Hitachi, Ltd. · TSE:6501

Hitachi — Investor Day (June 2013)

42 slides from Hitachi's investor day presentation, Jun 13, 2013

  1. Slide 1: Information & Telecommunication Systems Business Strategy

    Information & Telecommunication Systems Business Strategy Hitachi IR Day 2013 June 13, 2013 Yutaka Saito Senior Vice President and Executive Officer President & CEO Information & Telecommunication Systems Company Information & Telecommunication Systems Group Hitachi, Ltd. © Hitachi, Ltd. 2013. All r

  2. Slide 2: Contents

    Information & Telecommunication Systems Business Strategy Contents 1. Performance Review of 2012 Mid-term Management Plan 2. 2015 Mid-term Management Plan 3. Hitachi’s Comprehensive Capabilities in the Social Innovation Business 4. Transforming a Business Portfolio with Growth Potential 5. Developin

  3. Slide 3: FY2012 Results

    1-1. FY2012 Results Revenues: Slightly higher revenues from steady sales in services in Japan and storage solutions and ATMs overseas. Operating income: Earnings increased despite lower profitability due to some unprofitable projects. This mainly reflected solid earnings from storage solutions and

  4. Slide 4: Performance Overview of 2012 Mid-term Management Plan (1)

    1-2. Performance Overview of 2012 Mid-term Management Plan (1)  Revenues: Continuing to grow since FY2010, CAGR 4.0% (Japan: 2.8%, overseas: 7.9%)  Operating income: impacted by changes in the external environment, including the Great East Japan Earthquake, and unprofitable projects FY2012 FY2010

  5. Slide 5: Performance Overview of 2012 Mid-term Management Plan (2)

    1-2. Performance Overview of 2012 Mid-term Management Plan (2) Dec. 2012 Acquired Celerant Consulting in the U.K. Business Growth Dec. 2010 Acquired Sierra Atlantic in the U.S. (Consulting in the social infrastructure ) May 2012 (Consulting/ERP) Acquired eBworx in Malaysia (Financial IT solutions) J

  6. Slide 6: Contents

    Information & Telecommunication Systems Business Strategy Contents 1. Performance Review of 2012 Mid-term Management Plan 2. 2015 Mid-term Management Plan 3. Hitachi’s Comprehensive Capabilities in the Social Innovation Business 4. Transforming a Business Portfolio with Growth Potential 5. Developin

  7. Slide 7: Future Mega-Trends

    2-1. Future Mega-Trends Changes in society around 2020  Shifting from a society centered on “concentration, ownership and consumption” to “distribution, sharing and recycling”  Expansion of free trade zones  Global market growth led by emerging countries  Energy shift drive to reorganize industr

  8. Slide 8: Vision (1)

    2-2. Vision (1)  Innovate businesses and value chains with “human,” “IT” and “social infrastructure”  Realize a sustainable society by solving social issues globally “Human,” “IT” and As can only be done by Hitachi with its knowledge of both “IT” and “social infrastructure” “social infrastructure”

  9. Slide 9: Vision (2)

    2-2. Vision (2) Drive social innovation with “IT” Further enhance abilities to “understand social issues,” “propose solutions” and “deliver solutions” Major countries and regions Main solutions for solving social issues for global development More sophisticated Business social infrastructure innovat

  10. Slide 10: Growing Markets to Target

    2-3. Growing Markets to Target IT Market Trends Enhancing profitability to become Low growth in Japan, but a global major player (％) solid growth in the global market 122 2012 IBM Japan WW 106 20 2010 100 CAGR WW 4% Accenture Japan 1% 15 Operating income ratio (％) 2010 2012 2010 15 HP* CY2010 CY2015

  11. Slide 11: Management Policy

    2-4. Management Policy Become a global major player by 3Gs (Growth, Global and Group) 1. Hitachi’s Comprehensive Capabilities in the Social Innovation Business  Enhance Group collaboration for displaying “One Hitachi” strengths  Strengthen upstream approaches using frontline expertise  Utilize IT

  12. Slide 12: Performance Targets (Summary)

    2-5. Performance Targets (Summary) FY2012 FY2015 (Targets) Revenues 1,786.5 billion yen 2,100.0 billion yen EBIT (Operating income) ratio 5.8% (5.9%) 9.8% (10.0%) Overseas revenue ratio 26% 35% Service revenue ratio 60% over 65% © Hitachi, Ltd. 2013. All rights reserved. 12

  13. Slide 13: New Organizational Structure

    2-6. New Organizational Structure Information & Telecommunication Systems Group Information & Telecommunication ● System Solutions Division Systems Company ● Service Division 170 companies (Japan: 42, overseas: 128) (newly established in April 2013) As of April 1, 2013 ● Platform Division Hitachi Sy

  14. Slide 14: Contents

    Information & Telecommunication Systems Business Strategy Contents 1. Performance Review of 2012 Mid-term Management Plan 2. 2015 Mid-term Management Plan 3. Hitachi’s Comprehensive Capabilities in the Social Innovation Business 4. Transforming a Business Portfolio with Growth Potential 5. Developin

  15. Slide 15: Measures for the Social Innovation Business

    3-1. Measures for the Social Innovation Business Innovate businesses and value chains utilizing IT Information & Telecommunication Systems Company leads One Hitachi to cover the entire customer value chain  Change to a solutions-based approach to solve social issues, eyeing entire customer value ch

  16. Slide 16: IT's Role

    3-2. IT’s Role  Create new business models centered on “human”  Optimize business processes based on actual business knowhow Front areas “Human” “IT” Social Management and infrastructure Total engineering Enterprise social network marketing enhancement SNS, mobile Communication Analytics Data Anal

  17. Slide 17: Stepped-up Measures for Creating Customer Value

    3-3. Stepped-up Measures for Creating Customer Value Approach from the upstream level to survey the entire value chain and identify real issues existing in frontlines  Consulting capabilities in the social infrastructure field: Consulting Acquired Celerant Consulting (December 2012)  Upstream desi

  18. Slide 18: Main Domains in Social Infrastructure

    3-4. Main Domains in Social Infrastructure Energy Mining Transport Logistics Healthcare Agriculture Active collaborative creation with customers Approaches utilizing the Hitachi Group’s business and knowhow Provide enhanced social infrastructure systems: smart information Related revenues FY2012: ap

  19. Slide 19: Solutions Example (1) Healthcare

    3-5. Solutions Example (1) Healthcare Realize a healthy, safe and secure society Customer trends/needs Example of solution Reductions in social security expenses  Launched demonstration of disease at the national level prevention jointly with the U.K. NHS Increasing pre- (preventive and early Dru

  20. Slide 20: Solutions Example (2) Logistics

    3-5. Solutions Example (2) Logistics Create optimized logistics services utilizing IT Customer trends/needs Example of solution  Rapid growth of emerging market  Demonstration of new logistics mainly in Asia (CAGR: 18%) services (joint cargo and car pick-up  Establish global network, respond to s

  21. Slide 21: Contents

    Information & Telecommunication Systems Business Strategy Contents 1. Performance Review of 2012 Mid-term Management Plan 2. 2015 Mid-term Management Plan 3. Hitachi’s Comprehensive Capabilities in the Social Innovation Business 4. Transforming a Business Portfolio with Growth Potential 5. Developin

  22. Slide 22: Business Growth Strategies

    4-1. Business Growth Strategies Key fields to lead growth 1. Strengthen priority fields ● Smart information (introduced in Chapter 3) ● Big Data ● Highly reliable cloud computing ● Security 2. Expand global businesses ● Overseas revenue ratio: 26% (FY2012)  35% (FY2015) 3. Strengthen services busin

  23. Slide 23: Strengthen Priority Fields (1) Big Data

    4-2. Strengthen Priority Fields (1) Big Data Create new customer value and business opportunities using Big Data  Promote business utilizing end users’ Big Data: e.g. Telematics field: “Nissan Motor” x “Sompo Japan Insurance”  Strengthen global business with “Hitachi Global Center for Innovative A

  24. Slide 24: Strengthen Priority Fields (2) Highly reliable cloud computing

    4-2. Strengthen Priority Fields (2) Highly reliable cloud computing  Provide second-generation cloud computing services to address more diverse and sophisticated customer needs in response to expanding use of cloud computing services (linking different cloud computing services)  Provide cloud comp

  25. Slide 25: Strengthen Priority Fields (3) Security

    4-2. Strengthen Priority Fields (3) Security Provide security services covering entire social infrastructure and corporate activities Changing customer needs Strengthen social infrastructure security  Ensuring safety and availability of  Fuse IT and social infrastructure social infrastructure secu

  26. Slide 26: Expand Global Businesses (1) Revenues, Personnel

    4-3. Expand Global Businesses (1) Revenues, Personnel Overseas Revenue Ratio (Revenues by Region) Asia, etc. Asia, etc. [ ]: % ratio China [8] China [5] [5] Europe [5] Europe [6] [9] North Overseas North Overseas America revenue America revenue [10] ratio Japan [13] ratio Japan 26% 35% [74] [65] (FY

  27. Slide 27: Expand Global Businesses (2) Platform

    4-3. Expand Global Businesses (2) Platform Accelerate growth in global markets centered on Hitachi Data Systems Results Through FY2012 Initiatives Towards FY2015 Strengthened sales system to expand revenues Expand business domains - Revenues: CAGR 10% (FY2006  FY2012) to integrated platforms - Co

  28. Slide 28: Expand Global Businesses (3) Consulting

    4-3. Expand Global Businesses (3) Consulting Hitachi Consulting drives global business by the approach from upstream level Results Through FY2012 Initiatives Towards FY2015 Built a highly profitable Establish Tier 1 position service portfolio early - Upstream consulting - Expand regional coverage

  29. Slide 29: Expand Global Businesses (4) Solutions Delivery System

    4-3. Expand Global Businesses (4) Solutions Delivery System  Strengthen global solutions delivery as One Hitachi  Establish a support system in close contact with customers More sophisticated Corporate globalization social infrastructure Manufacturing, distribution, Electricity, railways, water, e

  30. Slide 30: Strengthen Services Businesses

    4-4. Strengthen Services Businesses Service revenue ratio: 60%(FY2012)  over 65%（FY2015） Market trends/needs Strong services businesses  Accelerated shift “from ownership to access” Provide high-value added services with the  Expansion of outsourcing over strength of track records and know-how in

  31. Slide 31: Contents

    Information & Telecommunication Systems Business Strategy Contents 1. Performance Review of 2012 Mid-term Management Plan 2. 2015 Mid-term Management Plan 3. Hitachi’s Comprehensive Capabilities in the Social Innovation Business 4. Transforming a Business Portfolio with Growth Potential 5. Developin

  32. Slide 32: Transformation

    5-1. Transformation Shift focus from consolidated management and business structure reforms to development of a global business structure Consolidated management and business structure reforms  Group company integration, conversion of subsidiaries into wholly owned subsidiaries (Hitachi Systems , H

  33. Slide 33: Strengthen Global Operations and Human Resources

    5-2. Strengthen Global Operations and Human Resources Strengthen global operations Enhance global and group consolidated management system: - Strengthen integration of business value chain - Hold top management conference globally Strategic increase in R&D investment (Ratio to revenue: 4.6%(FY2012

  34. Slide 34: Hitachi Smart Transformation Project

    5-3. Hitachi Smart Transformation Project Cost reduction through Hitachi Smart Transformation Project Earnings Structure (%)  Optimize split of work/process within Hitachi Group expenses 5.9  Consolidate and restructure group companies SG&A Operating 10 income  Integrate IT within Hitachi Group 3

  35. Slide 35: Strengthen Cash Flow Management

    5-4. Strengthen Cash Flow Management Challenges Measures Increase cash flows from Increase profitability by shifting operating activities Increase business to services businesses and expanding global businesses profitability Reduce inventories by Improve turnover period consolidating manufacturi

  36. Slide 36: Contents

    Information & Telecommunication Systems Business Strategy Contents 1. Performance Review of 2012 Mid-term Management Plan 2. 2015 Mid-term Management Plan 3. Hitachi’s Comprehensive Capabilities in the Social Innovation Business 4. Transforming a Business Portfolio with Growth Potential 5. Developin

  37. Slide 37: FY2013 Forecasts

    6-1. FY2013 Forecasts Amount of orders 1,838.3 1,899.0 received (billion yen) 1,787.5 35% Overseas 29% revenue 24% 25% 26% ratio ９.８％ ＥＢＩＴ Revenue ６.０％ ratio EBIT (billion yen) ５.８％ ５.５％ ５.８％ (billion yen) 2,100.0 2,000.0 ３００.０ 1,764.2 1.786.5 1,820.0 1,652.0 205.0 ２００.０ 1,000.0 104.2 110.0 96.0 96.

  38. Slide 38: FY2015 Business Targets

    6-2. FY2015 Business Targets FY2015 Targets Revenues: 2,100.0 billion yen (overseas revenue ratio: 35%) EBIT (Operating income) ratio: 9.8% (10%) Gross margin: 2.8 point improvement (from FY2012) SG&A expense ratio: 1.3 point improvement (from FY2012) © Hitachi, Ltd. 2013. All rights reserved. 38

  39. Slide 39: Contents

    Information & Telecommunication Systems Business Strategy Contents 1. Performance Review of 2012 Mid-term Management Plan 2. 2015 Mid-term Management Plan 3. Hitachi’s Comprehensive Capabilities in the Social Innovation Business 4. Transforming a Business Portfolio with Growth Potential 5. Developin

  40. Slide 40: Conclusion

    7. Conclusion Become a global major player by 3Gs (Growth, Global and Group) © Hitachi, Ltd. 2013. All rights reserved. 40

  41. 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

  42. Slide 42: HITACHI Inspire the Next

    HITACHI Inspire the Next

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