IHI Corp. plans to increase imports of shipbuilding components to counter the yen's rise.
The heavy-machinery maker's IHI Marine United Inc. unit, which buys "most" of its components from domestic suppliers, plans to buy parts including pumps and motors from South Korea and other nations, Shigemi Kurahara, the subsidiary's incoming president, said, without specifying volumes and suppliers.
IHI forecast a 64 percent decline in shipbuilding operating profit this business year to ¥1 billion because of the stronger yen. The unit will review procurement to hedge currency risk and cut costs and will likely increase purchases from South Korea, where quality improvements in vessels and parts have boosted demand from global shipping lines, Kurahara, 60, said.
"We need a business structure that's less affected by factors beyond our own control," said Kurahara, who takes IHI Marine United's helm in June.
South Korean shipbuilders, now the world's largest, used to import Japan-made components, Kurahara said. The yards now make about 80 percent of the parts domestically, and IHI imports electrical cable from the country for its ships, he said.
"As far as our customers agree, we are putting overseas-made parts on ships we build," Kurahara said.
IHI assumes the yen will strengthen 7 percent to average ¥95 against the dollar for the year started April 1.