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The HCM Group worked on securing profit by the establishment of a global management support scheme, expansion of its market share, cost reduction, and continued enhancement of operational efficiency by business/structural reform. In addition, we created the global research/development framework and strengthened the development marketing function to provide appropriate products by region and solutions for customers’ life-cycle cost reduction. HCM acquired H-E Parts and it became our wholly owned subsidiary on December 21, 2016 for enhancement of our value chain through strengthening of solution business. As for the crawler crane business, HCM transferred a portion of its Hitachi Sumitomo Heavy Industries Construction Crane Co., Ltd. (HSC) stock to Sumitomo Heavy Industries, Ltd. (SHI) and it became an equity-method affiliate of HCM on March 31, 2017.
Consequently, consolidated revenue for this term (April 1, 2016 to May 31, 2017) was ¥753,947 million, down 0.6% year on year. Adjusted operating income increased by 21.0% year on year to ¥28,265 million due to a decrease in overhead costs, operating income was ¥23,622 million, down 30.6% year on year due to booking of the restructuring cost in addition to the negative impact of the gain from the restructuring booked in FY2015. Net income attributable to owners of the parent was ¥8,022 million, down 8.9% year on year.
Solution business, our new business segment, consists of HE-Parts International LLC, which we consolidated in FY2016 3Q, and Bradken Limited, which became our consolidated subsidiary in FY2016 4Q, has been added to the existing construction machinery business since FY2016. Business results by these segments are as below.
Demand for hydraulic excavators increased by approx. 10% year on year due to the recovery in China, India, Asia, and Europe. We promoted enhancement of parts and service business through a globally launched service solution called “ConSite,” as well as expansion of the parts supply network to enlarge sales and revenue. In Japan, for i-Construction promoted by the Ministry of Land, Infrastructure, Transport and Tourism, HCM have been working to promote ICT hydraulic excavators and smart construction solutions.
As for mining machinery, demand for hydraulic excavators increased by approx. 10% year on year because of the recovery of commodity prices that could be seen from the middle of FY2016; however, demand for rigid dump trucks decreased by approx. 20% year on year. The decrease in ultra-large machines was significant for both hydraulic excavators and rigid dump trucks. We are focusing on expanding sales of the well-accepted AC-3 series rigid dump trucks especially the one for trolley use or high-altitude use equipped with an advanced vehicle body stability-assist function, in addition to offering a fleet management system and development of an autonomous haulage system to optimize mine operation, by bringing Hitachi Group’s strengths. Furthermore, we have been working on establishment of a highly controlled customer support system to enlarge revenue from parts and service.
This segment consists of H-E Parts and Bradken. H-E Parts provides service and solution required for machinery or equipment for mining, crushing, and construction mainly in Australia and the US. Bradken conducts various businesses concerning our value chain such as specialty castings for the industrial and energy industries, and wear parts for mining fixed plants and mining mobile plants, and it also provides maintenance and service for them.
Consolidated revenue for this term (April 1, 2016 to March 31, 2017) was ¥6,691 million, and adjusted operating income was ¥452 million because of consolidation of H-E Parts.