Japanese high-tech firm Hitachi on Tuesday said it plans to slash its annual costs 5.0 percent by 2015, or about $5.43 billion a year, to compete with rivals including General Electric.
The announcement by Hitachi, whose products range from microchips to railways, comes after the company said last month that its nine-month net profit dived more than 61.0 percent year-on-year, amid a strong yen and weaker demand from Europe and China.
Its full-year sales and operating profit forecast remained unchanged at 9.5 trillion yen ($115 billion) and 400 billion yen respectively.
On Tuesday, Hitachi executive officer Makoto Ebata said the firm would boost the purchase of raw materials overseas and merge overlapping units, saying its "high-cost structure" was tied largely to sourcing expenses.
Hitachi's sweeping "Smart Transformation Project" calls for a "shift from competition focused on the Japanese market to emphasis on true global competition" with plans for 450 billion yen ($5.43 billion) a year in cuts starting in the fiscal year ending March 2016.
"The question is how to build a cost structure that will enable us to compete with overseas players," said Ebata, who is overseeing the cost-cutting effort, Dow Jones Newswires reported.
New raw material procurement sites will be set up in emerging markets, including Russia, China, Brazil, the Philippines and Indonesia, it said, while an IT services unit with six regional headquarters will be merged.
The firm will continue efforts at developing "rare earth-less" motors amid uncertainty over stable supply of the key minerals crucial for making a wide range of high tech products, it said.
Japan, a major rare-earth importer, has joined the United States and European Union in complaining to the World Trade Organization that China was monopolising supply of the 17 elements. China produces about 97 percent of the world's supply of rare earths.