Mitsubishi Heavy Industries (MHI) reports on its management policy for fiscal 2024 and future winning strategies through MHI REPORT 2024. This article explores MHI’s future strategies.
MHI has indicated that it will focus on strengthening portfolio management and improving asset efficiency to support the growth of the entire group. First, the company aims to increase revenue to over 5.7 trillion yen, business profit to over 450 billion yen, and return on equity (ROE) to over 12% by focusing funds on growth businesses and growth areas. In particular, the company will invest approximately 1 trillion yen in gas turbine, nuclear power, and defense-related businesses to expand its market share and improve profitability in these fields.
In the gas turbine market, which saw a large increase in orders in FY2021, demand is rising for fuel conversion in line with CO2 emission regulations, regulated power sources due to the expansion of renewable energy, and on-site power sources for data centers. MHI plans to maintain its leading market share by developing and verifying highly reliable and fuel conversion technologies and combining them with CO2 capture technologies in the future. Specifically, MHI will expand supply capacity, increase production capacity, and aggressively invest in R&D to drive the decarbonization market.
Expansion of Nuclear Energy Business
In accordance with the government’s “Promotion of Nuclear Energy Utilization” policy, MHI will restart existing plants, support the establishment of a fuel cycle, and promote maintenance work to ensure long-term stable operation. In addition, the company will focus on exporting equipment to overseas markets and developing next-generation nuclear technologies such as fast reactors and high-temperature gas-cooled reactors. In particular, the company aims to ensure a stable energy supply and reduce environmental impact through the promotion of the design of the innovative light water reactor SRZ-1200® and the development of a demonstration fast reactor.
Reinforcement of Defense Business
Against the backdrop of heightened geopolitical risks, defense budgets are being increased and new defense equipment is being introduced. MHI will ensure the international joint development of standoff defense, missile defense, and next-generation fighter aircraft, and will also work on the development of unmanned technology. In this way, MHI will strengthen its competitiveness in the defense sector and respond to security needs in Japan and overseas.
Promote commercialization of growth areas
Following a three-year plan that began in FY2021, in FY2024 the company will establish a new GX segment that aims to build a hydrogen and ammonia value chain. The segment will contribute to the realization of a carbon-neutral society through the hydrogen project underway in Utah, U.S.A., and the establishment of the CCUS value chain. In particular, the segment aims to monetize the technology through licensing business, strengthen partnerships, and function as a nodal point of the ecosystem.
Strengthen business competitiveness
In existing businesses, the company will work to recover and strengthen profitability while responding to new markets. For example, the company is promoting digital transformation (DX) by providing power and cooling systems for data centers and expanding its AI-based failure prediction and preventive maintenance services. The company will also focus on technology development to maintain its competitive advantage by deploying labor-saving and automation technologies for steelmaking machinery and logistics equipment. Strengthening the technological base is another important strategy. Through the introduction of the latest technologies and aggressive investment in R&D, the company will promote sustained innovation. In particular, the company is focusing on the advancement of manufacturing processes using AI and digital technologies, and the development of energy-saving and streamlining technologies.
We will also focus on human resource development and promote the securing and training of digital innovation personnel. By doing so, the company aims to build a strong human resource base to support technological innovation and further enhance the competitiveness of the entire group.
Sustainability Initiatives
Under its “MISSION NET ZERO” initiative, MHI aims to reduce Group-wide CO2 emissions by 50% by 2030 and to achieve virtually zero emissions by 2040. To achieve this goal, MHI is promoting a wide range of initiatives, including the decarbonization of existing infrastructure, the creation of hydrogen and ammonia eco-systems, and the expansion of CO2 capture technologies. In particular, the development of high-efficiency gas turbines and the demonstration of technologies to convert to carbon-neutral fuels are underway, which will play a central role in the energy transition; Scope 1 and 2 are aimed at energy conservation and streamlining of production processes, while Scope 3 is expanding hydrogen and ammonia combustion technologies and CCUS business. Specifically, the company will promote social implementation of carbon neutral solutions through demonstration tests at the Takasago Hydrogen Park and the Nagasaki Carbon Neutral Park.
MHI will also review its dividend policy and adopt the Dividend on Equity (DOE) method to realize stable and predictable dividends, planning to pay out 22 yen per share in FY2024 and 26 yen per share in FY2026, aiming to increase dividends in line with profit growth.
Through these strategies, MHI will leverage its technological capabilities and global business base with a history of more than 140 years to strengthen its position as a company that balances sustainable growth with contributions to society. The company intends to continue to play a leading role in the world by promoting decarbonization from both energy supply and demand perspectives, and by pursuing technological innovation and market expansion.
