Selling copper tube, magnet wire, TOTOKU, UACJ and Furukawa Battery to concentrate on data-centre optics (2022)

Until a business held for twenty years came back to the centre

The order of the disposals followed a rule inversely proportional to the age of the affiliation. Copper tube, magnet wire and Tokyo Tokushu Densen were peeled off from the outside in, and what remained until last was Furukawa Battery — separated out by the company itself in 1950 and listed in 1972. The decision to sell shares in a subsidiary held for seventy-five years appears to have become possible only once a single yardstick, return on invested capital, was run through the whole company. It is an example of how a decision that looks unremarkable from outside — swapping one metric for another — can have the power to change the cast of businesses.

What the money was concentrated on, though, was not a newly purchased business. Optical fibre and optical components for data centres are an extension of the assets inherited from Lucent in the OFS acquisition of 2001. Much of the proceeds of the sales went into expanding output at a business carried at a loss for more than twenty years. Including the design that retained roughly 20% of Furukawa Battery indirectly, this judgement rearranged the balance between what to cut and what to keep holding. Whether the escape from operating margins in the 1% range continues cannot be known without looking beyond the forecast for the year to March 2026.