Hitachi to reorganize business structure

Reuters News
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Posted: Feb 03, 2012 12:38 AM
Hitachi to reorganize business structure

TOKYO (Reuters) - Hitachi Ltd said on Friday that it would reorganize its operational structure in April by setting up five new groups, as it looks to accelerate growth in its social infrastructure business and continue overhauling its sprawling operations to boost profitability.

Japan's biggest industrial electronics company has been revamping its empire of some 900 firms after it tumbled to one of the biggest losses in Japanese corporate history reported only three years ago under the weight of a high-cost structure and lack of operational focus.

Hitachi bounced back from those losses and has been a rare bright spot among its peers during the current earnings season, with its shares soaring more than 7 percent on Friday after it stuck to its full-year profit outlook, in contrast to other electronics makers that have forecast massive annual losses.

Hitachi said it would reorganize its business areas into five groups -- infrastructure, information technology, power systems, construction machinery and high-functional materials.

"By uniting businesses that have strong relevance to one another, we will accelerate the speed of decision making ... and realize a structure that is globally competitive," the firm said in its statement.

For the infrastructure business, Hitachi will bring together its rail systems, urban planning and defense systems divisions under the new group, it said.

The company will also set up a new management position in Beijing to oversee businesses in China and Asia, as it seeks to continue expanding in China, which accounts for 13 percent of Hitachi's sales.

President Hiroaki Nakanishi will hold a news conference at 3:00 p.m. (1 a.m. EDT) on the new structure, the firm said.

Hitachi, grappling with a strong yen, a global economic downturn and damages from natural disasters, on Thursday reported a 21 percent fall in quarterly operating profit, but kept its full-year outlook unchanged for a 400 billion yen ($5.25 billion) profit.

Shares of Hitachi were up 7.3 percent at 428 yen in Friday afternoon trade.

($1 = 76.1500 Japanese yen)

(Reporting by Yoko Kubota; Editing by Chris Gallagher)