Hitachi, Ltd. · TSE:6501

Hitachi — Investor Day (June 2017)

42 slides from Hitachi's investor day presentation, Jun 8, 2017

  1. Slide 1: Power and Energy Business Strategy (Mainly on Nuclear Energy Business)

    Power and Energy Business Strategy (Mainly on Nuclear Energy Business) Hitachi IR Day 2017 June 8, 2017 Koji Tanaka Executive Vice President and Executive Officer Assistant to the President [Nuclear Energy, Power, Energy Solutions] CEO of Nuclear Energy Business Unit Hitachi Ltd. © Hitachi, Ltd. 201

  2. Slide 2: Power and Energy Business Strategy: Contents

    中表紙 Power and Energy Business Strategy ［Contents］ 1. Status of Power and Energy Business 1-1. Business Overview 1-2. Business Performance Trends 1-3. Status of Power Business and Energy Solutions Business 2. Nuclear Energy Business Strategy 2-1. Business Overview and Growth Strategy 2-2. Domestic Bu

  3. Slide 3: 1-1 Business Overview

    1-1 Business Overview 1) Business Overview Provide solutions based on collaborative creation to all customers in the energy value chain Energy Solutions Power Business Unit 8% Business Unit 53% FY2016 Supervisory control systems Revenues Wind turbine generation system Advanced wide- Large format 495

  4. Slide 4: Power and Energy Business Strategy: Contents

    中表紙 Power and Energy Business Strategy ［Contents］ 1. Status of Power and Energy Business 1-1. Business Overview 1-2. Business Performance Trends 1-3. Status of Power Business and Energy Solutions Business 2. Nuclear Energy Business Strategy 2-1. Business Overview and Growth Strategy 2-2. Domestic Bu

  5. Slide 5: FY2016 Results

    1-2 Business Performance Trends 1) FY2016 Results Initial Forecast FY2016*2 Difference FY2015 *1*2 FY2016*3 (①) (②) (②-①) Revenue 519.5 billion yen 463.0 billion yen 462.8 billion yen (0.2) billion yen 495.7 billion yen Overseas revenue 9% 13% 8% - 9% ratio Adjusted operating 11.2 billion yen 3.0 bi

  6. Slide 6: Business Performance Trends

    1-2 Business Performance Trends 2) Business Performance Trends Revenue Increased (Billion yen) business scale 6,000 Effect of fewer large-scale +100.0 590.0 projects, etc. Effect of Fewer large-scale 519.5 (25.2) exchange rates 495.7 projects, etc. 5,000 500 +1.4 (5.7) 490.0 4,000 400 ～ ～ 00 3,000 F

  7. Slide 7: Business Performance Trends

    1-2 Business Performance Trends 3) Business Performance Trends Orders Received 598.3 billion yen 547.4 billion yen 463.2 billion yen 549.7 billion yen Order Backlog 642.8 billion yen 746.1 billion yen 717.5 billion yen 668.0 billion yen Overseas Revenue Ratio 9% 9% 10% 17% <70> Adjusted <over 12.7%>

  8. Slide 8: Strengthen Cost Strategy and Cash Generation

    1-2 Business Performance Trends 4) Strengthen Cost Strategy and Cash Generation Further implement the Hitachi Smart Transformation Project to achieve the ideal cost structure Improvement Rate in Gross Profit Reduce indirect costs through work and SG&A Margin SG&A style reform 3.9 Promote project p

  9. Slide 9: Power and Energy Business Strategy: Contents

    中表紙 Power and Energy Business Strategy ［Contents］ 1. Status of Power and Energy Business 1-1. Business Overview 1-2. Business Performance Trends 1-3. Status of Power Business and Energy Solutions Business 2. Nuclear Energy Business Strategy 2-1. Business Overview and Growth Strategy 2-2. Domestic Bu

  10. Slide 10: Power Business Unit FY2016 Results

    1-3 Status of Power Business and Energy Solutions Business 1) Power Business Unit FY2016 Results Improvement of Transmission and Distribution Expansion of Renewable Energy Business Systems Business  Maintained the largest share  Business structure reforms of the domestic market progressed as plann

  11. Slide 11: Energy Solutions Business Unit FY2016 Results

    1-3 Status of Power Business and Energy Solutions Business 2) Energy Solutions Business Unit FY2016 Results Domestic Business Overseas Business Electricity System Reforms Changes in Power Business due to  Started backbone system of Organization for decentralization, digitization and Cross-regional

  12. Slide 12: Power and Energy Business Strategy: Contents

    中表紙 Power and Energy Business Strategy ［Contents］ 1. Status of Power and Energy Business 1-1. Business Overview 1-2. Business Performance Trends 1-3. Status of Power Business and Energy Solutions Business 2. Nuclear Energy Business Strategy 2-1. Business Overview and Growth Strategy 2-2. Domestic Bu

  13. Slide 13: Nuclear Business Overview

    2-1 Business Overview and Growth Strategy 1) Business Overview Creating a bright global future by dealing with energy and global warming issues through advanced nuclear power technologies Domestic Business Overseas Business Restart of nuclear Fuel Cycle Horizon Project in the UK power stations Venti

  14. Slide 14: Business Structure

    2-1 Business Overview and Growth Strategy 2) Business Structure Global alliance structure supporting nuclear energy in the world General Electric 80.01% 19.99% 40% 60% Hitachi-GE Nuclear Energy GE Hitachi Nuclear Energy © Hitachi, Ltd. 2017. All rights reserved. 14

  15. Slide 15: Market Environment (Macroeconomic Trends)

    2-1 Business Overview and Growth Strategy 3) Market Environment (Macroeconomic Trends) Domestic Market Envisaged UK Energy Mix*2 (ＴＷｈ)  Provided that safety is ensured, nuclear power It is expected to follow the plans to diminish coal-fired is considered as a base load power source that power stati

  16. Slide 16: Business Strategy

    2-1 Business Overview and Growth Strategy 4) Business Strategy Improve profitability, positioning domestic business as a core business and overseas business as a growing business Lead a nuclear industry based on Domestic reliability and technical expertise  Promote an early restart of BWRs, respons

  17. Slide 17: Business Performance Trends

    2-1 Business Overview and Growth Strategy 5) Business Performance Trends Overseas Revenue Ratio 1% 4% 5% 8% 25% Revenue [280] (Billion yen) [(Domestic 180, Overseas100)] 3,000 300 Temporary Increase 280.0 increase due to in revenue reorganization [165] [(Domestic 164, Overseas 1)] 70.0 Overseas 187.

  18. Slide 18: Power and Energy Business Strategy: Contents

    中表紙 Power and Energy Business Strategy ［Contents］ 1. Status of Power and Energy Business 1-1. Business Overview 1-2. Business Performance Trends 1-3. Status of Power Business and Energy Solutions Business 2. Nuclear Energy Business Strategy 2-1. Business Overview and Growth Strategy 2-2. Domestic Bu

  19. Slide 19: Restart BWRs in Japan

    2-2 Domestic Business 1) Restart BWRs in Japan Strengthen an early restart of BWRs and long-term stable operation BWRs restart  Make steady progress with engineering works for compliance with new regulatory requirements and license approval (work to improve safety and enhance earthquake resistance,

  20. Slide 20: Decommissioning Business and Fuel Cycle Business

    2-2 Domestic Business 2) Decommissioning Business and Fuel Cycle Business Strengthen decommissioning business and steadily promote fuel cycle business Decommissioning business  Apply and develop Hitachi’s experience, knowledge and technology to decommissioning, and support electric Dose assessment

  21. Slide 21: Decommissioning of Fukushima Daiichi Nuclear Power Station

    2-2 Domestic Business 3) Decommissioning of Fukushima Daiichi Nuclear Power Station Contribute through world-class cutting-edge technology, while prioritizing safety Inspection of interior of primary containment vessel (PCV) on the basement level  Development of shape-changing robot to examine inte

  22. Slide 22: Power and Energy Business Strategy: Contents

    中表紙 Power and Energy Business Strategy ［Contents］ 1. Status of Power and Energy Business 1-1. Business Overview 1-2. Business Performance Trends 1-3. Status of Power Business and Energy Solutions Business 2. Nuclear Energy Business Strategy 2-1. Business Overview and Growth Strategy 2-2. Domestic Bu

  23. Slide 23: Outline of Horizon Project

    2-3 Overseas Business (1) Horizon Project 1) Outline of Horizon Project Name of Company Horizon Nuclear Power Limited Representative CEO Duncan Hawthorne Assumed office on May 1, 2016; previously President & CEO at Bruce Power L.P. Head Office Gloucester, U.K. Business Development of nuclear power s

  24. Slide 24: Features of Horizon Project

    2-3 Overseas Business (1) Horizon Project 2) Features of Horizon Project Deployment of the ABWR with proven track record of reliable construction  The ABWR is the most advanced reactor anywhere in the world, having a proven track record of reliable construction and operation.  Proven technology, w

  25. Slide 25: Project Schedule

    2-3 Overseas Business (1) Horizon Project 3) Project Schedule ▼ FY 2012 2013 2014 2015 2016 2017 2018 2019 2020 From FY2021 ▼ Acquisition Completion of Horizon (Nov. 2012) ▼ FID(planned in 2019) Milestone Key Completion of reactor design approval (GDA) ▼ (end of 2017) Operation of first reactor ▼ (p

  26. Slide 26: Steady Progress on Project

    2-3 Overseas Business (1) Horizon Project 4) Steady Progress on Project Reactor design approval (GDA) scheduled for completion at end of 2017 Site license application  Step 4 of the GDA is underway, and  Completed 1st and 2nd public the process is expected to be completed by consultations the end

  27. Slide 27: "On-Time On-Budget" Nuclear Reactor Construction

    2-3 Overseas Business (1) Horizon Project 5) “On-Time On-Budget” Nuclear Reaction Construction Deployment of proven ABWRs  Mitigation of construction risk through extensive track record  The ABWR is one of the most advanced reactor anywhere in the world, and has a proven track record of reliable c

  28. Slide 28: EPC Execution Structure Based on Strong Partnerships (1)

    2-3 Overseas Business (1) Horizon Project 6) EPC Execution Structure Based on Strong Partnerships (1) Establishment of EPC Execution Team to adhere to processes, costs and minimize risks EPC Contract Subcontractors Supply of equipment © Hitachi, Ltd. 2017. All rights reserved. 28

  29. Slide 29: EPC Execution Structure Based on Strong Partnerships (2)

    2-3 Overseas Business (1) Horizon Project 7) EPC Execution Structure Based on Strong Partnerships (2) Best Structure for Minimizing EPC Risk Integration of strengths and track records of each company to build strongest structure Proven most advanced One of the world’s largest EPC Excellent project c

  30. Slide 30: Collaboration with partners with track record and experience in operation

    2-3 Overseas Business (1) Horizon Project 8) Collaboration with partners with track record and experience in operation Improve operation expertise through partnerships with world-class electric power companies Cooperation agreement with JAPC Cooperation agreement with Exelon Cooperation agreement Fo

  31. Slide 31: Power and Energy Business Strategy: Contents

    中表紙 Power and Energy Business Strategy ［Contents］ 1. Status of Power and Energy Business 1-1. Business Overview 1-2. Business Performance Trends 1-3. Status of Power Business and Energy Solutions Business 2. Nuclear Energy Business Strategy 2-1. Business Overview and Growth Strategy 2-2. Domestic Bu

  32. Slide 32: Further strengthening of cooperation with GEH

    2-4 Overseas Business (2) Strengthening of Cooperation with GEH 1) Further strengthening of cooperation Strengthen cooperation with GEH for more effective synergies Expansion of joint projects with GEH Growth of GEH through utilization of strengths Cooperation over Horizon Project Expansion of fuel

  33. Slide 33: Expansion of Overseas Business

    2-4 Overseas Business (2) Strengthening of Cooperation with GEH 2) Expansion of Overseas Business Expand business globally by deploying the experience gained in the UK business Focus on countries promoting construction of new nuclear power plants UK Horizon Project, U.S. conducting Poland GDA for AB

  34. Slide 34: Power and Energy Business Strategy: Contents

    Power and Energy Business Strategy ［Contents］ 1. Status of Power and Energy Business 1-1. Business Overview 1-2. Business Performance Trends 1-3. Status of Power Business and Energy Solutions Business 2. Nuclear Energy Business Strategy 2-1. Business Overview and Growth Strategy 2-2. Domestic Busine

  35. Slide 35: Summary

    2-5 Summary 1) Summary Improve profitability, positioning Domestic Business as a core business and Overseas Business as a growing business  Strengthen an early restart of BWRs and long-term stable Domestic operation Business  Strengthen decommissioning business and steadily promote Core business f

  36. Slide 36: Appendix (1) Performance (Power and Energy Business)

    Appendix (1) Performance (Power and Energy Business) Revenues (Billion yen) Overseas Revenue Ratio (%) 590.0 17.0 600 519.5 495.7 490.0 400 9.0 9.0 10.0 200 0 FY2015 FY2016 FY2017 FY2018 FY2015 FY2016 FY2017 FY2018 (Result) (Result) (Forecast) (Target) (Result) (Result) (Forecast) (Target) Adjusted

  37. Slide 37: Appendix (2) Performance (Power and Energy Business)

    Appendix (2) Performance (Power and Energy Business) EBIT (Billion yen) EBIT Ratio (%) 80 75.0 12.7 29.0 5.9 40 5.6 1.1 0 (11.5) (40) (80) (57.2) FY2015 FY2016 FY2017 FY2018 FY2015 FY2016 FY2017 FY2018 (Result) (Result) (Forecast) (Target) (Result) (Result) (Forecast) (Target) Orders Received (Billi

  38. Slide 38: Appendix (3) Revenue by Business Unit

    Appendix (3) Revenue by Business Unit FY2016 Results Initial Difference FY2015 FY2016*2(2) FY2016*3 Forecast*1*2(1) (2)-(1) Nuclear Energy Business Unit 187.2 billion yen 150.0 billion yen 159.2 billion yen +9.2 billion yen 192.2 billion yen Power Business Unit 270.5 billion yen 275.0 billion yen 27

  39. Slide 39: Appendix (4) Performance by Power Business Unit

    Appendix (4) Performance by Power Business Unit Overseas Revenue Ratio 14％ 9％ 12％ 17％ Service Revenue Ratio 40％ 42％ 41％ 40％ Business [320.0] Revenues Transfer CAGR (Billion yen) 320.0 (FY2016→FY2018) 270.5 Others 300 (284.9 in total) 276.9 267.0 Transmission and Distribution 19％ Systems Power 200 Ge

  40. Slide 40: Appendix (5) Performance by Energy Solutions Business Unit

    Appendix (5) Performance by Energy Solutions Business Unit Overseas Revenue Ratio 1％ 2％ 2％ 24％ Temporary [110.0] Revenues increase (Billion yen) in revenue 110.0 100 1,000 85.1 New domain 78.2 74.0 50 500 0 FY2015 FY2016 FY2017 FY2018 (Result) (Result) (Forecast) (Target) [FY2018 target in previous

  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

Hitachi — Investor Day (June 2017) on 6ix