[Company analysis] Kawasaki Heavy Industries, Ltd. (川崎重工業)

「Kawasaki Heavy Industries, Ltd. (川崎重工業)」is headquartered in Kobe and manufactures transportation equipment such as motorcycles, aircraft, rail cars, ships, and other machinery. 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」). Previously, as a member of Kawasaki Zaibatsu, this company had a relationship with「JFE Holdings, Inc.(JFEホールディングス)」and「Kawasaki Kisen Kaisha, Ltd.(川崎汽船)」. The number of consolidated employees is approximately 35,691.

 

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	Kawasaki Heavy Industries, Ltd.
Company name (Japanese)	川崎重工業
Date of establishment	October 15, 1896
Headquarters location	〒105‐8315 東京都港区海岸1丁目14-5
Capital	104,484
Consolidated sales	1,594,743
Consolidated operating profit	64,023
Consolidated total assets	1,838,855
Consolidated capital	492,261
Capital adequacy ratio	26.8%
Consolidated number of employees	35,691

 

 

 

2. Summary and Features

 
The history of「Kawasaki Heavy Industries」begins in the Meiji period with the「Kawasaki Tsukiji Shipyard(川崎築地造船所)」in Tsukiji, Tokyo. It is a heavy industry company who started with the modern history and industrial history of Japan. They experienced the booming shipbuilding industry during the 1st World War in the Taisho era, and the subsequent World War II and the postwar high growth period, too. Even today, it is said to be one of the three major heavy industry companies on a par with「Mitsubishi Heavy Industries, Ltd.」and「IHI Corporation」.

It is also a company at the top of Kansai-based companies located in Kobe. 「Kawasaki Heavy Industries」produces various products and operates its business through separate subsidiaries in many industrial fields. In recent years, the traditional shipbuilding business has been in recession steadily. Eventually, this company decided to seperate their shipbuilding business in 2002 by establishing「Kawasaki Shipbuilding Corporation(川崎造船)」. As for other businesses, they also handle consumer products such as motorcycles. Especially, they have manufactured steam locomotives and high-speed railways for the first time in Japan.  「Kawasaki Heavy Industries」is the Japan's largest railway vehicle manufacturing company.

In the aviation field, they established an aircraft factory approximately 15 years after the Wright brothers' first flight, and are now producing aircraft and missiles for the SDF(Self-Defense Forces). When limited to 2015, the amount of orders received from the Ministry of Defense,「Kawasaki Heavy Industries」had the largest order in Japan, surpassing even「Mitsubishi Heavy Industries」. In this way, they are focusing on the aircraft body and engine and the aerospace industry, and they are also actively considering overseas export of military weapons such as submarines and aircraft.

Meanwhile, in collaboration with Joseph F Engelberger, who founded the world's first industrial robot company, in 1969, they succeeded in domestically producing robots in Japan. Also, as a heavy industry company, it is the 2nd largest robot manufacturing company in Japan and the 4th largest in the world after「FANUC Corporation」.

In recent years, sales of「Kawasaki Heavy Industries」have been on a gradual upward trend, and have finally returned to the level before the Subprime mortgage crisis. Their overseas sales account for about 57%. The strength of this company is that it is engaged in the aerospace / gas turbine-related and precision machinery business, which has a high operating profit margin and is certain to expect future growth. In the field of aviation, they are strengthening their relationship with「Boeing」. Besides, they are also one of the top class companies in the field of robots. In other words, the business is stably diversified well. On the other hand, it can be pointed out that it is a weak point that they do not have many products with the world's top share.

In fact, in 2013,「Mitsui E & S」showed a move to implement a business alliance with「Kawasaki Heavy Industries, Ltd.(川崎重工業)」in the offshore development and LNG carrier business. Both of them have strengths in their respective business fields, and they have a complementary relationship, so it seems a feasible plan. However, at that time, the negotiation did not went well due to the pride of each other. So the plan was cancelled.

 

 

 

3. Major Business

 

■ Shipbuilding and ocean business
They handle LNG carriers, LPG carriers, bulk carriers, submarines, etc.

■ Vehicle
They manufacture trains, locomotives, passenger cars, etc. Due to high demand for vehicles in the Asia / North America time zone, sales are currently increasing. Operating profit is expected to be around 5% in the long run, and the Asian market is expected to continue to grow by 2021.

■ Aerospace
They handle defense aircraft, civil aircraft parts, space-related equipment, etc. This business accounts for 21.7% of total sales and is the core business of Kawasaki Heavy Industries. Operating profit is about 10%, which is rather high.

■ Gas turbine related
Aircraft engines, industrial gas turbines, diesel engines, gas engines, etc.

■ Plant / Environment
Industrial plants, power plants, LNG tanks, garbage incineration plants, etc.

■ Motorcycle engine
motorcycles, four-wheel buggies, general-purpose watercraft engines, etc. It has the 2nd highest sales ratio in total sales after the aerospace business.

■ Precision machine
Pharmaceutical and medical robots, hydraulic equipment, automatic robots, etc. Sales have been increasing recently, and the operating income margin is also a fairly high level, averaging 9% for 10 years. The robot business is expected to grow in the future, and it is expected that it will become a new core business of「Kawasaki Heavy Industries」, where aerospace and motorcycles continue.

 

 

 

4. Financial information

 

※Unit is JPY million

		2016	2017	2018
Consolidated sales		1,518,830	1,574,242	1,594,743
Consolidated operating profit		45,960	55,925	64,023
Consolidated total assets		1,687,363	1,785,028	1,838,855
Consolidated net assets		451,327	481,386	492,261
Breakdown of sales	Shipbuilding and ocean business	103,204	95,610	78,974
	Vehicle business	137,159	141,760	124,689
	Aerospace business	329,915	330,211
	Aerospace related business	463,958
	Gas turbine and machine related business	241,953	266,471
	Energy・Environment・Plant business	253,041
	Plant・Environment business	160,877	124,465
	Motor cycle・Engine business	313,030	331,659	356,847
	Precision machine business	155,278	198,996	222,095
	Others	77,410	85,066	95,136