M’bishi Heavy eyes spinning off entire commercial shipbuilding unit

Mitsubishi Heavy Industries Ltd. said Thursday it is considering spinning off its entire commercial shipbuilding business as it struggles under the ballooning cost of cruise ship building.

The spinoff, which could be implemented as early as July, will include not just the unit’s design division but its manufacturing division, President Shunichi Miyanaga said at a press conference announcing the company’s earnings results.

The heavy machinery maker is also facing a soaring passenger-jet development cost.

The company reported a group net loss of 11.24 billion yen ($100 million) for the April to December period, compared with a net profit of 53.39 billion yen during the same period in 2015, due to additional losses in the cruise ship business and a stronger-than-expected yen.

Its group operating profit for the nine months through December plunged 63.1 percent from a year earlier to 68.48 billion yen, on sales of 2.69 trillion yen, down 4.9 percent from the year before.

The increasing cost of developing the Mitsubishi Regional Jet, a project being implemented by subsidiary Mitsubishi Aircraft Corp., also weighed on earnings, with its transportation division logging an operating loss.

The heavy machinery maker kept its full-year earnings forecast unchanged, projecting consolidated sales of 4 trillion yen for the year ending in March, an operating profit of 240 billion yen and a net profit of 100 billion yen.

The company also announced that Hiromichi Morimoto, the 62-year-old president of the aircraft manufacturer, will retire on March 31 and be replaced by Hisakazu Mizutani, a 65-year-old executive vice president of Mitsubishi Heavy.

Late last month, Mitsubishi Heavy said it will postpone the first delivery of the passenger jet until the middle of 2020, the fifth delay in its delivery plan.

The postponement could add around 100 billion yen to the development cost, which is currently projected at 400 to 500 billion yen.

Miyanaga said he expects the management reshuffle to help improve employees’ morale.
Source: Mainichi Japan