Hitachi, Ltd. · TSE:6501
Hitachi — Investor Day (June 2021)
36 slides from Hitachi's investor day presentation, Jun 8, 2021
Slide 1: Hitachi Investor Day 2021 Mobility Sector
Hitachi Investor Day 2021 Mobility Sector June 8, 2021 Alistair Dormer Executive Vice President and Executive Officer Chief Environmental Officer Hitachi, Ltd. © Hitachi, Ltd. 2021. All rights reserved.
Slide 2: Today's Key Messages
Today’s Key Messages Mobility 01 Mobility Sector Targeting 1.85 trillion yen Revenues and >11% Adjusted operating income ratio and >13% ROIC by FY2025 The Mobility Sector has strong 02 Well positioned to benefit from post pandemic recovery -BSBU Strong recovery in China as No.1 position in Elevator
Slide 3: Mobility Sector Contents
Mobility Sector Contents 1. Business Overview 2. Railway Systems BU (Market Trends & Growth Strategy) 3. Building Systems BU (Market Trends & Growth Strategy) 4. Conclusion 5. Appendix © Hitachi, Ltd. 2021. All rights reserved. 2
Slide 4: Position of the Mobility Sector
3 Automotive Business Systems © Hitachi, Ltd. 2021. All rights reserved. Hitachi Astemo Smart Life Hitachi High-Tech Hitachi Global Life Solutions Services & Platforms BU Mobility Railway Systems BU Product Business Building Systems BU Industry Water & Environment BU 1-1. Position of the Mobility Se
Slide 5: Business Structure
1-2-1. Business Structure 1 Mobility Mobility drives 13% of Hitachi revenues… …and is split ~45/~55 into RSBU and BSBU Others 5% Railway Building IT Systems BU Systems BU Listed 21% [BSBU] [RSBU] subsidiaries 16% 45% 55% FY2020 Consolidated FY2020 Revenues Energy Mobility Revenues 8,729.1 billion ye
Slide 6: Business Structure: Railways and Buildings
1-2-2. Business Structure 2 Mobility Mobility offers a range of services for Railways and Buildings RSBU drives ~45% of revenues BSBU drives ~55% of revenues ⚫ Rolling Stock manufacturing (~43%) ⚫ E&E (elevator & escalator) manufacturing ⚫ Railway Signaling manufacturing and turnkey projects and ins
Slide 7: Progress of 2021 Mid-term Management Plan
1-3. The Progress of 2021 Mid-term Management Plan Mobility +5% +4% Unit: Billions of yen Key (5)% BSBU 1,275.0 1,270.0 10.2% 11.1% 11.2% 1,171.7 1,226.8 8.5% 6.2% 8.4% 9.8% 9.8% RSBU 6.6% 620.0 135.8 142.6 591.5 679.1 700.0 124.8 119.6 124.4 99.6 107.7 64.1 19% 18% 19% 81.5 63.0 51.2 73.6 73.5 57.8
Slide 8: Mobility Sector Contents
Mobility Sector Contents 1. Business Overview 2. Railway Systems BU (Market Trends & Growth Strategy) 3. Building Systems BU (Market Trends & Growth Strategy) 4. Conclusion 5. Appendix © Hitachi, Ltd. 2021. All rights reserved. 7
Slide 9: Market trends favour digital players
2-1. Market trends favour digital players RSBU Railway market is Digitalisation of rail grows The competitive environment is expected to grow twice as fast challenging 5.8tr Yen -> 7.0tr Yen, 3% CAGR 1.3tr Yen -> 1.9tr Yen, 7% CAGR Hitachi is #4 globally in revenue (tr Yen) 8.0 2.0 1.2 Services (+14
Slide 10: Rail is targeting the position of outperformer in profitability
2-2. Rail is targeting the position of outperformer in profitability RSBU Rail prioritises strengthening profitability Key drivers Strengths Revenue: 500bn Yen 12% • Full product offering • Leadership and challenger Competitor position in key markets 10% Target 1 Adjusted operating income ratio* • S
Slide 11: Rail strategy is focused on digitizing the core offering
2-3-1. Rail strategy is focused on digitizing the core offering RSBU and leveraging recent Hitachi acquisitions 20% of Rail revenues is derived from Lumada Sustainability Operational technology Information technology Adjacencies © Hitachi, Ltd. 2021. All rights reserved. 10
Slide 12: Our strategy enables carbon free mobility
2-3-2. Our strategy enables carbon free mobility RSBU Battery hybrid train in the UK Battery tram in Florence • Partnership with • Trial in Florence Hyperdrive • Reduced cost and • London-Penzance disruption in city intercity route centres Battery hybrid train in Italy Hydrogen prototype in Tokyo •
Slide 13: Supports the Sustainable Development Goals
2-3-3. … and supports the Sustainable Development Goals RSBU Next level Driver of Global Covid-19 Environmental Social Organisation Economic recovery Value Value and Process Value • A train passenger reduces CO2 • Safe travel: thousands of deaths • Driving economic recovery with by 1.5 tons (70 tree
Slide 14: Rail has strong fundamentals in the medium and long term
2-3-4. Rail has strong fundamentals in the medium and long RSBU term driven by green recovery and digitalisation Growth factors Economic growth via Green Digitalisation Digital return to recovery of the core adjacencies normality RiskRisks Factors Mitigation Mitigation Focus on the most profitable p
Slide 15: Rail strategy: core, digitalization and competitiveness
2-3-5. Rail strategy is focused on capitalizing on our core, RSBU digitalization and strengthening competitiveness FY2020 FY2021 FY2022 Rail revenues (billion yen) Consolidate expansion in the USA 1,000 850.0 market position +55% Strengthen MaaS 547.7 APAC Expand Operations, Service & Maintenance 50
Slide 16: Mobility Sector Contents
Mobility Sector Contents 1. Business Overview 2. Railway Systems BU (Market Trends & Growth Strategy) 3. Building Systems BU (Market Trends & Growth Strategy) 4. Conclusion 5. Appendix © Hitachi, Ltd. 2021. All rights reserved. 15
Slide 17: Mega Trends and Market Outlook
3-1. Mega Trends and Market Outlook BSBU Mega Trend｜Population Growth/Urbanization Mega Trend｜Investment in the Construction Industry (Trillion Yen) (Billion People) Global Population Breakdown*1 Global Construction Output*2 10 1,600 8 Rural 1,400 6 Population 4 1,200 2 54% 56% 58% 60% Urban 0 Popul
Slide 18: Competitive Environment and management ambition
3-2. Competitive Environment and management ambition BSBU Aim to become market leader in both revenues and profitability 12.0% Hitachi is #5 with 0.5 relative market share (FY2020) Adjusted operating income ratio (billions 16% Competitor A of yen) 10.5% 1,000 Revenue: 500bnYen Competitor B 9.6% 14%
Slide 19: Management Vision for Building Systems Business
3-3. Management Vision for Building Systems Business BSBU Leverage Hitachi Building IoT Platform to expand business in a changing market with COVID-19 「Product」 「Service」 ⚫ Develop and provide reliable E&E ⚫ Provide high-quality services using AI ⚫ Leverage E&E core to expand the digital ⚫ Expand th
Slide 20: Growth Strategy
3-4-1. Growth Strategy BSBU Accelerate business digitalization – strengthen service offering, streamline cost structure Challenge to become market leaders as a building solution provider • Leverage benefits of scale and increase profitability in E&E Growth Scenario • Expand the smart building busine
Slide 21: Regional Strategy
3-4-2. Regional Strategy BSBU (billions of yen) 500 Revenues Challenge to become the market leader • Expand E&E order intake share with new product 400 and strengthen cost competitiveness of the 300 Japan entire value chain 200 • Promote new solutions responding to COVID-19 100 • Expand smart buildi
Slide 22: Growth Drivers and Risk Factors
3-5. Growth Drivers and Risk Factors BSBU Growth factors Population Increase Investment Environment Digitalization and in Real and Safety Urbanization Estate Risk Factors Mitigation Launched the new standard elevator in FY2021 and continue to Transformation of Real Estate Market as New normal standa
Slide 23: Environmental & Social Contribution
3-6. Environmental & Social Contribution BSBU Provide comfortable, safe, and efficient travel in cities • Contribute to realize sustainable society – Reduce CO2 emissions • Contribute to solve social issues – Solutions for the “New normal” Reduce CO2 emissions Solutions for Manufacturing Product & S
Slide 24: Mobility Sector Contents
Mobility Sector Contents 1. Business Overview 2. Railway Systems BU (Market Trends & Growth Strategy) 3. Building Systems BU (Market Trends & Growth Strategy) 4. Conclusion 5. Appendix © Hitachi, Ltd. 2021. All rights reserved. 23
Slide 25: FY2021 Forecast
4-1. FY2021 Forecast Mobility Mobility KPIs 13.7% 12.8% ■ ROIC 12.5% （Return on Invested Capital） ● Adjusted operating 11.3% income ratio 10.6% 8.5% 8.9% ● EBITDA ratio 8.4% 6.6% 1,226.8 1,275.0 1,171.7 BSBU 591.5 679.1 700.0 Revenues (billions of yen) RSBU 580.3 547.7 575.0 FY2019 FY2020 FY2021 For
Slide 26: Mobility in a post-pandemic world
4-2. Mobility in a post-pandemic world Mobility − Mobility Sector is targeting 1.85 trillion yen Revenues, >11% Adjusted operating income ratio and >13% ROIC by FY2025 − FY2020 Action plan continues to deliver Business Transformation − BSBU transformation on track to target global performance levels
Slide 27: Conclusion
4-3. Conclusion Mobility Become one of the top global solution providers • Consolidate geographic expansion in USA (RSBU) and in China (BSBU) • Focus on the core profitable projects • Drive growth via pioneering solutions in digital and sustainable mobility adjacencies FY2020 FY2025 Target Revenues
Slide 28: Mobility Sector Contents
Mobility Sector Contents 1. Business Overview 2. Railway Systems BU (Market Trends & Growth Strategy) 3. Building Systems BU (Market Trends & Growth Strategy) 4. Conclusion 5. Appendix © Hitachi, Ltd. 2021. All rights reserved. 27
Slide 29: Business Performance Trend
Appendix 1. Business Performance Trend Mobility FY2019 FY2020 FY2021 FY2021 Target Forecast as of June 2019 1,518.0 1,336.5 1,432.1 1,349.3 Orders billion yen billion yen billion yen billion yen 1,171.7 1,226.8 1,275.0 1,270.0 Revenues billion yen billion yen billion yen billion yen Overseas revenue
Slide 30: Factors Affecting Changes in Railway Systems BU Revenues and Adjusted Operating Income
Appendix 2. Factors Affecting Changes in Railway Systems BU Revenues and RSBU Adjusted Operating Income Revenues Unit : billions of yen 39.9 580.3 22.1 （9.9） 575.0 6.9 6.6 547.7 （24.9) (34.4) （11.7） FY2019 EMEA APAC Americas Japan FY2020 EMEA APAC Americas Japan FY2021 Forecast Adjusted operating in
Slide 31: Factors Affecting Changes in Building Systems BU Revenues and Adjusted Operating Income
Appendix 3. Factors Affecting Changes in Building Systems BU Revenues and BSBU Adjusted Operating Income Revenues Unit : billions of yen Adjusted operating income Unit : billions of yen © Hitachi, Ltd. 2021. All rights reserved. 30
Slide 32: Enabling Carbon Free Mobility – Rail
Appendix 4. Enabling Carbon Free Mobility – Rail RSBU • Green plants and offices using Solar PV and EVs Environment • Developing our solutions in sustainable and efficient plants • Scope 1/2: CO2 reduction of 50% (FY2024), 60% (FY2025), 100% (FY2030) in 6 plans. 1.9bn Yen investments GHG Emissions •
Slide 33: RSBU's key markets impacted by COVID-19 but set to recover
Appendix 5. RSBU’s key markets have been disproportionately RSBU impacted by COVID-19 but are set to recover RSBU key markets declined by 13% But are expected to recover RSBU key accessible markets, except for Italy and USA (Tr Yen) 1.5 Philippines +21% 96% (13%) (30%) 64% Taiwan 11% 1.0 (65%) Austr
Slide 34: Cautionary Statement
Cautionary Statement Certain statements found in this document may constitute “forward-looking statements” as defined in the U.S. Private Securities Litigation Reform Act of 1995. Such “forward-looking statements” reflect management’s current views with respect to certain future events and financial
Slide 35: Hitachi Social Innovation is Powering Good
Hitachi Social Innovation is POWERING GOOD
Slide 36: Hitachi
HITACHI Inspire the Next