Operating profit at the Tokyo-based company's shipbuilding and marine business will climb to about 10 billion yen ($97 million) in the financial year starting April 1, from an estimated 4 billion yen this year, Shiro Iijima, managing executive officer in charge of shipbuilding, said today.
Mitsubishi Heavy, which builds ships ranging from liquefied natural gas tankers to container vessels, is seeking to tap demand from shipping lines to carry Chinese imports of raw materials and exports of finished goods to the rest of the world. The company, which gets 9 percent of sales from the business, will invest 50 billion yen in the unit by 2010, Iijima said.
Iijima was speaking to reporters today at the Nagasaki shipyard, located in Japan's southern island of Kyushu.
Mitsubishi Heavy expects its operating profit margin to widen to 5 percent to 6 percent in the year ending March 2012, from this year's 1.4 percent estimate, Iijima said.
South Korea ended Japan's 44-year reign as the world's largest shipbuilder in 2000. China overtook Japan as the second- largest shipbuilding nation by new orders in 2006 and extended its lead last year, threatening to also surpass Japan by construction.
The Nagasaki shipyard installed the nation's largest crane that's able to hoist parts weighing as much as 1,200 tons at the 1-kilometer dock, Mitsubishi Heavy said on Feb. 20. The addition of the crane enables the shipyard to build the equivalent of seven liquefied natural gas carriers a year, up from five now.
Mitsubishi Heavy's shipbuilding division will have an operating profit of 4 billion yen for the year ending March 31, as it delivers vessels from contracts won at higher rates in 2004 and 2005, according to a Feb. 6 estimate from Mitsubishi Heavy. The division incurred losses in the previous four years as prices were not sufficient enough to absorb increased steel costs.
Steelmakers, including Posco and Nippon Steel Corp., plan to charge more for steel plates used in ships to counter higher raw material costs.
Nippon Steel seeks to increase domestic contract prices by 20,000 yen a metric ton for plates for the year starting April 1, company officials, who asked not to be identified, said last month. Prices this year ranged between about 70,000 yen and 80,000 yen.
The Shipbuilders' Association of Japan, which represents 20 Japanese builders of vessels, will seek to establish a pricing system that enables shipbuilders to charge raised costs onto buyers, a similar price structure adopted for commercial planes, Chairman Masamoto Tazaki said on Feb. 19.
Ship prices are typically set when shipyards receive orders and builders are not able to charge more to customers even when additional costs are incurred. Ships are typically delivered three to four years after contracts are made.