Kawasaki Report 2016 - Making history anew - Kawasaki Heavy Industries, Ltd.
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Kawasaki
Report
2016
Year ended March 31, 2016
Making history anew......
This Report can be accessed
from the QR code on the left.
Printed in Japan August 2016
River Mark: Used as the corporate emblem, this stylized version of the Japanese character for “river”
—the first character in the name “Kawasaki”—was adopted by the Company’s founder, Shozo Kawasaki.
Making history anew… 1 …by continuously moving society forward
3 120 Years of Value Creation: A History of Providing Social
Value and Enhanced Enterprise Value Firmly Rooted in
Technological Innovation
5 Kawasaki Group Mission Statement
6 To Our Stakeholders
7 Directors and Corporate Auditors
9 Performance Highlights
11 …by taking steps to increase enterprise value
12 Message from the Top Management
19 …by uniting to expand possibilities
Initiatives to Realize a Hydrogen Society
25 …by utilizing our strengths to accelerate growth
27 Ship & Offshore Structure
29 Rolling Stock
31 Aerospace
33 Gas Turbine & Machinery
35 Plant & Infrastructure
37 Motorcycle & Engine
39 Precision Machinery
......by continuously moving society forward
41 …by realizing growth that benefits all
CSR Activities of the Kawasaki Group
43 Corporate Governance/Compliance/Risk Management
47 Developing and Utilizing Human Resources
49 Collaboration with Business Partners/Human Rights
Editorial Policy Period 50 Social Contribution
This report focuses on activities undertaken in fiscal 2016 and key This report covers fiscal 2016 (April 1, 2015 to March 31, 2016),
aspects of strategies for the future as well as the new medium-term but some fiscal 2017 content is also included.
51 Environmental Approach
business plan that guides the Kawasaki Group from fiscal 2017. Also,
because Kawasaki is celebrating a corporate milestone—our 120th Scope
anniversary – we offer a look back at the technologies and expanding The report covers Kawasaki Heavy Industries, Ltd., its 99
54 Directors, Corporate Auditors and Executive Officers
business footprint that characterize our growth into today’s Kawasaki consolidated subsidiaries (49 in Japan and 50 overseas) and 55 Management Discussion & Analysis
Group. 20 equity-method non-consolidated subsidiaries. Some data,
The purpose of this report is to update all our various stake- however, refer to the parent company alone. 59 Consolidated Financial Statements
holder groups on the status of our efforts to create value for society 67 Notes to the Consolidated Financial Statements
and to boost enterprise value, our management policies, our business Guidelines
environment and strategic responses, and major environmental, social In preparing the report, the editorial office referred to the Sus- 97 Corporate Profile/Stock Information
and governance (ESG)-related content. We hope that this information tainability Reporting Guidelines (G4 ver.)* issued by the Global
98 Base/Major Subsidiaries Introduction
will enable everyone to acquire a deeper understanding of what we Reporting Initiative (GRI) and the Environmental Reporting Guide-
do and what we aim to achieve as the Kawasaki Group. lines (2012 Edition) issued by the Ministry of the Environment.
For more information on many of the topics touched upon in this *The Sustainability Reporting Guidelines (G4 ver.) follows the reporting
report, please visit our website and follow the appropriate links. principles of the GRI G4 Sustainability Reporting Guidelines; however,
Financial information: our reporting is not yet in accordance with the GRI G4 Guidelines.
Disclaimer
http://global.kawasaki.com/en/corp/ir/
Frequency of Publication Figures in this report appearing in forecasts of future business performance or similar contexts represent forecasts made by the Company based on information
CSR information: accessible at the time, and are subject to risk and uncertainty. Readers are therefore advised against making investment decisions reliant exclusively on these
Annually, in general
http://global.kawasaki.com/en/corp/sustainability/ forecasts of business performance. Readers should be aware that actual business performance may differ significantly from these forecasts due to a wide range
Previous number — Issued in July 2015
Environmental information: Following number — Expected to be issued in August 2017 of significant factors arising from changes in the external and internal environment. Significant factors that affect actual business performance include economic
http://global.kawasaki.com/en/corp/sustainability/environment/ conditions in the Company’s business sector, the yen exchange rate against the U.S. dollar and other currencies, and developments in taxation and other systems.
Contact us This report not only describes actual past and present conditions of the Kawasaki Group but also includes forward-looking statements based on plans, forecasts,
Please make inquiries through the inquiry form on our website business plans and management policy as of the publication date. These represent suppositions and judgments based on information available at the time.
http://global.kawasaki.com/en/corp/profile/contact/ Due to changes in circumstances, the results and features of future business operations may differ from the content of such statements.
1 2
Shozo Kawasaki, founder of what eventually grew into the Kawasaki Group, established Kawasaki Tsukiji Ship-
yard in 1878 and ventured into the shipbuilding business, believing strongly that the construction of modern
120 Years of Value Creation: A History of Providing Social Value and Enhanced Enterprise ships was essential for Japan to develop and prosper and that his mission in life was to support this process.
Value Firmly Rooted in Technological Innovation His philosophy “contributing to the nation—to society—through expertise” was embraced by Kojiro Matsukata,
the first president of the incorporated company, Kawasaki Dockyard, who also guided the company into the
Improve
enterprise value rolling stock, aircraft, shipping and steel businesses and developed the company into one of Japan’s leading
ROIC heavy industry enterprises. Later, to meet the needs of society and customers of the day, the company evolved
Technological Social value of flexibly, through active introduction of technology and the enthusiastic pursuit of innovation and application.
value businesses Adapting to changing times, the company has continued to grow, and enjoys a high profile in land, sea and air
Kojiro Matsukata
(innovative technology) transportation systems as well as energy & environmental engineering and ROBO-MECH. In 2016, Kawasaki cel-
First president following transition to incorporated company in 1896 ebrates its 120th anniversary. Going forward, today’s Kawasaki Group will continue to provide social value
Guided company into rolling stock, aircraft and shipping/steel businesses
Implemented Japan’s first eight-hour day system through its business activities, underpinned by innovative technology, and pursue synergies derived among
business segments to raise enterprise value to an even higher level.
Shozo Kawasaki
Established Kawasaki Tsukiji Shipyard in 1878 Please refer to pages 25–40 for details on the
Believed in “contributing to the nation—to society—through expertise” Current business Split off/transferred Technology expansion
activities of each internal company.
Cargo-passenger Stock boat manufacturing Oyashio, Ship & Offshore
ship Iyomaru Matsukata, anticipating a shortage
1878 Kawasaki Dockyard’s of vessels given the circum-
first domestic
submarine
Structure
Shipbuilding first vessel after stances of World War I, took the made after
becoming a publicly decisive step to build stock boats, The 10th
World
traded company and by 1926 the company had Toyotamaru,
War II First Japan-built
constructed 96 vessels first Japan-built pure
LNG carrier
car
ca
ar carrier
Know-how, particularly related to welding and internal
1906 combustion engines, provide basis for realizing domestic
1928 192
1929
29 Auto
Automo
tom bi
mob le
less Rolling Stock
Business express train
Rolling production of steam locomotives Split off into To meet the social needs of the day, Kodama
Kod
o ama Series 0 Shinkansen
Stock Made Japan’s first steel-cast independent began production of automobiles using
rolling stock manufacturing technology
electric train in 1925, marking company
*Suspended production in 1942 by order of
1906 The
he e company’s
compa
company’
mpa first
r t elec-
ny’ss firs
ny’ first step toward improved rail-
way system in Japan and wider
(reintegrated
in 1969)
the Department of War, as emphasis shifted
from automobiles to greater production of
tric-drive
tri
riic-d
c-driv
c-drive wooden
rive wood
ooden ccoach
en coa
en ch
Steel Nankai Railway Type 1 use of rail transportation aircraft (some operations resumed later)
Casting wooden coach
Division Company’s first airplane: Split off into independent
1937 Aerospace
1918 Type Otsu 1
surveillance airplane
company (reintegrated in 1969)
Aircraft With interest piqued by thriving aircraft industry in the United States
and Europe, introduced technology from abroad along with structural commercial
Domestic com mmer
mercia aircraft
ci l aircraf
ft YS
YS-11
1
technology used in shipbuilding to launch aircraft production Participated from the planning g First helicopter
stage, in charge of manufacturingring developed in Japan
the main wings and nacelle parts Kawasaki BK117 Helicopter P-1 Maritime Patrol Aircraft
1942 Jet Engines 1969
Industrial Gas Turbine &
1907 Japan’s first jet engine: 1956 Gas Turbines Machinery
Marine Steam Turbines Land-use Steam Turbines
Began production of Ne-0 Marine-use turbine technology directed toward rd
d Kawasaki GPS200,
steam turbines for use Marine steam land-use applications to meet rapid increase in
n First Japan-madeeg gas
as
as main engines of ships turbine demand for power in the industrial sector turbine generatorr
1880 Land-use applications 1937 Boilers (land-use)
Cement plant for
Plant &
customer in Algeria
Boilers (marine-use) Diversified into environmental plant engineering, utilizing 1960 Infrastructure
Began production of cornerstone heat-transfer/combustion technology, to
marine-use boilers
1907 expand energy-related engineering activities 1932 Environmental Plants,
Steel Stru
ruct
ctur
ure
es Tunnel boring machines used
Cement Plants Chemical Plants, LNG Tanks to excavate the Channel Tunnel,
Embarked on Eitaibashi, bridge over Used steel structure/engineering technology and Shield Machines linking France and the U.K.
production of steel Sumida River as a cornerstone to diversify range of indus-
bridges, utilizing Many bridges, which collapsed trial equipment, adding chemical plants, LNG
construction/ in the Great Kanto Earthquake, tanks, shield machines and other products
welding technology were replaced derived from cement equipment
Motorcycle &
*Withdrew from bridge business in 2006
1949 1955 Engine
Motorcycles
ess Motorcycles
(Engines) (Finished)
KE-1 engine Began producing
Activities started after the war finished motorcycles Z1
when production of aircraft Meihatsu 125-500
was not allowed
Precision
1916 1968 Robots
Machinery
Hydraulic
Machineryy
Began producing Incorporated Began producing screw pumps Low-speed KV Series axial Kawasaki-Unimate 2000, first
Hele-Shaw electro-hydraulic Hele-Shaw radial piston through technology alliance high-torque radial piston pump Japan-made industrial robot
steering gears pumps with Sweden’s IMO AB piston motors Introduced technology from The Kawasaki Group is currently working to
with technology acquired Unimation Inc., a U.S. company, Dual-arm SCARA
Robot “duAro” create new products and quickly and efficiently
from England and began domestic production
improve enterprise value by deriving synergies
across internal company lines and covering the
extensive range of business activities that have
emerged to date.
1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990
For details on
hydrogen projects,
Modernization of Railway World War I Great Kanto Great Depression World War II First exchange rate: Opening of the Tokaido Nixon Shock please refer to pages
Japanese industry Nationalization Earthquake (initiatives to rebuild ¥360 to U.S. dollar Shinkansen line (Dollar Shock)
19–24.
(rapidly expanding demand for Act (buildings/bridges after the war)
3 transportation infrastructure) collapsed) 4
Kawasaki Group Mission Statement To Our Stakeholders
In 2007, Kawasaki formulated the “Kawasaki Group Mission Statement” as a compass
directing the activities of the Kawasaki Group. The statement incorporates the social Working to Realize the Group Mission
mission that the Group must fulfill in the 21st century, a shared sense of values to Kawasaki—and by extension, the Kawasaki Group—got its start in the shipbuilding business and, by responding to social
increase Kawasaki brand value, the underlying principles of management activities, needs of the day, has grown into an integrated provider of heavy industry products and services over a diverse range of
business sectors, including land, sea and air transportation systems, energy and environmental engineering (infrastructures)
and guidelines for daily conduct that each and every member of the organization is
and various kinds of industrial equipment. Throughout our history, we have consistently endeavored to improve enter-
required to follow. prise value, developing along with our stakeholders, which includes shareholders, customers and local communities.
Our mission, as a corporate group, is to fulfill the Group Mission: “Kawasaki, working as one for the good of the
Group Mission planet (Enriching lifestyles and helping safeguard the environment: Global Kawasaki).” This is, essentially, our
role in society, and to address this role, we must provide products and services that meet the varied needs of
our customers as well as their customers around the world while seeking a harmonious balance with the
Kawasaki, working as one for the good environment. Toward this end, we prioritize technology, and are thus on an enduring quest for originality
and innovation in technology.
of the planet In Kawasaki Report 2016, which you have kindly taken the time to read, we offer our thoughts on
carrying out the Group Mission as well as information on business strategies, daily activities that
ensure Kawasaki meets its social responsibilities as a good corporate citizen, and the relationship
•We are the Kawasaki Group, a global technology leader with diverse integrated the Company maintains with stakeholders. We hope this report enables you to gain a better
strengths. understanding of what we do.
•We create new value-for a better environment and a brighter future for
generations to come. Shigeru Murayama
Chairman of the Board
((Representative
(R
Rep
epre
epresent
nttat
a iv
ve Di
D recct
ctor))
Director)
Kawasaki Value
•We respond to our customers’ requirements
•We constantly achieve new heights in technology Yoshinori Kanehana
•We pursue originality and innovation President
((Representative
(R
Rep
ep
preese
s nt
nta
atiiv
ativve Di
Dire
ector)
Director)
The Kawasaki Group Management Principles
1 Trust
As an integrated technology leader, the Kawasaki Group is committed to providing high-performance products and
services of superior safety and quality. By doing so, we will win the trust of our customers and the community.
2 Harmonious coexistence
The importance of corporate social responsibility (CSR) permeates all aspects of our business. This stance reflects
the Kawasaki Group’s corporate ideal of harmonious coexistence with the environment, society as a whole, local
communities and individuals.
3 People
The Kawasaki Group’s corporate culture is built on integrity, vitality, organizational strength and mutual respect
for people through all levels of the Group. We nurture a global team for a global era.
4 Strategy
The Kawasaki Group pursues continuous enhancement of profitability and corporate value based on three
guiding principles-selectively focusing resources on strategic businesses; emphasizing quality over quantity;
and employing prudent risk management.
The Kawasaki Group Code of Conduct
1. Always look at the bigger picture. Think and act from a long-term, global perspective.
2. Meet difficult challenges head-on. Aim high and never be afraid to try something new.
3. Be driven by your aspirations and goals. Work toward success by always dedicating yourself to your tasks.
4. Earn the trust of the community through high ethical standards and the example you set for others.
5. Keep striving for self-improvement. Act on your own initiative as a confident professional.
6. Be a part of Team Kawasaki. Share your pride and sense of fulfillment in a job well done.
5 6
Directors and Corporate Auditors
(As of June 24, 2016)
Corporate Auditor Outside Director Outside Director Corporate Auditor
Takafumi Shibahara Yoshihiko Morita Michio Yoneda Katsuyoshi Fukuma
Outside Corporate Auditor Outside Corporate Auditor
Senior Vice President Senior Vice President Senior Vice President Senior Vice President
Nobuyuki Fujikake Takashi Torizumi
Toshiyuki Kuyama Kazuo Hida Kenji Tomida Kazuo Ota
Senior Vice President Senior Vice President
Senior Executive Vice President* Chairman of the Board* President* Senior Executive Vice President*
Makoto Ogawara Tatsuya Watanabe
Joji Iki Shigeru Murayama Yoshinori Kanehana Munenori Ishikawa
*Representative Director
7 8
Performance Highlights
Net sales
95.9 Net cash provided by operating activities CO2 emissions from business sites (non-consolidated)*1 Distribution of Value to Stakeholders (FY2016)
Operating income Net cash used for investing activities (103t-CO2)
87.2 Value delivered (Net sales)
Free cash flow
(Billions of yen)
1,541.0 (Billions of yen) 318 325 (Billions of yen)
Business partners 1,226.8
72.3 1,486.1 151.7
284 Business costs
1,385.4 127.6
1,303.7 1,288.8 263 (excluding costs for employees, society,
57.4
84.7 74.1
86.0 252 and government)
60.2
Net sales
Net sales
42.0
18.7 28.1 11.8 1,541.0
1,541.0
Employees 241.9
Salaries, bonuses, etc.
–53.0
Society 0.7
–65.9 –67.3 Social contribution expenses
–81.1 –77.5
–74.1
Administration and government 20.1
2011 2012 2013 2014 2015 (FY) 2011 2012 2013 2014 2015 (FY) 2011 2012 2013 2014 2015 (FY) Income taxes-current
*1 For details, please refer to page 52. Value created 51.3 Value created minus expenses for business partners,
(Billions of yen) employees, society, and government
Creditors 3.6 Interest expense
Return on invested capital Net interest-bearing debt Net debt equity ratio CO2 emission reduction with our products*2
(%) Shareholders’ equity (%) (103t-CO2)
(Billions of yen)
10.4%
9.4% 131.9%
741 745 Value created
109.3% Shareholders 21.6
121.8% 51.3 Non-controlling interests plus
8.1%
dividends paid
7.4%
83.9% 82.5% 504 513
6.1%
Company internal, etc. 26.0
446.1
396.6
431.9 431.3 321 Increase in retained earnings during period
372.8 363.0
338.2
306.0 362.7
356.2
Socially Responsible Investment (SRI)-related
Evaluations that Included Kawasaki
2011 2012 2013 2014 2015 (FY) 2011 2012 2013 2014 2015 (FY) 2011 2012 2013 2014 2015 (FY)
The Brand of Companies
Return on invested capital = EBIT (Income before income taxes and Net debt equity ratio = Net interest-bearing debt (Interest-bearing debt - *2 Estimates based on actual delivery record
non-controlling interests + Interest expense) / Invested capital Cash on hand and in banks) / Shareholders’ equity Enhancing Corporate Value ue
(Interest-bearing debt + Shareholders’ equity) through Health and Pro-
ductivity Management
Capital investments Net income per share ROE Expenditure on social Recurring profit ratio (Health and Productivity
R&D expenses Dividends per share (Return on equity) contribution activity (%) The Dow Jones Sustainability Stock Selection) is a list of companies
(%)
(Millions of yen) Index is a leading SI index which chosen jointly by Japan’s Ministry
(Billions of yen) (Yen)
12.9% 796
759 773 assesses and selects leading of Economy, Trade and Industry
87.7 11.0% 10.6% 687
sustainability-driven companies
in terms of economic, environ-
(METI) and the Tokyo Stock Exchange
(TSE) for making strategic efforts
78.6 80.0
76.3 9.5%
631
mental, and social criteria. to address employee health from a
30.8
63.9 7.8% 27.5 management point of view. Only one
1.75% TSE-listed company in each industry
23.0
39.9
41.7 40.3 41.6 43.6 18.4
category is selected for this index.
1.25% 1.04%
13.9
10.0
12.0 0.90%
0.83% The Nadeshiko Brand is
a list of companies cho-
5.0 5.0 6.0
sen jointly by METI and
the TSE that are outstanding in terms
2011 2012 2013 2014 2015 (FY) 2011 2012 2013 2014 2015 (FY) 2011 2012 2013 2014 2015 (FY) of encouraging the empowerment of
Return on equity = Profit attributable to owners of the parent / Shareholders’ women in the workplace, and that are
equity creating an environment in which
women are able to pursue careers.
MSCI Global Sustainability Indexes Companies listed on the First Section
Share of net sales by segment Share of net sales by region Distribution of companies/employees by region include companies with high ESG of the TSE are eligible for selection, and
ratings relative to their sector one or two companies are selected from
Precision Machinery Ship & Offshore Structure Asia, Oceania, etc. 18% Asia, Oceania, etc. 13% peers. each industry category for the honor.
¥133.1 billion ¥94.8 billion ¥272.8 billion 28 companies/4,576 employees
Kawasaki received a loan
Rolling Stock The Americas 10%
Japan 41% 14 companies/3,447 employees from the Development
Motorcycle & Engine ¥146.6 billion
¥636.5 billion Bank of Japan (DBJ) in
¥333.5 billion
The Morningstar Socially Respon- December 2015, under
Europe 2% sible Investment Index is the the DBJ Environmentally Rated Loan
8 companies/ first index in Japan of socially Program based on a solid evaluation
685 employees
responsible investment stock. under the bank’s rating structure for
The stock prices of socially companies with particularly impres-
Aerospace The Americas 32% responsible companies selected sive environmental programs. DBJ
¥351.8 billion ¥486.7 billion from all those listed in Japan also gave Kawasaki a special award
Plant & Infrastructure Gas Turbine & Machinery Europe 9% Japan 75% by Morningstar Japan K.K. are recognizing the Company as a model
¥135.6 billion ¥236.4 billion ¥144.8 billion 50 companies/25,897 employees converted into an index. corporation in this effort.
9 10
Message from the Top Management
We will create new value and boost
enterprise value by integrating the
world’s highest standards of technologies.
On Assuming the Position of President Kawasaki Group Mission
Yoshinori Kanehana My name is Yoshinori Kanehana. I assumed the The noteworthy feature of the Kawasaki Group is
President position of president from Shigeru Murayama in that each business segment takes a multifaceted
(Representative Director) June 2016. The Kawasaki Group traces its roots approach matched to prevailing market require-
back to 1878, when Shozo Kawasaki established ments and consistently adds to its portfolio of
Kawasaki Tsukiji Shipyard. This early company technological innovations, which underpins capa-
was incorporated in 1896 as Kawasaki Dockyard bilities of the highest global standards. Our mis-
Co., Ltd., and it is based on this year of incorpora- sion statement is “Kawasaki, working as one for
tion that we will celebrate our 120th anniversary the good of the planet” and our goal is to use the
in 2016. It is my mission to promote further devel- capabilities we have amassed to solve the some-
opment of the businesses that today’s Kawasaki what conflicting issue of creating comfortable
Group pursues across many fields worldwide, from lifestyles while ensuring a future for our planet,
land, sea and air transportation systems to energy that is, the global environment. Success will
and environmental engineering and all sorts of require new value, which we will create by inte-
......by taking steps to increase industrial equipment, to raise enterprise value
even higher, and to ensure that I pass on to the
grating the technologies of each business seg-
ment and leveraging the synergistic effects to
enterprise value
next generation of employees and management deliver unique products and services to custom-
a Kawasaki Group that has evolved beyond its ers and, by extension, society as a whole.
current achievements. In this effort, I will be guided
by the founder’s philosophy of “contributing to the Raising Enterprise Value
nation—to society—through expertise.” The Kawasaki Group has embraced Kawasaki-
I have been involved in the rolling stock busi- ROIC* Management, which prioritizes improve-
ness ever since I joined Kawasaki. I believe I have ment in enterprise value among key performance
been able to contribute to the safety and security indicators. The objective in Kawasaki-ROIC Man-
of Japan’s railway system, which is one of the agement is to carefully control invested capital
Main career history best in the world. I have also spent lots of time but still achieve higher profits, and to enhance
overseas, on assignment at facilities in New York enterprise value by boosting the Group’s overall
Mar. 1976 Graduated from School of Engineering Science, Osaka University
and other locations, and I have gained experience profitability and stability while promoting
Apr. 1976 Joined Kawasaki Heavy Industries, Ltd. in various aspects of business, from international growth. Kawasaki-ROIC Management led to
1976–1979 In charge of Kawasaki Computer-Controlled Vehicle System, in the Rolling Stock Group
discussions where I faced off against global play- hugely successful results during MTBP 2013,
ers in the industry to win orders to the running which finished in fiscal 2016.
1979–1988 Led Rolling Stock Group system integration work
of rolling stock facilities overseas. From this point Recently, the Group embarked on a newly
Oct. 1988 Seconded to Kawasaki Heavy Industries, Ltd. London Office on, however, my perspective changes, as I now drafted medium-term business plan—MTBP 2016—
stand at the helm of the entire Kawasaki Group with measures and targets for the immediate
Aug. 1997 Seconded to Kawasaki Rail Car, Inc. (New York, U.S.A.)
and its seven internal companies (business seg- three years but looking 10 years down the road
Jun. 2003 President, Kawasaki Rail Car, Inc. ments), each serving a different client base and to 2025 (fiscal 2026). MTBP 2016 has Kawasaki-
Oct. 2007 General Manager, Project Management Division, Rolling Stock Company different markets. But I believe my background ROIC Management at its core and will set the stage
will serve me well. I will draw on the global, for an improvement in medium- to long-term
Apr. 2012 General Manager, Marketing Division
frontline perspective I have acquired through enterprise value. I will discuss the details of MTBP
Jun. 2013 President, Rolling Stock Company my involvement in the rolling stock business and 2016 on the next page.
apply the insights and experience accumulated *ROIC (Return on Invested Capital): A management indicator that
Jun. 2016 President (Current Position)
over the past four years as a director participat- shows how much profit will be generated with the capital
invested in a business segment.
ing in Group management activities to achieve
medium- to long-term growth of the Kawasaki
Group and improve value for all stakeholders.
11
1 12
MTBP 2013 A particularly noteworthy achievement coming Positioning of MTBP 2016 Positioning of MTBP 2016
First, though, I would like to look back on MTBP out of MTBP 2013 was improved capital efficiency, In defining the content of the new medium-term
2013, which concluded in fiscal 2016. Net sales through Kawasaki-ROIC Management, which business plan, we revised Kawasaki Business Group Mission/Group Vision
MTBP 2016
expanded significantly, buoyed mainly by inter- cemented a vastly reinforced financial position. Vision 2020 guided by our Group Mission and • Measures and plans for the next three
nal companies, that is, Aerospace, Motorcycle & This is substantiated by aggregate free cash flow of Group Vision. That is, we pictured the kind of years with a view 10 years down the
Engine, and Gas Turbine & Machinery, and hit an ¥146.2 billion on a Group-wide basis over the three businesses we would be running and the quanti- road
• Picture of business 10 years on
all-time high of ¥1,541.0 billion in fiscal 2016. years of MTBP 2013. In addition, interest-bearing tative targets we would be aiming for 10 years • Investment and strengthening of
• Quantitative view of FY2026 business foundation for medium- to
Operating income, at ¥95.9 billion, exceeded the debt decreased ¥86.2 billion, as of March 31, 2016, on, in 2025 (fiscal 2026). MTBP 2016 is therefore long-term growth
initial target of ¥90 billion and also set a new from the level at the end of March 2013, and the net not just a business plan for the next three years • Response to changes in business envi-
record, reflecting higher net sales, successful debt equity ratio* dropped 49.3 percentage points. but rather an immediate action plan that will set ronment and issues requiring attention
Rethink
cost-cutting measures and the merits of a low During MTBP 2013, we made tremendous prog- us well on the way toward our ultimate destina- Kawasaki Business Vision 2020
yen. Before-tax ROIC moved into double-digit ress in terms of performance as well as financial posi- tion ten years from now.
territory—10.4%—in fiscal 2015, but backtracked tion and reached the majority of our initial targets.
Realization of Group Mission and Group Vision
to 9.4% in fiscal 2016 owing to the booking of *Net debt equity ratio is calculated by dividing net interest-bearing Group Mission, Group Vision
extraordinary losses on a shipbuilding joint debt (interest-bearing debt - cash on hand and in banks) by share- Our Group Mission—“Kawasaki, working as one
holders’ equity. The lower the ratio, the sounder the financial position. Picture of business 10 years on
venture in Brazil. for the good of the planet”—is an expression of
the social mission that we, as a corporate group, MTBP 2016
Net sales Interest-bearing debt
Operating income 95.9 Free cash flow
wish to fulfill. It remains the same as before. We (FY2017–FY2019) Action plan
87.2
(Billions of Yen) (Billions of Yen) also set out a three-point Group Vision that looks FY2017 FY2019 FY2026
72.3
1,486.1 1,541.0 484.6
444.6 414.3 398.4 forward to the kind of corporate group we plan
1,288.8 1,385.4
74.1
to become.
60.2
42.0
11.8 •We will become a corporate group with four Key Products and Services that Drive Growth
Demand for Kawasaki Group products and ser-
core business sectors—Air Transportation Sys-
–53.0 tems, Land/Sea Transportation Systems, Energy vices is steadily expanding, fueled by such fac-
2013 2014 2015 2016 (FY) 2013 2014 2015 2016 (FY)
& Environmental Engineering and ROBO-MECH tors as greater international movement of people
Before-tax ROIC Net debt equity ratio (coined from industrial equipment sector)—that and transportation of goods due to increased glo-
131.9% creates new value with integrated technological balization, wider use of automation paralleling
10.4%
9.4% 109.3% the graying of society and a shortage of workers,
8.1% capabilities and offers products and services
6.1%
83.9% 82.5% that open up new possibilities for customers and heightened demand for products that address
and society. environmental risk. This bodes well for our
businesses.
•We plan to become a corporate group that We expect the key drivers of growth for the
achieves continuous improvement in enterprise Kawasaki Group to be commercial aircraft, com-
2013 2014 2015 2016 (FY) 2013 2014 2015 2016 (FY)
value and a stable return to shareholders by mercial aircraft jet engines, rolling stock for over-
Before-tax ROIC = EBIT (Income before income taxes and non-controlling Net debt equity ratio = Net interest-bearing debt (Interest-bearing debt -
interests + Interest expense) / Invested capital at year-end (Interest-bearing Cash on hand and in banks) / Shareholders’ equity building a business portfolio that ensures a high seas markets, energy, and robots.
debt + Shareholders’ equity)
degree of adaptability to changes in the busi-
ness environment and provides growth invest- Predicted Sales from Key Products and Services that Drive Growth
ment and cash flow.
“A particularly noteworthy achievement coming (Billions of yen)
•We plan to become a corporate group that accu- 1,000
Robots, including Medicaroid*
out of MTBP 2013 was improved capital efficiency, rately identifies social concerns and stakeholder
expectations and delivers appropriate solutions
through Kawasaki-ROIC Management, through business activities, and also promotes 800
Energy
a workplace environment where employees
which cemented a vastly reinforced financial position.” Rolling stock for overseas markets
approach their jobs enthusiastically, driven by 600
hopes and dreams.
Commercial aircraft jet engines
400
Guided into the future by our Group Mission and
our three-point Group Vision, we will strive to
raise enterprise value. 200
Commercial aircraft
0 2014 2016 2021 2026
*Medicaroid Corporation: A joint venture established with Sysmex Corporation to develop and manufacture
medical robots; accounted for by the equity method.
13 14
Picture of Business in 2025 core competence, new products and business formulating the new medium-term business plan reinforcing our business foundation so that it is
Visualizing business in 2025, we see growth models in each sector. MTBP 2016. truly primed for medium- to long-term growth.
hinging on the key investment areas of air trans- Turning this image into reality should result The global economic forecast remains uncer- Specifically, we will establish business-
portation systems, robots and energy, with enter- in a before-tax ROIC of 14% or higher, an operat- tain, clouded by such factors as a downturn in matched key performance indicators (KPI)* which
prise value continuing to improve on a portfolio ing income margin of 9% or higher, ROE of 15% oil prices, a slowdown in emerging markets, and break down the components of ROIC, and track
emphasizing high profitability, sustained growth or higher, and operating cash flow of at least withdrawal of the United Kingdom from the Euro- progress. Because KPI hinge on daily operations
and stability. In addition, for each of the four ¥200.0 billion in fiscal 2026. pean Union (EU). And in currency markets, the and are based on the characteristics that define
sectors—Air Transportation Systems, Land/Sea yen is trending upward. Given these factors, it is each business, our employees are better able to
Transportation Systems, Energy & Environmental Fundamental Strategies under MTBP 2016 possible that the operating environment during grasp the “what” and “how” of ROIC to boost
Engineering and ROBO-MECH—we have clarified What do we need to do over the next three MTBP 2016 will not be particularly favorable enterprise value and be more involved in Kawa-
specific growth strategies as well as business years to achieve this vision for 10 years in the for us. To reach our objectives for 2025 despite saki-ROIC Management. Examples of KPI include
strategies aimed primarily at promoting stronger future? That was the perspective we took in potential obstacles, we must be able to cope with inventory turnover, consolidated marginal profit
changes in the operating environment and issues and accrued failure costs, and whatever indicator
of concern in our business segments while contributes significantly to a better ROIC result in
Picture of Business in 2025
steadily pursuing investment activities for each business will be the one that is chosen. Such
Kawasaki Group medium- to long-term growth and solidifying our KPI are very useful not only in the pursuit of
• Growth hinging on key investment areas of air transportation, robots and energy foundation. greater efficiency and growth but also in risk
• Enhanced enterprise value through portfolio boasting high profitability, sustainable growth and stability Toward this end, we identified three funda- management.
mental strategies to follow during MTBP 2016. *KPI (Key Performance Indicators): Quantitative business metrics
Air Transportation Systems Land/Sea Transportation Systems
The first is to promote further progress on
• •
used to evaluate the degree of success in reaching business goals.
Steady growth paralleling increased demand for air Growth by tapping into overseas demand, especially
transportation worldwide in emerging markets Kawasaki-ROIC Management, the second is to
Indeed, we have been meticulous in our
• System integrator, module supplier • Promoted high-value-added products, underpinned implement investments targeting medium- to
approach to ROIC through Kawasaki-ROIC Man-
• High profitability through after-market/MRO* busi- by technological capabilities and brand strength long-term growth, and the third is to realign our
agement, even preparing balance sheets for
ness • Global production structure businesses.
each business unit. But we will be more
Efficiency
Energy & Environmental Engineering ROBO-MECH thorough in regard to risk management,
• Growth fueled by wider demand for distributed
power generation and oil & gas
• Expanded business sectors for human-friendly robots
that coexist with humans and for medical robots
Fundamental Strategy 1:
Further progress on Kawasaki-ROIC Management
using KPI to check for unusual numbers,
executing project bids and pre-order
• Promoted solution-style business and system mar-
keting
• Promoted products maximizing synergies between
robots and hydraulic components
We introduced Kawasaki-ROIC Management in
front-end engineering, examining
Application of KPI
2013 to improve the enterprise value of the
• Leader toward realization of hydrogen society • Top brand in motion control
Kawasaki Group, and the concept has proven
latent risks, and following up after
projects are completed, which will Growth
Risk
management
*MRO: Maintenance, Repair, Overhaul successful in strengthening our financial position
strengthen risk management.
and generating cash flow on a consolidated basis.
But during MTBP 2016 we have to push the
Quantitative View of Fiscal 2026 concept even further, with an emphasis on
Above 14
11.0
9.4 Above 9 “The three fundamental strategies under
6.1
Before-tax ROIC
MTBP 2016 are to promote further progress
6.2 5.7
Operating income margin on Kawasaki-ROIC Management,
3.2
to implement investments targeting medium- to
FY2013 FY2016 FY2019 FY2026 long-term growth, and to realign our businesses.”
(Actual) (Actual) (Target) (Ideal)
Before-tax ROIC 6.1% 9.4% 11.0% 14% or higher
Operating income margin 3.2% 6.2% 5.7% 9% or higher
Return on equity (ROE) 9.5% 10.6% 14.0% 15% or higher
Operating cash flow ¥28.1 billion ¥86.0 billion ¥140.0 billion ¥200.0 billion or higher
Total asset turnover (times) 0.87 0.95 1.00 1 or more
(Reference value: Net sales) (¥1,288.8 billion) (¥1,541.0 billion) (¥1,740.0 billion) (¥2,400.0 billion)
15 16
Fundamental Strategy 2: Fundamental Strategy 3: MTBP 2016 Quantitative Targets distribution of dividends. Guided by this policy,
Investments targeting medium- to long-term Business realignment In our outlook for fiscal 2017, the first year of management established a benchmark of 30% for
growth Two business segments—Ship & Offshore Structure MTBP 2016, we anticipate net sales of ¥1,570.0 the consolidated payout ratio over the medium
During MTBP 2013, the Kawasaki Group aggres- and Hydraulic Machinery—continue to face a diffi- billion, up from fiscal 2016, but operating income to long term.
sively allocated funds for capital expenditure and cult business environment, making restructuring is likely to decline to ¥70.0 billion. This reflects a
investment in R&D; however, during MTBP 2016, essential. Ship & Offshore Structure will strive to shift toward yen appreciation and a temporary Environmental Management
the strategy is to expand investment overall, with optimize profits by integrating the operations of decrease in Aerospace earnings, but the situation Guided by the strategies of the Ninth Environmen-
an emphasis on growth fields. We will earmark NACKS and DACKS* with the Sakaide Works, which should correct by fiscal 2019, the last year of tal Management Activities Plan (fiscal 2017 to
about ¥280.0 billion over three years for capital will function as a mother factory. At the Kobe MTBP 2016, and we look forward to higher sales fiscal 2019), the Kawasaki Group seeks to reduce
expenditures, such as a new factory to manufac- Works, the focus will be on submarine-related and income, mainly from Rolling Stock, Motorcycle the environmental impact that accompanies busi-
ture components for the Boeing 777X as well as operations in an effort to stabilize business activi- & Engine and Precision Machinery. Expectations are ness activities. Emphasis has been placed on mea-
jet engine production facilities and increased pro- ties. Meanwhile, the offshore service vessels busi- for net sales of ¥1,740.0 billion, operating income sures to cut CO2 emissions and energy costs, pro-
duction of robots, and about ¥150.0 billion over ness, which booked massive losses in fiscal 2016 of ¥100.0 billion and before-tax ROIC at 11.0%. mote the 3R* concept and reduce environmental
three years to R&D, especially on future commer- due to issues related to a Brazilian joint venture, FY2016 FY2017 FY2019 loads (materials exerting an impact on the envi-
cial aircraft as well as medical robots and hydro- will be downsized, with efforts directed mainly (Billions of yen) (Actual) (Forecast) (Target) ronment), with targets for each division set annu-
gen-related businesses. toward the construction of offshore service Orders received 1,693.6 1,500.0 1,740.0 ally. All divisions are systematically engaged in
Looking at investment in air transportation vessels for customers in Norway. Net sales 1,541.0 1,570.0 1,740.0
programs to achieve these targets. In addition, we
systems—a key segment—as a percentage of *NACKS and DACKS: Affiliated companies accounted for by the maintain a program for registering products with
Operating income 95.9 70.0 100.0
overall application of funds, you will notice an equity method as joint ventures with companies in China. excellent environmentally conscious features as
increase in capital expenditures, from 38% in MTBP Operating income Kawasaki Green Products, and constantly pursue
6.2 4.4 5.7
In Hydraulic Machinery, “Kawasaki” enjoys margin (%)
2013 to 45% in MTBP 2016, and an increase in activities to lower the inherent post-sale environ-
top-brand status for leading-edge technology and Before-tax ROIC (%) 9.4 8.3 11.0
R&D investment as well, from 15% to 20%, respec- mental impact of the Kawasaki products provided
a high share of the market. But the goal is to at ROE (%) 10.6 11.0 14.0
tively. I trust you understand the reasons behind to customers.
least maintain—but ideally expand—market share,
our strategy to selectively invest in growth fields. Our lineup already includes power generation
mainly by enriching the lineup and honing a Financial Strategies
In the hydrogen business, we spearheaded systems that draw on waste heat from garbage
sharper cost-competitive edge, and reduce reliance During MTBP 2013, we worked to significantly
the establishment of CO2-free Hydrogen Energy incinerators and cement plants as well as products
on the excavator market in China by developing strengthen our financial position by improving
Supply-Chain Technology Research Association designed to reduce environmental impact through,
business in the construction and agricultural capital efficiency through Kawasaki-ROIC Man-
(HySTRA) in February 2016. HySTRA’s primary for example, the use of waste heat from gas tur-
machinery markets beyond excavators. In addition, agement and ensuring good operating cash flow.
objective is to establish and verify the technolo- bine and gas engine power generation facilities.
this business segment will seek synergies and During MTBP 2016, investing cash flow is likely
gies required throughout the hydrogen energy We are also working on the technologies of tomor-
enhanced efficiency by integrating operations with to trend high, at about ¥90.0 billion per year, to
supply chain, beginning with production from row that will feature in such applications as CO2
the robot business. This effort includes production fuel medium- to long-term growth; however, we
source materials to transportation, storage and separation and collection systems and the above-
of robots at Kawasaki Precision Machinery expect to register operating cash flow of more
use. The ultimate goal, however, is to contribute mentioned CO2-free hydrogen projects. Through
(Suzhou) Ltd. in China and more efficient use of than ¥110.0 billion per year and will strive to
to the realization of a hydrogen energy society. these activities, we will contribute to the realiza-
labor and facilities. reinforce our financial position and maintain tion of a sustainable society on a global scale.
appropriate investment capacity. We are target- *3R: Reduce, Reuse, Recycle – three essential components of
Changes in CAPEX (acquisition basis) and R&D investment during each MTBP (cumulative)
ing a net debt equity ratio in the range of 70% initiatives to cut waste disposal
Air Transportation Systems ROBO-MECH Energy & Environmental Engineering
to 80% as of March 31, 2019.
Land/Sea Transportation Systems Other
10% Message to Stakeholders
17% Return to Shareholders For the Kawasaki Group, the development of our
19%
24%
38% The Kawasaki Group seeks to raise shareholder businesses is built on a relationship of trust with
Changes in CAPEX 45%
(acquisition basis)
25% value and enhance enterprise value over the long stakeholders, including shareholders and customers.
24% 27%
27% Total Total Total term by continuously investing in the innovative I hope that Kawasaki Report 2016 helps readers
¥197.8 billion ¥244.1 billion about ¥280.0 billion
6% 5% R&D and state-of-the-art facilities needed to gain a deeper understanding of what we do as a
5% 13%
15% drive growth and by consistently generating corporate group and takes communication between
income exceeding capital costs as well as a high stakeholders and the Kawasaki Group to a higher
MTBP 2010 (Actual) MTBP 2013 (Actual) MTBP 2016 (Forecast) level of cash flow from operations. We believe level. Under the corporate slogan “Powering your
this approach serves our shareholders’ interests. potential,” we will undertake business activities
10%
10% 15% 20% Toward this end, our basic policy is to strike designed to achieve our mission—to be a socially
13% 12%
a good balance between certain corporate capital responsible corporate citizen contributing to com-
20% needs—reinforcing our financial footing by fortable lifestyles and the environment worldwide—
R&D investment 22%
35%
enriching shareholders’ equity and reducing and to make society a better place through ongoing
42% Total 40% Total 20% Total
13% ¥118.7 billion ¥125.6 billion about ¥150.0 billion
interest-bearing debt, and improving shareholder value creation. Your continued understanding and
13% value through R&D and capital investment—and support of the Kawasaki Group and its activities will
15%
the return of profits to shareholders through the be integral to our shared success.
17 18Initiatives to Realize a Hydrogen Society
Size of hydrogen market
To date, uses of hydrogen have been limited to primarily industrial applications such
as in oil refining, as rocket fuel, and in semiconductor manufacturing processes.
But with the debut of a fuel cell system for homes in 2009 and subsequent popularity,
¥ 8trillion 8 (Trillions of yen/year)
Establish completely
followed by other innovative applications, including the introduction of a fuel cell vehi-
CO2-free hydrogen
cle in 2014, hydrogen is steadily moving toward everyday use. Kawasaki has technolo- supply system
gies highly compatible with each process—production, transportation/storage and use— Hydrogen
CO2-free hydrogen production
and transportation/storage
of the hydrogen supply chain. Our technologies link hydrogen production sites to get into full swing 6
consumer sites, and in so doing, pave a new way to the future—the Hydrogen Road.
Full-scale introduction of hydrogen
power generation/Establish
large-scale hydrogen supply system
Imported hydrogen at ¥30/Nm3
¥ 4trillion 4
Hydrogen supply
infrastructure
Expand distribution of hydrogen
for commercial use
Hydrogen-fueled
Imported hydrogen power generation
becomes widely available
Full-scale introduction
of hydrogen for power 2
providers
expand
Fuel cell vehicles
......by uniting to
Stationary fuel cells
¥200 billion 0
2015 2020 2025 2030 2035 2040 2045 2050 (Year)
possibilities Dramatic expansion in hydrogen use
Market debut of fuel
cells for business/
industrial use
Price of
hydrogen
drops
Price of fuel cell
vehicles drops
*From “Strategic Road Map for Hydrogen and Fuel Cells (Revised, March 22,
2016), by the Ministry of Economy, Trade and Industry
On February 22, 2016, four companies—Kawasaki Heavy Industries, Iwatani
Corporation, Shell Japan Limited and Electric Power Development Company—
established HySTRA, the CO2-free Hydrogen Energy Supply-Chain Technology
Research Association. Going forward, the plan is for HySTRA to implement the
Demonstration Project for Establishment of Supply Chain for Mass Marine Trans-
portation of Hydrogen and Gasification of Brown Coal, a demonstration project
for the New Energy and Industrial Technology Development Organization (NEDO).
Kawasaki Hydrogen Road
Hydrogen Hydrogen Hydrogen Hydrogen Kawasaki is keen to
Production Transportation Storage Use contribute to reducing CO2 on
We promote liquefi fied hyd
hy rogen
rog
og made We are
a worki rk
rking
king on
n the developmentt Liquefied hydrogen storage tanks We are developing gas a global scale by pushing ahead
ffro
rom brown coal ass an un nuse
usedd natural
at l re
resou
source
sou rcee,, of th
the woorld
d’s first
firs liq
iq
quefi
efieed hydrogen
efi en caarri
rrier.
e and containers for on-land transport turbine power generation equipment with the development
at the cr
cryog
yogeni
yog e c temp
eni temp
mpeeratur
mp eratur
uree Con
nstrruct
uction
n of a dem mons
onstr
tration vess
ess
ssel
sse is set fo
el forr 2020, of liquefied hydrogen are essential using hydrogen as the fuel source.
of technology aimed
of -253˚C
3˚C and thenen transpor
porrt it. while
whi le we
w are planning
pll for larg
r er des
rg designss as
as well
we . to the use of hydrogen in Japan. We are also pursuing development of technology
We built a hydrogen liquefa
quefaction
on sys
system
tem
m Kawasaki has proven results, built over many years, that allows mixed combustion with hydrogen at realizing tomorrow’s
test facility
y and marked ed a first in
n Jap
apan in supporting domestic storage of rocket fuel, in natural gas-fired gas turbines hydrogen society.
with
w
witi h the successful liq
liqu
qu
qu
uefa
efacti
efa ction
on of hyd
yddrog
rogen
ogeen
og en und
under
un err and thus has technologies applicable to storage tanks to lower environmental impact in addition
a purely domesttic production n str
stru
ructu
ru ctuure.
re. and transport containers for liquefied hydrogen. to the development of gas turbines driven
We are pursuing R&D aimed by 100% hydrogen.
at making larger-capacity liquefied
hydrogen storage tanks.
19
19 20
20Hydrogen Hydrogen
Production
Cooled to -2253˚C
and in liquefied form,
-253°C cryogenic temperature achieved
Kawasaki successfully developed Japan’s first industrial-
hydrogen shrinks to
original volume for the oce
of its
ean voyage to Japan
Giving the world its first liquefied hydrogen carrier
use hydrogen liquefaction system using entirely home- For hydrogen to have a real future as widely used, next-generation
grown, proprietary technology. energy, technology is needed that will ensure safe and highly effi-
The hydrogen liquefaction system we developed was cient transportation of hydrogen in large volume. Kawasaki, which
installed at one of our domestic facilities and has the built Japan’s first liquefied natural gas (LNG) carrier in 1981,
capacity to liquefy about five tons of hydrogen per day. enjoys a place at the forefront of cryogenic technology for
This is made possible through the application of cryo- marine transport. We drew together the best in cryogenic
genic materials handling technology and technical technology and shipbuilding technology accumulated over
turbine expertise accumulated through the devel- many years and are applying this expertise to the devel-
opment of high-speed rotating machines. opment of the world’s first liquefied hydrogen carrier.
When cryogenically cooled to -253˚C, hydrogen changes from a gaseous state to a liquefied state shrinking to 1/800 of its The sh
shape
ap of th
ape the
e future,
f from
om Kaw
Kawasa
asaki
ki -162˚C LNG carrier: Symbolizing 30 years of Kawasaki pride
original volume. In this concentrated form, hydrogen exhibits a tremendous improvement in storage/transportation effi- Large liquefied hydrogen carrier Should
Sho uld
ld a so
socciet
ie y wher
e e hydroge
ogen n is
is widely
w use
us ed beco
become a reality, itt will
w require e
ciency, which raises the amount of hydrogen that can be distributed by marine or ground transportation. large qua
large uanti
ntitie
tiess of hydr
hydr
droge
ogen
oge n prod
prod
o uce
uc d inex xpen
pensiv
sively
ively ov
o ers
e eas
eas to be trrans
nspor
po ted
por te to Ja apan
pan.. Hydr
ydroge
yd ogen—t
—the
he ult
ultima
imatete clean
an
energy
ene rgy. When sosocie
c ty
cie y use
ses
es hydr
ydd oge
ogen a
ogen ass an
an ene
nerrgy
g source e as maatte
er-o
r f-f
f- act
ctly
ly ass it doe
does coal
oal, oil
oil an
and
ndd na
natur
tur
tu
u al gas,
gass, it
it will be
be
large hyddrog
rogen
en car
carrie
rie
ers de
dev
e elo
ev loped
pe
p ed by Ka
Kawas
wassaki
a th
ak hat suppppor
o thhydr
ydroge
ydr ogen
oge n dist
dis
istrib
r uti
rib ution.
21 22Hy
ydrogen Hydrogen
Use
liquefied hydrogen
coontainment system
Kawasaki has cultivated cryogenic temperature –253˚C liquefied
100Hydrogen-driven gas turbine technology
hydrogen power generation
hydrogen storage technology through the development of lique- Chemical plants and other facilities generate large amounts of by-product
fied hydrogen storage tanks installed at the Japan Aerospace gas, including hydrogen, leading to a growing need for effective ways to
Exploration Agency (JAXA) rocket launch facilities. utilize the derivative gas. In response, Kawasaki is currently running
Kawasaki was entrusted by NEDO to undertake R&D on peripheral verification tests on a gas turbine with a proprietary combustion
technology (a hydrogen liquefaction and storage system) under a system fueled by a mixture of natural gas and hydrogen. We are
cutting-edge R&D project to promote wider use of hydrogen as also engaged in the development of gas turbine combustors
an energy source. We are working on a 1,000m3-class lique- optimized to the characteristics of hydrogen, namely, its fast
fied hydrogen containment system featuring a vacuum rate of combustion, to generate power using 100% hydrogen.
insulation structure to minimize evaporation of the stored
liquefied hydrogen, as hydrogen in its liquefied state is Hydrogen mix combustion technology: Demonstration gas
turbine on site of Kawasaki facility
more susceptible to evaporation than LNG.
(Hydrogen-only combustion technology: Pilot operation under
Liquefied hydrogen storage tanks at Tanegashima Space consideration)
Center, in use for more than 25 years
High
Hi gh-T
-Teempe
emmpe
perature
re/Hig
igh-Pr
ig Pres
Pr essu
ure
re Comombu
bustio
stio
stion
T stt Facil
Te iliity (RWT
TH Aa
Aachhen
e Uniivers
vers
ver itty)
y)
Developed low-NOx, hydrogen-fueled gas turbine
combustion technology
Hydrogen combustion in a gas turbine tends to be unstable because of hydrogen’s fast rate of
combustion, and as the flame temperature rises, NOx emissions nearly double compared with
the amount released in the combustion of natural gas.
To solve these issues, Kawasaki teamed up with Aachen University of Applied Sciences (FH), in
Germany, to pursue basic research on hydrogen-fueled Dry Low Emission (DLE*) combustion capable
of suppressing flashback and other unstable combustion events through the use
of small hydrogen flames while also achieving low-NOx results.
Then, commissioned by the Japan Science and Technology
Agency under a strategic innovation promotion program for
energy carriers—an initiative of the Council for Science, Technology
and Innovation—we became involved in the development of
a gas turbine combustor using this small hydrogen flame. We
also conducted a hydrogen combustion test (100% hydrogen) Gas turbine Combustor
using the high-temperature, high-pressure combustion test facility
at RWTH Aachen University and confirmed that the use of the new
technology achieved NOx emissions far below the regulation value.
*A system that reduces NOx emissions by minimizing combustion temperature without the use of injected water or steam.
23 24
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