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Hitachi hit hard by quake

Posted: 29 Mar 2011 ?? ?Print Version ?Bookmark and Share

Keywords:Japan earthquake? Hitachi? damaged facilities?

The devastating March 11 earthquake has hit Hitachi Ltd hard.

According to David Rubenstein, an analyst with MF Global, Hitachi's stock has fallen by 15 percent versus the TOPIX fall of 8 percent since the tremor that struck northeast Japan.

''We believe that the sell-off is attributable to doubts about the viability of (its) nuclear business and stoppage of production at several factories in Hitachi city. However, we would assert that much of the cause of this accident was due to TEPCO's negligence, which suggests that the reactor makers will not be liable for damages. Further, Hitachi could benefit from an increase in non-nuclear power demand in Japan. Lastly, nuclear power is rather small at 2 percent of total sales,'' Rubenstein explained.

The report released by MF Global says the catastrophe has had a ''major impact'' on Hitachi's seven manufacturing facilities near the Tohoku region. Of these, five are in or near Hitachi city in Ibaraki, one is in Chiba and one is in Fukushima. The parent company owns three of the factories and identifies four facilities as unlisted subsidiaries.

''There is building and equipment damage to six of the plants, which have not been repaired yet. Chiba's LCD plant has electrical power problems only. Most of the plants will not restart production until after April except for the Chiba plant,'' he said.

The damaged plants include Hitachi city, Ibaraki (auto parts, power systems and control systems); Naka City, Ibaraki (elevators and auto parts) Fukushima (auto parts), and Chiba (small displays).

''Hitachi has 30 percent of its production overseas. The domestic production includes over 100 factories for the entire Hitachi group. The firm views the power systems division as the highest risk factor given the uncertainty of the nuclear power outlook,'' he said.

''Many of Hitachi's products don't have inventories such as power systems or elevators. However, white goods do have inventories, the elevator division has large capacity in China, and the turbine business has capacity overseas in Germany and the U.S. Other core production areas are IT/servers in Kanagawa, trains in Kansai and ATMs in Nagoya, all of which are unaffected by the earthquake,'' he added.

- Mark LaPedus
??EE Times

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