- Predicts full-year profit will rise 16% from last year
- Hitachi expanding overseas; benefits from higher rail travel
Hitachi Ltd., Japan’s second-largest manufacturer, predicted a 16 percent jump in annual profit helped by demand for trains and automotive parts. The forecasts missed estimates.
Net income may rise to 200 billion yen ($1.8 billion) in the year ending March, the Tokyo-based company said in a statement Friday, lagging behind the 286 billion yen average estimate of analysts. Sales forecast of 9 trillion yen also lagged behind the 10 trillion yen estimate.
Hitachi, which bought Finmeccanica SpA’s rail business last year, is expanding overseas and is benefiting from increasing demand for travel by train -- a segment also targeted by its Chinese rival CRRC Corp. Hitachi, whose businesses include power plant turbines, bullet trains and elevators, is spending $2.8 billion over the next three years on the Internet of Things to boost sales by offering extra services and increased efficiency.
The trainmaker said the sale of shares in its leasing unit will probably reduce the revenue it books from the company by 490 billion yen this fiscal year, according to a statement Friday. Mitsubishi UFJ Financial Group Inc., Japan’s biggest bank, and its leasing unit announced Friday that they would buy a total of 27.2 percent of Hitachi Capital Corp. from its parent.
Hitachi’s shares fell 1.8 percent to 476.1 yen as of the close of trading in Tokyo. The stock is down 30 percent this year, compared with a 14 percent decline in the Nikkei 225 Stock Average.
Chief Executive Officer Toshiaki Higashihara said last month he is increasing the company’s focus on use of digital technology to help boost sales in its car parts, train and energy businesses while spinning off non-core units. Hitachi will also consider buying companies, he said.
Hitachi agreed in March to a tie-up with Sagawa Express Co. in the logistics business and in October merged its air-conditioning unit with Johnson Controls Inc. The company previously combined its energy-equipment business with that of Mitsubishi Heavy Industries Ltd.
Hitachi also is expanding its rail business, opening its first U.S. plant to build Metrorail vehicles for the Miami area. The company wants to bid for the second stage of the high-speed rail network in the U.K., said Higashihara, who took the helm April 1.