[Company analysis] IHI Corporation

「IHI Corporation」is a comprehensive heavy industry company with a history of 160 years since its founding, and is expanding its business in a wide range of fields such as energy systems, various plants, logistics systems, jet engines, and space development. It is one of Japan's three major heavy industry companies(「Mitsubishi Heavy Industries, Ltd.(三菱重工業)」,「Kawasaki Heavy Industries, Ltd.(川崎重工業)」and「IHI Corporation」). The number of consolidated employees is approximately 29,286.

 

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	IHI Corp.
Company name (Japanese)	IHI
Date of establishment	December 5, 1853
Headquarters location	〒135-8710東京都江東区豊洲三丁目1-1 豊洲IHIビル
Capital	107,100
Consolidated sales	1,483,442
Consolidated operating profit	82,488
Consolidated total assets	1,664,529
Consolidated capital	381,692
Capital adequacy ratio	22.9%
Consolidated number of employees	29,286

 

 

 

2. Summary and Features

 
The former company name is「Ishikawajima-Harima Heavy Industries Co., Ltd.(石川島播磨重工業)」and they started  using the current name since 2007. It was founded in 1853 as「Ishikawajima Shipyard(石川島造船所)」, and as a result of continued growth centered on the ship and ocean business, it became one of the three major heavy industry companies in Japan. For three years from 1962 to 1965, even it was one of the world's largest shipbuilding companies with the largest volume of shipbuilding work in the world.

The mechanical technology that「IHI」has accumulated in their specialty shipbuilding industry is remarkable, and they are trying to utilize it in the aerospace industry. They are now become the largest company in the Japanese aero engine industry since it began full-scale aerospace business in the 1980s. In this aero engine field only, even「Mitsubishi Heavy Industries(三菱重工業)」is a mere subcontractor of「IHI」. This company got 10% of profit margin which is a fairly high, although they only gained 5% of global share which means they are not definitely in an overwhelming position.

As for the recent trend of sales of「IHI」, it continues to rise upward. This is largely due to an increase in demand for aircraft engines, and overseas sales account for over 50% of total. However, the operating profit margin still remains low. If we exclude the aviation-related business, it is below the industry average of 5% for heavy industry companies.

The reason for this is not because IHI's non-aviation-related business group has a low global share or lack of technical capabilities.「IHI」has a 20% share of the global turbocharger market, which is expected to grow continuously by 2030. In the case of LNG tanks, the world share is 21%, and in the case of LNG boil-off gas reciprocating compressors, the world share is 60%.

In addition, as mentioned above, they have also implemented shipbuilding business through a subsidiary in the past. However, due to the pursuit of Korean and Chinese competitors, the competitive advantages of the shipbuilding business is steadily diminishing. That is why「Japan Marine United Corporation(ジャパン マリンユナイテッド)」was formed by「Hitachi Zōsen Corporation(日立造船)」,「JFE Engineering Corporation(JFEエンジニアリング)」and「IHI Corporation」.

 

 

 

3. Major Business

 

■ Resources / Energy / Environment
They handle boilers for thermal power generation, nuclear crisis, gas turbine power generation equipment, etc. It shows the highest sales weight.

■ Social infrastructure and ocean
They handle bridges, new transportation systems, parking systems, etc. The one who has less sales weight.

■ Industrial system / General-purpose machine
They achieved stable profitability. However, the operating income ratio is below 5%. But this company has 20% global share in turbocharger market.

■ Aerospace / Defense
Aero Engine, Rocket System / Space Related

 

 

 

4. Financial information

 

※Unit is JPY million

		2016	2017	2018
Consolidated sales		1,486,332	1,590,333	1,483,442
Consolidated operating profit		47,389	72,267	82,488
Consolidated total assets		1,692,831	1,633,662	1,664,529
Consolidated net assets		337,630	350,217	381,692
Breakdown of sales	Resources / Energy / Environment	417,844	487,683	374,780
	Social infrastructure and ocean	147,979	144,653	132,761
	Industrial system / General-purpose machine	401,074	448,367	431,433
	Aerospace / Defense	469,488	461,434	490,176
	Others	49,947	48,176	54,292