MHI Splits Shipbuilding Sector

zoomKouyagi Plant Dock at Nagasaki Shipyard and Machinery Works Japans Mitsubishi Heavy Industries (MHI) is pushing on with the last years plan to establish two new group companies at its Nagasaki Shipyard & Machinery Works Koyagi Plant one to undertake ship construction and the other to manufacture hull blocks. MHI also plans to transfer its operations in construction of large-size commercial ships in the Nagasaki district to the new firms. MHI will separate cruise ship construction from its commercial ship business and operate as an engineering business under a new organization to be launched within the Commercial Aviation & Transportation Systems business domain. Of the two new companies, the ship construction entity will be launched as a company succeeding the MHI Ship & Ocean Engineering, focussing on sales, engineering, procurement, manufacture, construction and repair services. New ship construction operations will focus on LNG (liquefied natural gas) and LPG (liquefied petroleum gas) carriers, vessels that MHI expects to be in strong demand beyond the near term. The hull block manufacturing company will initially get under way in the form of a preparatory company, followed by an absorption-type split. The new entity will specialize in large-scale hull blocks, and will pursue enhanced productivity primarily by continuous construction of such blocks and refurbishing of its physical plant. Besides supplying blocks to the new ship construction company, the firm will also promote their sale to customers outside the MHI Group. Plans also call for annual production volume to be progressively expanded. MHI presently undertakes shipbuilding operations in commercial vessels at two locations Nagasaki and Shimonoseki having gradually consolidated from its original five ship construction bases in response to changes in the commercial ship market commencing in the 1980s. No changes will be made in the structures of shipbuilding activities for commercial vessels at Shimonoseki Shipyard & Machinery Works and vessels for the Japan Ministry of Defense at Nagasaki Shipyard. For the nine months ending December 31, 2014, MHI recorded JPY 2.618 trillion (USD 22,3 bn) in new orders, a 14.1% increase compared to little over JPY 2.295 trillion (USD 19.55 bn) worth of orders received for the same period in 2013. But despite a surge in new orders, the companys net income for the period dipped by 9% to JPY 71.1 billion (USD 605. 8m). MHI expects to end the fiscal year ending March 31, 2015 with JPY  4 trillion (USD 34 bn) in net sales, and JPY 100 billion (USD 852 m) in net income.