Hitachi, Ltd. · TSE:6501
Hitachi — Investor Day (June 2019)
33 slides from Hitachi's investor day presentation, Jun 4, 2019
Slide 1: IT Sector - Hitachi IR Day 2019
IT Sector Hitachi IR Day 2019 June 4, 2019 Keiichi Shiotsuka Executive Vice President and Executive Officer Head of Systems & Services Business Head of the Social Innovation Business Hitachi, Ltd. © Hitachi, Ltd. 2019. All rights reserved.
Slide 2: Key Messages Today
Key Messages Today The IT Sector Leads the Digital Business (Lumada Business) 1 of All Hitachi Group Strengthen Lumada Business and Accelerate its Global 2 Expansion with Large-scale Investments Expand Social Innovation Business through Construction of 3 the Ecosystem (of Lumada) © Hitachi, Ltd. 201
Slide 3: Corporate Structure and Positioning of the IT Sector
Corporate Structure and Positioning of the IT Sector Revenues (FY2018 results) 2,121.6 billion yen IT Sector Overview Number of domestic and foreign employees: approximately 76,000 people Business locations in 47 countries / regions * Mobility Smart Life Industry Energy Dormer Kojima Aoki Nishino IT
Slide 4: Contents
IT Sector Contents 1. Vision 2. Summary of 2018 Mid-term Management Plan 3. Targets of 2021 Mid-Term Management Plan 4. Growth Strategy 5. Conclusion © Hitachi, Ltd. 2019. All rights reserved. 4
Slide 5: Contents
IT Sector Contents 1. Vision 2. Summary of 2018 Mid-term Management Plan 3. Targets of 2021 Mid-Term Management Plan 4. Growth Strategy 5. Conclusion © Hitachi, Ltd. 2019. All rights reserved. 5
Slide 6: 1-1. IT Sector's Mission
1-1. IT Sector’s Mission To lead all Hitachi’s business fields as an engine for growth of the Hitachi Group with Lumada business as the core and improve values of society and customer Social Environmental Economic values values values Mobility Smart Life Industry Energy IT solution solution solution
Slide 7: 1-2. Vision
1-2. Vision To meet customers’ expectations by leveraging digital technologies and become top-class solution provider in the global market that creates a sustainable society Profit margin (%) Top-class solution 20 SAP provider in the global market Revenues: 4 trillion yen Cognizant Adjusted operatin
Slide 8: 1-3. Roadmap to the Target
1-3. Roadmap to the Target Aiming 4 trillion yen revenues and 15% adjusted operating income ratio in gradual three steps Third step: Achieving the world’s top-class revenues Sustainable growth and profitability FY2019 – FY2021 Expanding sales in the Second step: growing global market Expansion of re
Slide 9: Contents
IT Sector Contents 1. Vision 2. Summary of 2018 Mid-term Management Plan 3. Targets of 2021 Mid-Term Management Plan 4. Growth Strategy 5. Conclusion © Hitachi, Ltd. 2019. All rights reserved. 9
Slide 10: 2-1. Summary of 2018 Mid-term Management Plan
2-1. Summary of 2018 Mid-term Management Plan [Former Information & Telecommunication Systems Segment] First step: To generate cash required for growth investments Improvement of profitability by steadily improving profitability 9.4% 10.9% 7.7% Adjusted operating 6.7% Transfer of shares of income ra
Slide 11: 2-1. Summary of 2018 Mid-term Management Plan
2-1. Summary of 2018 Mid-term Management Plan [Former Information & Telecommunication Systems Segment] First step: Adjusted operating income ratio improved by 4.2 points Improvement of profitability 6.7% (FY2015) 10.9% (FY2018) Withdrawal from and convergence of low-profit businesses with the reve
Slide 12: Contents
IT Sector Contents 1. Vision 2. Summary of 2018 Mid-term Management Plan 3. Targets of 2021 Mid-Term Management Plan 4. Growth Strategy 5. Conclusion © Hitachi, Ltd. 2019. All rights reserved. 12
Slide 13: 3-1. Targets of 2021 Mid-Term Management Plan
3-1. Targets of 2021 Mid-Term Management Plan [IT Sector] Second step: Accelerate global expansion of Lumada business Expansion of revenues with large-scale investments 3 trillion yen*2 *2 400.0 Lumada revenues 2.4 trillion yen in other sectors 332.0 Growth investments (3 years) 2,600.0 Revenues (bi
Slide 14: Contents
IT Sector Contents 1. Vision 2. Summary of 2018 Mid-term Management Plan 3. Targets of 2021 Mid-Term Management Plan 4. Growth Strategy 5. Conclusion © Hitachi, Ltd. 2019. All rights reserved. 14
Slide 15: 4-1. What is Lumada?
4-1. What is Lumada? An engine for creating new value through co-creation with customers and partners by utilizing data Customers’ businesses Co-creation with customers and partners Systems integration and operation / maintenance Co-creation services for customers Establish and provide solutions Pro
Slide 16: 4-2. Lumada Business Model
4-2. Lumada Business Model Establish a business model for providing the value speedily to many customers as much as possible with minimal customization, to realize both the expansion of revenue and high profitability Success models of competitors (analysis by Hitachi) Results of FY2018 *1 Accenture
Slide 17: 4-3. Efforts to Expand the Lumada Business
4-3. Efforts to Expand the Lumada Business Accumulation and Applying of Customer Cases / Solution Cores Expand co-creation with customers, create new customer cases / solution cores, and accelerate the expansion of Lumada business 4-4 Expansion of Lumada Utilization in Other Sectors Lumada boosts th
Slide 18: 4-4. Accumulation and Applying of Customer Cases / Solution Cores
4-4. Accumulation and Applying of Customer Cases / Solution Cores Production Value chain Type of Businesses Manufa- Management, sale, planning, design, procurement, cturers production, logistics and maintenance services © Hitachi, Ltd. 2019. All rights reserved. 18
Slide 19: 4-4. Accumulation and Applying of Customer Cases / Solution Cores
4-4. Accumulation and Applying of Customer Cases / Solution Cores Simulation of sales, profits and losses Diagnosis of failure alerts Improvement of Over efficiency in cyber Optimization security monitoring operations of inventories Customer Cases 650 Digitalization of expert skills Solution Analysi
Slide 20: 4-4. Accumulation and Applying of Customer Cases / Solution Cores
4-4. Accumulation and Applying of Customer Cases / Solution Cores Simulation of sales, profits and losses Diagnosis Diagnosis of failureofalerts 売上損益シミュレーション Smart Life Predictive diagnosis for medical equipment failure alerts Improvement of Over efficiency in cyber Optimization security monitoring
Slide 21: 4-4. Accumulation and Applying of Customer Cases / Solution Cores
4-4. Accumulation and Applying of Customer Cases / Solution Cores Simulation of sales, profits and losses Diagnosis of failure alerts Improvement of Over efficiency in cyber Optimization security monitoring operations Customer Accelerate Lumada businessCases activities of inventories 650 by enrichin
Slide 22: 4-5. Expansion of Lumada Utilization in Other Sectors
4-5. Expansion of Lumada Utilization in Other Sectors Expand the business of Hitachi Group with the Revenues of Other Sector’s creation of new solutions by combination of the Lumada Business products and systems of the sectors and Lumada around 400 billion yen (FY2021 Target) Mobility solutions × Lu
Slide 23: 4-6. Construction of Lumada Ecosystem
4-6. Construction of Lumada Ecosystem Revenues of all Hitachi’s Constructing an ecosystem with customers and Lumada Business partners to expand Social Innovation Business around 1.6 trillion yen (FY2021 Target) Lumada Ecosystem Management Management Maintenance Sales Maintenance Sales Management Log
Slide 24: 4-7. Enhancement of Digital Specialist / Human Capital
4-7. Enhancement of Digital Specialist / Human Capital Enhancing the number of digital specialist / human capital that support Lumada to approximately 30,000 by FY2021, through development of specialist and enhancement of basic training. Design thinker Data scientist Plays a leading role in the iden
Slide 25: 4-8. Strengthen Overseas Business Structure
4-8. Strengthen Overseas Business Structure Strengthen overseas business structure with a focus Overseas revenues (FY2021 Target) on North America and Asia and accelerate the expansion of Lumada businesses globally 1.1 trillion yen Sep. 2017: Established Hitachi Vantara Initiatives for global growth
Slide 26: Contents
IT Sector Contents 1. Vision 2. Summary of 2018 Mid-term Management Plan 3. Targets of 2021 Mid-Term Management Plan 4. Growth Strategy 5. Conclusion © Hitachi, Ltd. 2019. All rights reserved. 26
Slide 27: FY2021 Target of IT Sector
FY2021 Target of IT Sector Revenues Revenues of Lumada Business 2.6 trillion yen 1.2 trillion yen (including other sector’s Lumada business: 3 trillion yen) (including other sector’s Lumada business: 1.6 trillion yen) Overseas revenues ROIC Adjusted operating income ratio 1.1 trillion yen 15% 13% Or
Slide 28: Society 5.0
Accelerate Social Innovations by utilizing Lumada as the perspective of a digital-concentric business entity Aim to become top-class solution provider in the global market Contribute to the improvement of the quality of people’s lives and customers’ corporate values Society 5.0 © Hitachi, Ltd. 2019.
Slide 29: 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 30: Hitachi Social Innovation is POWERING GOOD
Hitachi Social Innovation is POWERING GOOD
Slide 31: HITACHI Inspire the Next
HITACHI Inspire the Next
Slide 32: Transition of Operation Results (IT Sector)
Transition of Operation Results (IT Sector) FY2018* FY2018 FY2019 FY2021 (Result) (Result) (Forecast) (Target) Revenues 2,065.9 billion yen 2,121.6 billion yen 2,060.0 billion yen 2,600.0 billion yen Overseas revenue 29% 29% 31% 42% ratio Adjusted operating 225.2 billion yen 230.1 billion yen 220.0
Slide 33: Fields of Business (IT Sector)
Fields of Business (IT Sector) Front Business Consulting Financial systems Systems for social infrastructure IT for banking, insurance and IT for power generation/energy, transport securities and communication carriers Public systems IT for public offices, municipalities Defense systems* and educati