Japanese heavy machinery maker IHI Corp said Monday it will sell its loss-making cement plant business to industry peer Kawasaki Heavy Industries Ltd as it refocuses its attention on the liquefied natural gas storage facility business.
The cement plant business accounted for 8.7 billion yen or half of IHI’s overall operating loss, and 4.1 billion yen or 0.6 percent of IHI’s overall revenues last fiscal year. IHI said it expects "minor" earnings impact from the deal which it expects to complete on April 1.
By narrowing its business focus, IHI aims to improve its operations on each project to minimize risks, said the company after it issued a severe profit warning last year due to delays and troubles in plant project completions.
On the other hand, Kawasaki aims to capitalize on the acquisition to expand its cement plant business in and outside Japan, IHI said.
IHI suffered an operating loss of 47.56 billion yen in the nine months to December, worse than the 6.2-billion-yen loss it incurred a year earlier, hit by substantial losses in its plant engineering business after a strict review of profit and cost estimates for ongoing projects.
A lack of adequate manpower and other resources to handle increased projects disrupted timetables, resulting not only in delays but also in higher costs, said IHI.