shipbuilding business.

Another weakness of「Mitsubishi Heavy Industries」is that there are not many products with the top market share in the world. The above gas turbines certainly have the top market share, but the absolute position has not been established due to the large presence of competitors such as「GE」and「Siemens」. In addition, the company is large and has a long history but there is also some problem likecompulsory recruitment problems during World War II.

 

 

 

3. Major Business

 

■ Thermal power generation system business
This is the core business of「Mitsubishi Heavy Industries」. This sales and the profit margin is particularly larger than other businesses.

■ Industrial / Social Infrastructure Business
Logistics equipment. It consists of various businesses such as turbochargers, engines, and chemical plants. It is well diversified, but the operating margin is low.

■ Aerospace and defense business
Basically, they manufacture aircraft parts. most orders comes from Japanese Ministry of Defense. In the private sector, they supply some parts such as passenger aircraft wings to「Boeing」.

 

 

 

4. Financial information

 

※Unit is JPY million

		2016	2017	2018
Consolidated sales		3,914,018	4,085,679	4,078,344
Consolidated operating profit		150,543	58,176	186,724
Consolidated total assets		5,481,978	5,248,756	5,142,723
Consolidated net assets		2,104,118	1,693,865	1,748,821
Breakdown of sales	Power related business	1,430,825	1,476,636	1,514,804
	Industrial / Social Infrastructure Business	1,722,312	1,874,181	1,866,575
	Aerospace and Defense business	701,672	720,005	675,672
	Others	59,208	39,993	21,290