February 25, 2024

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Technology and Age

Hitachi’s incoming president to expand global tech footprint

TOKYO — Hitachi has chosen Executive Vice President Keiji Kojima as its first new president in seven years, positioning him to lead the Japanese technology group through its latest growth phase.

“I’m committed to turning Hitachi into a global leader in social innovation,” Kojima said during an online briefing on Wednesday. “The assets for competing on the world stage are now in place.”

Kojima’s resume includes overseeing the development of Lumada, Hitachi’s pivotal industrial Internet of Things platform. Lumada is now a core business that contributes over 1 trillion yen ($9.2 billion) in revenue and has an operating margin surpassing 10%.

This promotion was triggered by the retirement of Executive Chairman Hiroaki Nakanishi, who has been hospitalized for lymphoma. President Toshiaki Higashihara has succeeded Nakanishi while simultaneously serving in his current position.

Kojima will step in as president following a shareholders’ meeting in June. Nakanishi remains with Hitachi as chairman emeritus.

Although the executive shuffle was an abrupt affair, “it has been discussed constantly during nominating committee meetings,” Higashihara said.

After Hitachi booked a record-making net loss of 787.3 billion yen in the year ended March 2009 following the global financial crisis, the company went through years of restructuring with a goal of bouncing back to “global competitive form,” in the words of Higashihara.

That journey entailed divesting from non-core businesses that had little to do with information technology, such as Hitachi Chemical and the power tool maker Hitachi Koki. At the same time, group companies like Hitachi High-Tech were turned into wholly-owned subsidiaries.

In short, Hitachi has been reorganizing its business portfolio from that of a manufacturer that sold goods at volume into an organization largely concentrated on providing tech services on an ongoing basis.

Hitachi’s earning capacity has come back strong. The company projects that consolidated operating profit will jump 50% to 740 billion yen this fiscal year. In March, Hitachi announced it would purchase U.S. software developer GlobalLogic for $9.6 billion.

However, Hitachi’s transformation from a general electronics maker to a global tech group is far from complete. Lumada and other IT businesses brought in 2.04 trillion yen in revenue. Although the figure represents about a quarter of all sales, much of the earnings come from business with Japanese financial groups and government agencies.

The domestic business accounts for 70% of Hitachi’s IT sales, making overseas expansion a pressing issue.

“I expect [Kojima] to take the role of promoting globalization and synergies between acquisitions and existing businesses,” said Higashihara.

Kojima indicated that attaining growth mostly through acquisitions would pose a challenge.

“It’s important to grow under your own power,” Kojima said.