Hitachi to spin off units amid reshuffle
By Robin Harding in Tokyo

Published: March 16 2009 07:57 | Last updated: March 16 2009 19:13

Hitachi, the Japanese industrial group, on Monday announced a sweeping restructuring of its operations and top-level management changes as it sought to tackle expected losses of Y700bn ($7.1bn) in the year to March.

Two of Hitachi’s largest operating divisions – the consumer business that makes electronic goods such as televisions and its automotive components business – will become independent, but 100 per cent-owned, subsidiaries. The goal is to speed decision-making and contribute to Y500bn in cost cuts during Hitachi’s next financial year.

Hitachi’s chairman and president will both stand down, to be replaced by Takashi Kawamura, who will come out of semi-retirement to take on both top jobs. He is currently chairman of two Hitachi subsidiaries that make batteries and industrial machinery.

The changes reflect concern within Hitachi about the scale of this year’s expected losses – equivalent to almost a third of shareholders’ equity as of March 2008 – but analysts were sceptical that the move would lead to radical change at the sprawling group.

Hitachi is Japan’s largest electrical group, with Y11,227bn in sales last year and 880 consolidated subsidiaries that make everything from nuclear power stations to hard disk drives.

The business was struggling for profitability even before the global downturn and this year will mark the company’s third consecutive net loss.

The group has been hit especially hard by the collapse in car sales and losses at Renesas Technology, its 55 per cent-owned semiconductor business.

After January’s announcement that Hitachi expected a Y700bn net loss in the year to March, Moody’s cut its credit rating by one notch to A2 and placed Hitachi on review for a further downgrade.

In response, Hitachi promised on Monday to cut costs by Y500bn, equivalent to 4.6 per cent of last year’s operating expenses. Of that, Y200bn will be cuts to fixed costs and Y300bn will come from a lower procurement bill, which is falling anyway because of raw material price declines.

Hitachi said much of the Y200bn in fixed-cost cuts would come from the automotive and consumer businesses, and named two Japanese car component plants that will close.

Etsuhiko Shoyama, outgoing chairman and former president, will remain on the board and is likely to wield influence, as will outgoing president Kazuo Furukawa, who will also stay on the board as deputy chairman.
Copyright The Financial Times Limited 2009

3분기 연속적자를 내고 있는 히타치가 사장교체와 사업부문을 분리하겠다고 발표했다. 신용등급이 한단계 떨어진 뒤 내놓은 방안이다. 사장을 교체해도 대표이사는 그대로 남아있다고 한다. 실질적인 의사결정권자는 그대로이다. 의사결정속도를 빠르게 하기위해 사업부문을 자회사형태로 분사 사업부문을 분리한 것도 재무재표를 깔끔하게 하기 위한 조치는 아닌지 의심된다. 한국기업들과 구조가 유사한 일본기업들도 체제를 변화하는데는 너무 느리다.