Hitachi Ltd. to Sell Stake in Hitachi Construction Machinery

Updated Jan 19, 2022
Hitachi ZX210LC excavator digging on a construction site.
After years of speculation, Hitachi Ltd. is selling half of its 51% stake in its construction unit, Hitachi Construction Machinery.
Hitachi

Hitachi Ltd. is selling half of its 51 percent stake in Hitachi Construction Machinery to trading firm Itochu Corp and investment fund Japan Industrial Partners, according to a report by Reuters and other media outlets.

The sale shouldn’t come as a surprise though. Hitachi Ltd. hinted at divesting all or part of its interests in the construction unit in March 2019 and again in October 2020.

According to a Nikkei Asia report, Hitachi Ltd. will sell the stake for $1.7 billion, marking the final transaction in a decade-long realignment of its business portfolio. The construction unit's market value at the end of share trading in Tokyo was 753 billion yen. Hitachi Construction Machinery reported $7.1 billion in revenue for the 2021 fiscal year from the sales of its equipment and parts.

"This shareholder announcement is part of HCM’s long-range plans to support HCM growth in North America and Latin America. It will not impact HCM’s working relationship with Hitachi Limited. But, by adding a solid financial partner in the capital-intensive equipment industry, HCM will have greater independence to chart its own future, including supporting our growth initiatives in the United States, Canada and Latin America region," says Al Quinn, CEO, HCMA.

In the U.S., Hitachi’s construction subsidiary has undergone several organizational changes in recent months.

  • In August 2021, Hitachi Construction Machinery and John Deere dissolved their 33-year joint venture agreement for the manufacturing and distribution of excavators in North, Central and South America. Following the announcement, Hitachi Ltd. received several sales inquiries from trading companies, large-scale mining distributors and small and medium-sized construction distributors in the Americas. 
  • In October 2021, the company announced a corporate name change from Hitachi Construction Machinery Loaders America to Hitachi Construction Machinery Americas to reflect its organizational changes and plans for growth.  HCMA is focused on the sales and service sectors, as the regional headquarters handling all construction machinery products, including wheel loaders, compact and large hydraulic excavators, ultra-large mining excavators, and mining dump trucks.
  • In November 2021, the company shipped its first hydraulic excavator built in Japan after the Deere split for the North America market.
  • And starting in March, Hitachi Construction Machinery Americas will manufacturer all of its construction and mining equipment in Japan and then import the products to North and South America, selling them through its own distribution network.

Hitachi Ltd. will maintain a relationship and retain its shares with the construction equipment unit, as there are synergies with the group’s Internet of Things platform, Lumada. In addition, Hitachi Ltd. will continue to contribute to the Hitachi Group vision of achieving net-zero emissions in the mining market by providing engineless, fully electric dump trucks, which are jointly under development with ABB Ltd. 

For Itochu, the deal means an expansion of its overseas sales network. The Japanese trading house sells construction equipment in the U.S., Japan and Indonesia, as well as other markets. It also has a joint venture agreement with Hitachi Construction Machinery in Indonesia to oversee sales and offer financial services.