[Company analysis] Hitachi, Ltd. (日立製作所)

「Hitachi, Ltd. (日立製作所)」is Japanese No.1 comprehensive electrical and electronic equipment manufacturing company, and has a wide range of businesses from semiconductors to household electronic equipment, personal computers, communication equipment, heavy electrical equipment, electronic equipment for automobiles, railway vehicles, etc. At present, their sales volume is overhelming their competitors such as「Sony Corporation(ソニー)」,「Panasonic Corporation(パナソニック)」and「Mitsubishi Electric Corporation(三菱電機)」. The number of consolidated employees is approximately 307,275.

 

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, Ltd.
Company name (Japanese)	日立製作所
Date of establishment	Sunday, February 1, 1920
Headquarters location	〒100-8280 東京都千代田区丸の内一丁目6番6号
Capital	458,790
Consolidated sales	9,480,619
Consolidated operating profit	754,976
Consolidated total assets	9,626,592
Consolidated capital	4,414,403
Capital adequacy ratio	45.9%
Consolidated number of employees	307,275

 

 

 

2. Summary and Features

 
The predecessor of「Hitachi, Ltd.」was「Hitachi Mine(日立鉱山)」, which used to mine copper and iron sulfide in Hitachi City, Ibaraki Prefecture. The department that repairs the machines used at this「Hitachi mine」, developed the Japan's first 5-horsepower motor in 1910. After the establishment of「Hitachi」, this became the driving force of growth. So as for the motor business,「Hitachi」has a strong brand power that can be comparable to「Toshiba Corporation(東芝)」and「Mitsubishi Electric Coperation(三菱電機)」.

Currently, they have eight types of business areas such as "Information and communication systems", "Social / industrial systems", "Electronic device systems", "Construction equipment", "Highly functional materials", "Automotive systems", and "Lifestyle ecosystems". As a general electric equipment manufacturer, it has the largest sales amount and the number of consolidated employees in Japan. In addtion, it is the second largest corporation in Japan after「Toyota Motor Corporation」and「NTT」. There are 879 consolidated subsidiaries and 407 related companies in Hitachi Group. Besides, it is a multinational company that secures production and sales bases all over the world, and overseas sales account for 51% of the total.

「Hitachi」is well known to general consumers for home appliances such as refrigerators and washing machines. In particular, they have a lineup of products with high environmental performance, and Hitachi's products have the image of being environmentally friendly. In addition to these home appliances, they also handle railway cars, operating systems, and elevators. Regarding railway infrastructure, they are aggressively expanding globally, and achieved a high market share in Japan and China in the elevator business.

They have been working on business diversification for a while, but since they experienced a large deficit due to the The subprime morgage crisis, we withdraw from businesses with poor performance. For example, Hitachi's financial services business was sold to「Mitsubishi UFJ Financial Group(三菱UFJファイナンシャル)」, thermal power generation business to「Mitsubishi Heavy Industries(三菱重工業)」and logistics services business to「Sagawa Post. Express(佐川急便)」, respectively. 

The semiconductor business of「Hitachi」was transferred to「Renesas Electronics Corporation」, a joint venture with「Mitsubishi Electric(三菱電機)」. This "Renesas" is the company that bought the semiconductor division of 「NEC」in 2010. As for the liquid crystal display business, they made business integration with「Sony Corporation(ソニー)」and「Toshiba(東芝)」, and now it became 「Japan Display(ジャパンディスプレイ)」. As a result of this daring business reorganization and concentrationg of management resources on businesses with high profitability, they are now in a position with stable profitability.

The strength of「Hitachi」is, they are utilizing IT technology through their various field of business. With this, almost all problems could be dealt with in-house level without borrowing external aid. In addition, they are very stable in sales and profitability in consumer products and infrastructure-related products.「Hitachi」currently become the most successful Japanese electronics manufacturer and is evaluated to have few weaknesses. However, the low-priced IT products from Chine companies are expected to be a strong competitors for「Hitachi」in the home appliance field.

 

 

 

3. Major Business

 

■ Energy sector
「Hitachi」is one of Japan's three major nuclear reactor manufacturers in generators, transformers and power equipment. They supply the boiling water reactor, which was introduced from「GE」, to the electric power companies including「Toshiba」and「Tokyo Electric Power Company」. Steam turbines and large-scale boilers are manufactured at「Mitsubishi Hitachi Power Systems, Ltd.,」 a joint venture with「Mitsubishi Heavy Industries」. 

■ Industrial sector
They handle industrial, distribution and water related solutions.

■ Building system
They mainly handle elevators and have the second largest market share in Japan after「Mitsubishi Electric」.

■ Railway system
It is the only company in the world that comprehensively handles the field of railways, from railway cars to electronic equipment mounted on them, power transmission equipment, seat reservation and ticketing systems, and operation management systems such as signals.

■ Health management
It is a growing sector through M & A, and is currently competing with「Canon」and「Shimadzu Corporation 」in the market.

■ Living ecosystem
「Hitachi」handles home appliances such as refrigerators and washing machines, air conditioning system products, LED lighting, and environmental business products such as residential solar power generation systems.

■ Automotive system
They are trying to expand the scale of this business by implementing business integration with「Nissan Motor」related parts companies.

■ Hitachi High Technologies
They manufacture semiconductor manufacturing, inspection equipment, electron microscopes, analysis equipment, medical analysis equipment, etc. They also handle industries, IT systems, industrial materials, electronic devices, materials, etc.

■ Hitachi Construction Machinery Co., Ltd.
They also carry out construction work for bridges, various types of civil engineering work, schools, hospitals, and general housing, mainly on roads. They are also developing recycling business using waste and disaster prevention related business.

■ Hitachi Metals
They mainly handle specialty steel products used in steel and automobiles and industrial machinery. 

■ Hitachi Chemical
They are developing business in a wide range of fields including functional materials, electronic materials, inorganic materials, resin materials, automobile parts, power storage devices, electronic parts, and diagnostic reagents.

■ Hitachi Consulting
In the past, they integrated their consulting business and established「Hitachi Consulting」. After the「ABeam Consulting Ltd.」and「Accenture PLC」, this company has now the third largest sales as a member of SAP Certified Consultant holders in Japan.

 

 

 

4. Financial information

 

※Unit is JPY million

		2016	2017	2018
Consolidated sales		9,162,264	9,368,614	9,480,619
Consolidated operating profit		587,309	714,630	754,976
Consolidated total assets		9,663,917	10,106,603	9,626,592
Consolidated net assets		4,096,995	4,511,671	4,414,403
Breakdown of sales	Information, communication system business	1,982,821	2,008,907	2,065,913
	Social and industrial systems business	2,331,931	2,375,012	2,539,812
	Electronic devices and systems business	1,170,375	1,086,551	951,213
	Construction machinery business	753,947	959,153	1,033,703
	High functional materials business	1,464,687	1,657,537	1,704,446
	Automobile system business	992,284	1,001,036	971,007
	Life, environmental system business	557,315	540,152	485,089
	Financial services business	179,212
	Others	653,794	557,776	534,465
	Adjustments	-924,102	-817,510	-805,029