Hitachi, Ltd. · TSE:6501
Hitachi — Investor Day (June 2019)
43 slides from Hitachi's investor day presentation, Jun 4, 2019
Slide 1: Mobility Sector - Hitachi IR Day 2019
Mobility Sector Hitachi IR Day 2019 June 4, 2019 Alistair Dormer Executive Vice President and Executive Officer Hitachi, Ltd. © Hitachi, Ltd. 2019. All rights reserved.
Slide 2: Key Messages Today
Key Messages Today − Mobility sector revenues have grown by 11.9% CAGR over the last 5 years with 69.3% 1 of revenues earned overseas − Very strong backlog at the end of FY2018 for both Bus with BSBU and RSBU backlog at 2 675.7Bn yen and 2,827.1Bn yen respectively − Further global expansion is targe
Slide 3: Contents
Mobility Sector Contents 1. Introduction to Mobility Sector 2. Building Systems BU 3. Railway Systems BU 4. Conclusion Glossary Appendix A – Building Systems BU Appendix B – Railway Systems BU © Hitachi, Ltd. 2019. All rights reserved. 3
Slide 4: We create social, environmental and economic values
1. Introduction to Mobility Sector 1-1. We create social, environmental and economic values Social values Environmental values Economic values Mobility Smart Life Industry Energy IT solution solution solution solution solution Product Product Product Product Product © Hitachi, Ltd. 2019. All rights
Slide 5: The sector demonstrated strong growth over the last 5 years
1. Introduction to Mobility Sector 1-2. The sector demonstrated strong growth over the last 5 years (11.9% CAGR) and is the third largest within Hitachi Mobility Revenues as % of Total Hitachi Revenues (FY2018)* Mobility Sector Key Financials – Last 5 Years (Billion Yen) Railway Systems BU Building
Slide 6: Society is changing and so is the way we think about Mobility
1. Introduction to Mobility Sector 1-3. Society is changing and so is the way we think about Mobility Global trends and challenges…. …driving different Mobility solutions Global population is forecast to grow to Faster, cleaner intercity approximately 9.7 billion transport by 2050 from 7.6 billion i
Slide 7: Our products, solutions and operations support the UN Sustainable Development Goals
1. Introduction to Mobility Sector 1-4. Our products, solutions and operations support the United Nations Sustainable Development Goals Mobility sector is committed on Social Innovation Business with a positive impact on society Mobility SDGs Hitachi Rail was a founding member of UTC* South Durham,
Slide 8: Contents
Mobility Sector Contents 1. Introduction to Mobility Sector 2. Building Systems BU 3. Railway Systems BU 4. Conclusion Glossary Appendix A – Building Systems BU Appendix B – Railway Systems BU © Hitachi, Ltd. 2019. All rights reserved. 8
Slide 9: BSBU provides building products and services globally
2. Building Systems BU 2-1. BSBU provides building products and services globally Hideaki Seki－BSBU CEO - Over 28 years of experience in BSBU; 40 years total experience in Hitachi group - Previous engagement in revitalization of motor technology (4 years), and in automotive systems business (8 years
Slide 10: BSBU continues to innovate, expand into new geographies and grow in its core markets
2. Building Systems BU 2-2. BSBU continues to innovate, expand into new geographies and grow in its core markets Key Achievements − Delivery of the world fastest 1,260m/min 1 elevator − Elevators and Escalators new installation 2 order received unit share no. 1 in China (FY2018) − Expanded sales and
Slide 11: BSBU is delivering in our core markets and winning orders in new geographies
2. Building Systems BU 2-3. BSBU is delivering in our core markets and winning orders in new geographies to expand our footprint in Asia Major Deliveries [China] [Thailand] [Japan] [Japan] InterContinental Krungsri Ploenchit Tower TOKYO MIDTOWN HIBIYA Yokohama Landmark Tower Shanghai Wonderland <Ban
Slide 12: BSBU exceeded key revenues, profit and free cash flow targets in FY2018
2. Building Systems BU 2-4. BSBU exceeded key revenues, profit and free cash flow targets in FY2018 FY2018 Results Forecast as of FY2018 Result Deviation Dynamics 8th June 2018 − Increased as projects of FY2019 Revenues (Billion Yen) 621.6 580.0 +41.6 were brought forward − Increase in business scal
Slide 13: BSBU is forecasting double-digit profit margins by FY2021 and growing order backlog
2. Building Systems BU 2-5. BSBU is forecasting double-digital profit margins by FY2021 and growing order backlog Order Received 615.5 599.3 650.0 (Billion Yen) Book to Bill 0.99x 1.02x 1.05x (Ratio) Order Backlog 675.7 690.0 740.0 (Billion Yen) Overseas revenue ratio 57% 54% 55% 800 - Revenues - Ad
Slide 14: Profitability forecasts to increase to FY2021
2. Building Systems BU 2-6. Profitability forecasts to increase to FY2021 due to cost reduction program and growing maintenance revenues Revenue Bridge Billion Yen Decrease in NI Modernization and Maintenance and Expansion in new and negative FX solutions increase solutions increase geographies effe
Slide 15: NI and services business lines are inherently linked
2. Building Systems BU 2-7. NI and services business lines are inherently linked so improving our offering across the whole business is key to growth Expand BSBU’s business by both elevator/escalator and service businesses Retention of Hitachi equipment Differentiation strategy New installation Mode
Slide 16: BSBU is investing in its technology and capabilities
2. Building Systems BU 2-8. BSBU is investing in its technology and capabilities to enhance competitiveness 1. Investment in Global Control Centre Elevator / Escalator Services − Platform to enhance our core offering and expand advanced building services offering Business Business Global Control Cen
Slide 17: BSBU will target expansion in Asia and the Middle East
2. Building Systems BU 2-9. BSBU will target expansion in Asia and the Middle East, utilising our manufacturing base in China and technology in Japan Asia and Middle East China New and growing markets (e.g. India, Saudi Arabia, Cambodia, Vietnam) − Become No.1 manufacturer in China by revenue and pr
Slide 18: Contents
Mobility Sector Contents 1. Introduction to Mobility Sector 2. Building Systems BU 3. Railway Systems BU 4. Conclusion Glossary Appendix A – Building Systems BU Appendix B – Railway Systems BU © Hitachi, Ltd. 2019. All rights reserved. 18
Slide 19: RSBU is a global, full line-up rail solutions provider
3. Railway Systems BU 3-1. RSBU is a global, full line-up rail solutions provider. Our products helped over 18 billion people travel last year*1 Andrew Barr – RSBU CEO − 15 years of Hitachi Group *2 experience, with 26 years in the rail industry overall − CEO of Ansaldo STS since May Very High Shink
Slide 20: FY2018 was an incredibly successful year for RSBU
3. Railway Systems BU 3-2. FY2018 was an incredibly successful year for RSBU, ensuring a solid platform for further growth Key Achievements − 9.6% organic revenue growth and 7.5% adjusted operating income ratio 1 − Highest revenue and adjusted operating income ratio in RSBU history − Record year for
Slide 21: RSBU's major project delivery last year
3. Railway Systems BU 3-3. RSBU’s major project delivery last year demonstrates the breadth of products and geographies the business covers *1 *2 *3 UK RS UK RS Denmark RS Japan RS Japan RS Japan RS Full fleet delivery for 61 new Class 385 Completed Metro Delivery of New Luxury New monorail car LOI
Slide 22: Order intake in FY2018 was ahead of forecast
3. Railway Systems BU 3-4. Order intake in FY2018 was ahead of forecast, with a book to bill ratio of 1.16x Riyadh Metro O&M Taiwan Intercity Book to Bill ratio – − 12 year O&M contract for 1.16x − 600 new EMU train cars track, stations, depots +12% vs. and control centres of for Taiwan intercity Ri
Slide 23: Financial results were ahead of forecast for almost all major metrics
3. Railway Systems BU 3-5. Financial results were ahead of forecast for almost all major metrics FY2018 Results Forecast as of FY2018 Result Deviation Dynamics 8th June 2018 − Slight revenue miss due to RS Revenues (Billion Yen) 616.5 630.0 (13.5) project slippage Adjusted Operating Income 46.3 43.8
Slide 24: RSBU is targeting continued margin improvement to FY2021
3. Railway Systems BU 3-6. RSBU is targeting continued margin improvement over the Mid- Term Plan to FY2021 Orders Received 714.6 765.2 699.3 (Billion Yen) Book to Bill 1.16x 1.34x 1.08x (Ratio) Orders Backlog* 2,827.1 2,967.5 3,063.6 (Billion Yen) Overseas 82% 78% 80% revenue ratio 800 - Revenues -
Slide 25: Revenues and margins will recover and grow again post FY2020
3. Railway Systems BU 3-7. Revenues and margins will recover and grow again post FY2020, following completion of IEP manufacturing this financial year Revenue Bridge Billion Yen Completion of UK Italy (double-deck Increase in Growth in UK and projects, partially Increase in EMU) and APAC Gains in No
Slide 26: Investment in core products and technology will enhance RSBU's offering
3. Railway Systems BU 3-8. Investment in core products and technology will enhance RSBU’s offering for customers, and increase competitiveness Rolling Stock Development of new Rolling Stock platforms . Balance factory workload globally Innovate to anticipate customers’ needs . Improve efficiency usi
Slide 27: Targeting continued growth through strong customer relationships
3. Railway Systems BU 3-9. Targeting continued growth through strong customer relationships in core markets, and expansion in new geographies Americas EMEA Japan & APAC Key Facts Key Facts Key Facts − FTEs – 933 − FTEs – 8,322 − FTEs – 4,377 − 3 manufacturing sites − 6 manufacturing sites − 2 manufa
Slide 28: Utilising Hitachi technology for digital solutions
3. Railway Systems BU 3-10. Utilising Hitachi technology for digital solutions to improve processes and create new revenue streams Strengthen Core Product Create New Revenue Streams Operational Efficiency ‒ Flexible operation ‒ Back end system and ‒ Unify development of Rolling Operation service bus
Slide 29: Contents
Mobility Sector Contents 1. Introduction to Mobility Sector 2. Building Systems BU 3. Railway Systems BU 4. Conclusion Glossary Appendix A – Building Systems BU Appendix B – Railway Systems BU © Hitachi, Ltd. 2019. All rights reserved. 29
Slide 30: Both Building and Railway Systems businesses are pursuing growth and transformation
4. Conclusion 4-1. Both Building and Railway Systems businesses are successfully pursuing growth and operational transformation Building Systems BU Railway Systems BU ‒ Strong and stable business targeting top line growth ‒ IEP manufacturing revenues reducing offset by and double digit profitability
Slide 31: The Mobility sector is in a strong position to achieve its growth ambition
4. Conclusion 4-2. The Mobility sector is in a strong position to achieve its growth ambition and improve profitability Revenues (Bn yen) and Adjusted Investment (CAPEX + R&D) (Bn yen) EBIT (Bn yen) and EBIT Ratio (%) Operating Income Ratio (%) and ROIC (%) Stretch target through 10.9% 11.2% M&A 9.8
Slide 32: Contents
Mobility Sector Contents 1. Introduction to Mobility Sector 2. Building Systems BU 3. Railway Systems BU 4. Conclusion Glossary Appendix A – Building Systems BU Appendix B – Railway Systems BU © Hitachi, Ltd. 2019. All rights reserved. 32
Slide 33: Glossary
Glossary ASTS Ansaldo STS IoT Internet of Things ATO Automatic Train Operation JAPAC Japan and Asia Pacific BIVALE Solution service to solve problems for LOI Letter of Intent building management by total control with LRV Light Rail Vehicle “Energy”, “Security” and “Building Maintenance” LNER London
Slide 34: Contents
Mobility Sector Contents 1. Introduction to Mobility Sector 2. Building Systems BU 3. Railway Systems BU 4. Conclusion Glossary Appendix A – Building Systems BU Appendix B – Railway Systems BU © Hitachi, Ltd. 2019. All rights reserved. 34
Slide 35: Market Trend
Appendix A – Building Systems BU A-1. Market Trend Low growth in Japan & China markets, but strong growth in global markets E&E NI Market Trends* (Thousand units) 925 967 952 964 57 58 60 Americas 55 118 121 124 126 Europe 194 202 212 221 Asia / Middle East 527 556 527 527 China 20 20 20 20 Japan
Slide 36: Towards FY2021: Target Position
Appendix A – Building Systems BU A-2. Towards FY2021:Target Position Direction for Future Growth 20.0% (Adjusted Operating Income Ratio (%)) Company B Hitachi+ Hitachi Yungtay 15.0% (FY2021) (FY2021) Hitachi (FY2019) Company A 10.0% Company D Company C 5.0% Hitachi (FY2018) Company E Hitachi’s estim
Slide 37: Business performance trends
Appendix A – Building Systems BU A-3. Business performance trends（Except FX effects） Revenue Bridge Billion Yen CAGR: 3.3% Increase in Expansion in new ‒ FY19 projects brought Increase in modernization & FY19 projects geographies forward to FY18 maintenance & solution brought forward ‒ Revenue scale
Slide 38: Contents
Mobility Sector Contents 1. Introduction to Mobility Sector 2. Building Systems BU 3. Railway Systems BU 4. Conclusion Glossary Appendix A – Building Systems BU Appendix B – Railway Systems BU © Hitachi, Ltd. 2019. All rights reserved. 38
Slide 39: We closed two major deals
Appendix B – Railway Systems BU B-1. We closed two major deals, demonstrating strong returns and enabling the next phase of transformation Ansaldo STS delisted to unlock next step in transformation and growth As at 1 June 2018 FY2018 Milestones FY2019 - FY2021 ‒ Owned 51% of Ansaldo Ongoing STS fr
Slide 40: We are well positioned to compete in a growing market
Appendix B – Railway Systems BU B-2. We are well positioned to compete in a growing market Industry Growth Market Growth by Product*1 Annual Average, Trillion Yen Market Growth by Region*1 Annual Average, Trillion Yen CAGR CAGR CAGR CAGR 2.3% 2.3% 3.1% 3.1% 6.3 6.3 5.9 5.9 2.5% 5.4 5.4 0.5 6.0% 0.9
Slide 41: 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 42: Hitachi Social Innovation is POWERING GOOD
Hitachi Social Innovation is POWERING GOOD
Slide 43: HITACHI Inspire the Next
HITACHI Inspire the Next