Hitachi, Ltd. · TSE:6501
Hitachi — Investor Day (June 2018)
31 slides from Hitachi's investor day presentation, Jun 8, 2018
Slide 1: Industry & Distribution Business Strategy
Industry & Distribution Business Strategy Hitachi IR Day 2018 June 8, 2018 Jun Abe Vice President and Executive Officer CEO of Industry & Distribution Business Unit Hitachi, Ltd. © Hitachi, Ltd. 2018. All rights reserved.
Slide 2: Contents
Industry & Distribution Business Strategy Contents 1. Business Overview 2. Growth Strategy (1) Scaling (2) Profitability Improvement (3) Cost Strategy and Strengthen Cash Generation 3. Summary © Hitachi, Ltd. 2018. All rights reserved. 2
Slide 3: 1-1. FY2018 Target
1-1. FY2018 Target Compared with FY2018 FY2015 (5.9) billion yen Revenues 633.0 billion yen [(1)%] Adjusted operating income 46.5 billion yen [7.3%] +59.4 billion yen [ratio] EBIT [ratio] 41.1 billion yen [6.5%] +57.6 billion yen Overseas revenue ratio 13% (3)% Mission ■Withdrawal from low-profit bu
Slide 4: 1-2. Positioning in Hitachi Group
お客さま 1-2. Positioning in Hitachi Group Provide digital solutions by utilizing OT × IT × Products as a strength Industry Distribution Maintenance/Services Needs Stable, efficient and optimized production Advanced logistics Improving maintenance quality Smart manufacturing Smart logistics Maintenance/
Slide 5: 1-3. Megatrends
1-3. Megatrends Changing demographics [China] [U.S.] The working-age population is already Immigrants keep increasing, and labor decreasing force will become more diverse. By 2030 wages will become more than Source：Estimated by Hitachi based on data from Migration Policy Institute 5 times comp
Slide 6: 1-4. Vision
1-4. Vision A sustainable society in which everyone can live energetically and comfortably Europe China Japan Asia North America Industrie 4.0 Made in China 2025 Society 5.0 Digital India Industrial Internet Connected Industries Thailand 4.0 Industry Distribution Hitachi’s Social Innovation Business
Slide 7: 1-5. Vision (Transforming Business Portfolio into High-Profit Areas)
1-5. Vision (Transforming Business Portfolio into High-Profit Areas) Revenues*1 (Unit: Billion yen) 10,000 1,000 Growing business Digital solutions ・Smart manufacturing 628.9 ・High-value added services 620.0 633.0 (logistics solutions, Growing business maintenance & repair, etc.) 5,000 500 ・ERP solu
Slide 8: 1-6. Progress of 2018 Mid-term Management Plan
1-6. Progress of 2018 Mid-term Management Plan FY2015 FY2016 FY2017 FY2017 FY2018 FY2018 results*1 results*1 previous forecast*2 results previous target*2 forecast Revenues (Billion yen) 638.9 628.9 600.0 620.0 666.0 633.0 Adjusted operating income ratio (2.0)% (0.2)% 5.0% 2.7% 7.5% 7.3% EBIT ratio
Slide 9: Contents
Industry & Distribution Business Strategy Contents 1. Business Overview 2. Growth Strategy (1) Scaling (2) Profitability Improvement (3) Cost Strategy and Strengthen Cash Generation 3. Summary © Hitachi, Ltd. 2018. All rights reserved. 9
Slide 10: 2-1. Business Strategy (1)
2-1. Business Strategy (1) Basic policy Expansion of digital solution business through OT × IT × Products Acceleration of global business deployment Hitachi’s strengths Focus points Abundant R&D resources Business scaling Advanced manufacturing Further profitability capabilities / experi
Slide 11: 2-1. Business Strategy (2)
2-1. Business Strategy (2) Growth strategy (1) Scaling ① Increase target customers ② Expand target areas (global) ③ Multiply smart manufacturing (utilize as solution cores) ④ Multiply smart manufacturing (collaboration with partners) ⑤ Extend business domain starting with ERP solutions (2) Profitabi
Slide 12: Contents
Industry & Distribution Business Strategy Contents 1. Business Overview 2. Growth Strategy (1) Scaling (2) Profitability Improvement (3) Cost Strategy and Strengthen Cash Generation 3. Summary © Hitachi, Ltd. 2018. All rights reserved. 12
Slide 13: 2-2. (1) Scaling: Increase target customers
2-2. (1) Scaling ① Increase target customers Strengthen approach to medium-sized companies through collaboration with Group companies Customer segment (market) (Current core domain) Expand Global market Large company Medium-sized Medium-sized (Sales 500.0 billion yen company company ■Japanese-affili
Slide 14: 2-2. (1) Scaling: Expand target areas (global)
2-2. (1) Scaling ② Expand target areas (global) Asia: Provide digital solutions for the manufacturing industry to Japanese companies North America: Business deployment by strengthening collaboration with Sullair and Penske Made in China 2025 China Industrial Internet Model project for Provide digita
Slide 15: 2-2. (1) Scaling: Multiply smart manufacturing (solution cores)
2-2. (1) Scaling ③ Multiply smart manufacturing (utilize as solution cores) Expand services utilizing Lumada Customer visits Expand digital solution business Unit at Omika Works’ showcase (Company) 250 Expand IoT market for technology Domestic FA/PA 200 2,065.0 150 Okuma users billion yen (2017) 100
Slide 16: 2-2. (1) Scaling: Multiply smart manufacturing (partners)
2-2. (1) Scaling ④ Multiply smart manufacturing (collaboration with partners) B2B2B business deployment Business deployment collaborating with a machine tool manufacturer as a partner starting from products Approach Approach Provide digital solutions through Collaboratively provide support business
Slide 17: 2-2. (1) Scaling: Extend business domain starting with ERP solutions
2-2. (1) Scaling ⑤ Extend business domain starting with ERP solutions Create value jointly using product operation data and business data Customer issues Domestic ERP package license market 113.0 billion yen (2016) ・Upgrade to S/4HANA by the 2025 maintenance deadline is required CAGR: 4.8% (2016 to
Slide 18: Contents
Industry & Distribution Business Strategy Contents 1. Business Overview 2. Growth Strategy (1) Scaling (2) Profitability Improvement (3) Cost Strategy and Strengthen Cash Generation 3. Summary © Hitachi, Ltd. 2018. All rights reserved. 18
Slide 19: 2-2. (2) Profitability Improvement: High-value added services
2-2. (2) Profitability Improvement ① Provide high-value added services to total value chain Provide manufacturing / logistics platform in China Customer issues Smart manufacturing market in China ・From individual optimization to total optimization Approx. 600.0 billion yen (2015) ・Sophisticated logi
Slide 20: 2-2. (2) Profitability Improvement: Maintenance & repair business
2-2. (2) Profitability Improvement ② Add value through maintenance & repair business Expand services after sales starting from parts repair and preventive maintenance Customer issues Worldwide market size of Repair sector (customers’ IT-related spending) ・Quality improvement of repair services 37.3
Slide 21: 2-2. (2) Profitability Improvement: Quality and safety data analysis
2-2. (2) Profitability Improvement ③ Add value through quality and safety data analysis and verification services Service deployment aiming to strengthen quality assurance systems in the manufacturing industry Customer issues Worldwide market size of Data utilization and strengthening of a highly re
Slide 22: Contents
Industry & Distribution Business Strategy Contents 1. Business Overview 2. Growth Strategy (1) Scaling (2) Profitability Improvement (3) Cost Strategy and Strengthen Cash Generation 3. Summary © Hitachi, Ltd. 2018. All rights reserved. 22
Slide 23: 2-3. Cost Strategy and Strengthen Cash Generation
2-3. Cost Strategy and Strengthen Cash Generation Evolution of the Hitachi Smart Transformation Improvement point Reinforcing the front-line to expand the SG&A expense 15 digital solution business Gross profit margin Improving business efficiency by setting 10 ・Withdrawal from low-profit busines
Slide 24: Contents
Industry & Distribution Business Strategy Contents 1. Business Overview 2. Growth Strategy (1) Scaling (2) Profitability Improvement (3) Cost Strategy and Strengthen Cash Generation 3. Summary © Hitachi, Ltd. 2018. All rights reserved. 24
Slide 25: 3-1. Factors of Increase/Decrease of Revenues, Adjusted Operating Income/Loss
3-1. Factors of Increase/Decrease of Revenues, Adjusted Operating Income/Loss Revenues (Unit: Billion yen) Withdrawal from low-profit 638.9 overseas business Expansion of (5.9) digital solution 633.0 628.9 business +8.9 Carve out 620.0 of LCD panel Others Expansion of manufacturing +3.6 Withdrawal m
Slide 26: 3-3. Summary
3-3. Summary FY2018 Target Compared with FY2018 FY2015 (5.9) billion yen Revenues 633.0 billion yen [(1)%] Adjusted operating income 46.5 billion yen [7.3%] +59.4 billion yen [ratio] EBIT [ratio] 41.1 billion yen [6.5%] +57.6 billion yen Overseas revenue ratio 13% (3)% Toward next Mid-term Managemen
Slide 27: 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 28: Hitachi: Inspire the Next
HITACHI Inspire the Next
Slide 29: Appendix (1) Market Environment
Appendix (1) Market Environment (Industry and Distribution Sectors, Digital Business) Continuous expansion of IoT investment in the manufacturing and distribution industries toward advancing business IoT market size prediction*1 Forecast of domestic IoT market by major industrial segments*2 (Estimat
Slide 30: Appendix (2) Business Overview
Appendix (2) Business Overview Handle a wide range of business domains from customer management to worksites Provide digital solutions that create new value by integrating OT and IT Smart manufacturing Provide services on a one-stop basis from management to the worksite ■ERP solutions Management Bus
Slide 31: Appendix (3) Business Performance Trends
Appendix (3) Business Performance Trends FY2015*1 (Results) FY2016*1 (Results) FY2017 (Results) FY2018 (Forecast) Orders received 700.6 600.4 646.9 649.5 (Billion yen) Overseas revenue 16% 12% 11% 13% ratio Adjusted operating Revenues income/EBIT [Previous target*2 for FY2018] (Billion yen) (Billion