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Beko Owner To Take Over Hitachi Appliances Business

Hitachi, whose Australian appliance business has grown during COVID-19 has moved to offload 60% of their home appliance business to Turkish Company Arcelik the owner of the Beeko brand.

The US$500 million deal could lead to the expansion of the Hitachi appliance business in Australia.

ChannelNews understands that Arcelik who also own the Grundig brand are looking to relaunch the Grundig brand in Australia, to date no decision has been made on whether they will launch Grundig branded appliances and audio systems locally.

Currently the Japanese domestic market accounts for 80% of Hitachi’s home appliance sales, their overseas markets that include Australia is relatively small and Arcelik who have their own subsidiary on the Gold Coast believe that they can grow Hitachi’s overseas business.

Hitachi management believe that by teaming up with Arcelik, which is strong in such markets as Europe and Africa, the Japanese company can expand overseas sales of Hitachi branded products which will improve the profitability of the division.

Currently Hitachi is rapidly overhauling its group businesses, seeking to concentrate on core operations while shedding others, such as its metals business which is now in negotiations to be sold.

Although the appliance segment is considered to be a noncore operation, it is one of the few areas where Hitachi has direct contact with consumers, providing the company with valuable data on people’s lifestyles, especially as it develops its Internet of Things operations.

At this stage it’s uncertain whether Hitachi will continue with a subsidiary in Australia for their consumer products.

Hitachi home appliances sales, which mainly consists of white goods such as refrigerators and washing machines, came in at US$4.5 billion in the 2019/2020 fiscal year that ended in March operating profit margin was just under 5%.

In order to survive in global competition, Hitachi is aiming for a companywide margin of over 10% next fiscal year and strengthening the appliance segment has become an urgent issue.

Low-cost Chinese appliance makers such as Haier who also own Fisher & Paykel are now finding that markets around the world including Australia are turning off buying Chinese appliances.

In 2015, Hitachi sold a 60% stake in its overseas air conditioning business to Johnson Controls, a major U.S. automobile parts company. Hitachi Global Life Solutions, which owns the remaining 40%, is expanding those overseas sales via a joint venture with Johnson Controls. It plans to use the same approach in its partnership with Arcelik.

The Hitachi business has previously attracted interest from other suitors, according to the people. A representative for Arcelik declined to comment, while a spokesperson for Hitachi couldn’t immediately be reached outside regular business hours.

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