TOKYO -- Hitachi Transport System's tie-up with Sagawa Express signals the beginning of a next round of restructuring at the Hitachi group, as the parent looks to boost profitability to go after General Electric and other rivals in the U.S. and Europe.
"To achieve further growth, we will review our business portfolio," Hiroaki Nakanishi, chairman and chief executive of Hitachi, has said on multiple occasions.
The company has gone through drastic reorganizations of its group businesses in the past several years. Hitachi sold off its hard-drive business and spun off its liquid crystal display panel operations in 2012. The company went on to let its fossil-fuel power generation system business integrate with that of Mitsubishi Heavy Industries in 2014. Its air-conditioning system unit was merged with a U.S. firm in 2015.
In addition, Hitachi turned Hitachi Maxell into an equity-method affiliate by relisting the consumer electronics arm's shares. The parent had converted Hitachi Maxell into a wholly owned subsidiary by delisting the stock in 2010 to turn the troubled unit around.
These restructuring efforts, aimed at focusing its business resources on the areas of infrastructure and information technology, helped Hitachi earn a record operating profit in the year ended March 2015. But the company is bracing for the first drop in operating profit in four years this fiscal year, hit by the slowing Chinese economy.
In response to the profit shortfall, Hitachi is looking to renew its efforts to reorganize its group businesses. Hitachi Transport's partnership with Sagawa Express, which will result in the logistics subsidiary becoming an equity-method affiliate, is the first major restructuring move in four years. But the next major business reorganization announcement will most likely come soon.