Taking in a geothermal business and the group telecoms company (2003)

What to cut, and what to take on

What president Makuta Keiichi inherited was a company in the middle of re-measuring its own assets against the yardstick of EVA. It cut plant and construction spending from a peak of just under ¥500bn to the low ¥200bns and compressed total assets by roughly ¥170bn from fiscal 1999, while at the same time taking a 65% stake in the geothermal and hydro operations of the collapsed Nichijyu group and buying back, with its own shares, the equity of a telecoms company split among ninety-six holders. That what to cut and what to take on were decided within the same two years can be seen as the character of this restructuring.

That said, the explanation at the time described telecoms as a peripheral business area, and the geothermal and hydro assets carried the strong colouring of generation that had come to hand along with a rescue. It is hard to read into the Tohoku Electric of 2004 any expectation that these two companies would become future pillars. Even so, the geothermal and hydro operations were combined with Toshin Kogyo in 2015 to form Tohoku Natural Energy, and now sit at the centre of the group’s renewables. That was twelve years after the contract with the bankruptcy trustee was signed in May 2003.