Hitachi, Ltd. · TSE:6501

Hitachi — Investor Day (June 2014)

25 slides from Hitachi's investor day presentation, Jun 12, 2014

  1. Slide 1: Hitachi Smart Transformation Project

    Hitachi Smart Transformation Project Hitachi IR Day 2014 June 12, 2014 Tatsuro Ishizuka Executive Vice President and Executive Officer CTrO Hitachi, Ltd. © Hitachi, Ltd. 2014. All rights reserved.

  2. Slide 2: Contents

    Hitachi Smart Transformation Project Contents 1. Project Outline 2. Project Progress 3. Project Activities 4. Conclusion © Hitachi, Ltd. 2014. All rights reserved.

  3. Slide 3: 1-1. Project Objective

    1-1. Project Objective Transform Group structure into a globally competitive enterprise Achieving Growth and Hitachi’s Transformation Conduct Grow Hitachi Group structural reforms the Social Innovation Business and enhancement measures Transformation Innovation Hitachi Smart Transformation Project T

  4. Slide 4: 1-2. Project Goal

    1-2. Project Goal Establish organization and business functions supporting global growth Management contribution: 1 Headquarters 2 accelerate decision-making Organization l Establish management support base Optimize structure 1 group In-house companies l Optimize group structure and major Group comp

  5. Slide 5: 1-3. Project Overview

    1-3. Project Overview Promote reform and cooperation within the Group from an end-to-end perspective Cost structure Measures Reform perspectives Marketing costs Centralize back-office operations Standardize Indirect Promote global shared services Strengthen operational costs Centralize functions SG&

  6. Slide 6: Contents

    Hitachi Smart Transformation Project Contents 1. Project Outline 2. Project Progress 3. Project Activities 4. Conclusion © Hitachi, Ltd. 2014. All rights reserved.

  7. Slide 7: 2-1. Progress

    2-1. Progress Achieved cost reduction targets ahead of schedule to fulfill targets of 2015 Mid-term Management Plan FY2013 FY2014 Ahead of schedule Reach even higher Previous Result Forecast Target forecast 100 110 90 100 billion yen billion yen billion yen billion yen (billion yen) 400 400 Cumulati

  8. Slide 8: 2-2. Factors for Change in Operating Income (FY2013 to FY2014)

    2-2. Factors for Change in Operating Income (FY2013 à FY2014) Project benefits contributing to improved business results and the creation of growth investments Billions of yen Benefit of Hitachi Smart Transformation Project Cost reduction, etc. Impact of : +163.2 560.0 integrating business * : +90.0

  9. Slide 9: 2-3. Future Outlook

    2-3. Future Outlook Enhancing the project initiatives and reaping benefits to fulfill targets of the 2015 Mid-term Management Plan ~ FY2012 FY2013 FY2014 FY2015 FY2016~ Reforms focused on Process-focused reforms cost areas and functions Full-scale development Accelerate global usage of Accelerate ce

  10. Slide 10: Contents

    Hitachi Smart Transformation Project Contents 1. Project Outline 2. Project Progress 3. Project Activities 4. Conclusion © Hitachi, Ltd. 2014. All rights reserved.

  11. Slide 11: 3-1. Steady progress on reforms by cost areas and functions

    3-1. Steady progress on reforms by cost areas and functions Progress Measures KPI FY2015 FY2013 FY2014 (Forecast) Centralize printed reforms Production cost circuit board Number of bases 23 16 8 production bases Number of Global SCM reforms participating 18/18 18/18 18/18 businesses Number of Expand

  12. Slide 12: 3-2. New Measures

    3-2. New Measures Operational, business and work process reforms Production cost reforms Indirect cost reforms l Introduce shared services l Globalize the value chain to indirect operations l IT cost reforms Cost of SG&A Direct materials cost reforms sales Group structural reforms Indirect cost l Gr

  13. Slide 13: 3-3. Globalize the Value Chain

    3-3. Globalize the Value Chain Establish optimal global processes to swiftly respond to customers’ business needs Example of global production and supply systems China Japan Mother Production factories bases Basic design Saudi Arabia Southeast Asia Engineering Engineering bases bases Procurement bas

  14. Slide 14: 3-4. Build Global Procurement Scheme

    3-4. Build Global Procurement Scheme Build a new global procurement scheme using professional functions within the Group IPO Focus on high-value-added operations Transfer operations Hitachi High-Technologies Hitachi Capital Hitachi Transport System [Procurement management] [Payment] [Logistics] Cond

  15. Slide 15: 3-5. Global Logistics Reforms

    3-5. Global Logistics Reforms Build a global logistics scheme to realize cost reductions and improve fund efficiency Hitachi Group’s Logistics expertise IT economic powerhouses Hitachi Transport System Information & Telecommunication (Example: China bases -approx. 180 Systems Company companies and a

  16. Slide 16: 3-6. Introduce Shared Services to Indirect Operations

    3-6. Introduce Shared Services to Indirect Operations Expand the introduction of shared services to indirect operations globally Promote BPO in overseas indirect operations In operation Established a division devoted to operational reforms Planned China Asia India Europe Americas Standardize indirec

  17. Slide 17: 3-7. IT Cost Reforms

    3-7. IT Cost Reforms Reduce regular IT expenditures to secure funding for strategic IT investments that will aid growth FY2011 (Result) FY2015 (Forecast) Priorities Main measures Strategic Optimization Improve IT investment software nPromote centralized purchasing of licenses Strategic 1 IT investme

  18. Slide 18: 3-8. Group Structural Reforms

    3-8. Group Structural Reforms Strengthen strategic Headquarters functions and optimize the Group structure to achieve growth as ‘One Hitachi’ Headquarters reforms Strengthen Headquarters strategic l Realign headquarters to specialize in strategy formulation (Group Corporate) functions and promotion

  19. Slide 19: 3-9. Intra-Group Transaction Reforms

    3-9. Intra-Group Transaction Reforms Reallocate resources for intra-group transactions to resources for driving growth Intra-Group Transaction Reforms Before reforms After reforms Standardize transaction patterns Accounts Accounts Estimates Orders payable Estimates Orders payable Simplify work proce

  20. Slide 20: 3-10. Advance to Process-focused Reforms

    3-10. Advance to Process-focused Reforms Overall optimization of operational, business, and work processes using IT Vision Themes ahead l Achieve optimal operations according to business characteristics based on a Group-wide platform Reforms focused on cost areas and functions will be henceforth rev

  21. Slide 21: Contents

    Hitachi Smart Transformation Project Contents 1. Project Outline 2. Project Progress 3. Project Activities 4. Conclusion © Hitachi, Ltd. 2014. All rights reserved.

  22. Slide 22: 4-1. FY2015 Targets

    4-1. FY2015 Targets The Hitachi Smart Transformation Project will help the Hitachi Group to achieve a consolidated operating income (EBIT *1) ratio of over 7% Project benefits Company-wide forecast FY2013 FY2014 Cumulative FY2012 FY2013 FY2015 (single year) (single year) through FY2015 *2 (Result) (

  23. Slide 23: Improve earnings and cash generation capacity to advance to the next stage of growth

    Improve earnings and cash generation capacity to advance to the next stage of growth Why should you change the way of doing business ? A time to leave the past behind us The way it was - is not how it will be Today, we are re-evaluating our current business practices from the global management point

  24. Slide 24: 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

  25. Slide 25: © Hitachi, Ltd. 2014. All rights reserved.

    © Hitachi, Ltd. 2014. All rights reserved.

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