TOKYO -- Hitachi's operating profit reached a record high for the first time in 23 years in the fiscal year ended March 2014. The company appears to be moving closer to logging an operating profit margin of more than 7% on sales of 10 trillion yen ($93.3 billion) as called for by its current medium-term business plan through the fiscal year ending March 2016.
Nikkei asked Toshiaki Higashihara, who became president and chief operating officer of the electronics and machinery conglomerate in April, about his managerial policy and the company's next medium-term plan.
Excerpts from the interview follow.
Q: What was the first thing you did as president?
A: I toured 23 of our operations, both inside and outside Japan. There we chose 100 senior and middle managers and had lunch with five of them at a time to tell them how we want to change Hitachi and to get their direct feedback.
Q: What did you learn as a result?
A: Hitachi has been in the manufacturing business for more than 100 years. I concluded that we tend to expect our customers to buy whatever new product we make. I intend to forge solution-type dealings, whereby we try to understand what kind of value Hitachi can create in consultation with our customers.
We will spend six to 12 months reorganizing our operations according to customer groups including financial institutions, public organizations, manufacturers and power companies. The we will delegate decision-making power to each division. Since information and control experts are necessary for all divisions, such experts will be the link connecting all divisions.
Q: What is your goal for the next medium-term plan?
A: We are shooting for an operating profit margin of at least 10%. To achieve this, we have to conduct both top-down and bottom-up reforms. We will urge workers to interact with customers, doing more to make their own decisions. Our organization will stay in the background to support them while leveraging our strength as a conglomerate. We will also work on revenue growth because we won't be able to get the energy we need unless sales increase.
Q: Do you have any plans for corporate acquisitions or selling of any operations?
A: We will do both. We will carefully estimate the benefits of any such move and take the utmost care in selecting businesses we buy or sell. We intend to augment businesses such as healthcare equipment, whose value will grow by incorporating more information technology.
Q: Hitachi is trying to buy the rail business of Italy's major defense and aerospace contractor Finmeccanica. What do you think will come of this deal?
A: I won't comment on any specific deal but intend to boost our rail operations. We handle rolling stock, signals and railway operations in Japan so the technical expertise we have acquired should meet the needs of many other countries.
Q: Hitachi merged its thermal power system operation with that of Mitsubishi Heavy Industries. Do the two companies aim to work even closer together?
A: We have a very good relationship now that our thermal power business has been merged and launched as a new company. We will decide whether to collaborate further on a case-by-case basis. Hitachi will seek partners with a global perspective and hope to gain partners from each region (of the world) to strengthen overseas activities.