Hitachi, Ltd. · TSE:6501

Hitachi — Investor Day (June 2018)

44 slides from Hitachi's investor day presentation, Jun 8, 2018

  1. Slide 1: Power and Energy Business Strategy

    Power and Energy Business Strategy Hitachi IR Day 2018 June 8, 2018 Atsushi Oda Vice President and Executive Officer, CEO of Power Business Unit Hidetoshi Takehara Vice President and Executive Officer, CEO of Nuclear Energy Business Unit Hitachi, Ltd. © Hitachi, Ltd. 2018. All rights reserved.

  2. Slide 2: Contents

    Power and Energy Business Strategy Contents 1. Power and Energy Business Updates 2. Business Strategy of Power Business Unit 3. Summary 4. Status of Nuclear Energy Business 5. Business Performance Data and Glossary © Hitachi, Ltd. 2018. All rights reserved. 2

  3. Slide 3: Five Key Points

    Five Key Points 1 Earning power of the power and energy business 2 Changing markets and business opportunities in them 3 Three competitive businesses on which to focus management resources High value-added service business that can be 4 a revenue base 5 Status of the nuclear energy business © Hitach

  4. Slide 4: Provide solutions based on collaborative creation to all customers in the energy value chain

    1. Power and Energy Business Updates 1-1. Progress of Mid-term Management Plan (1) Business Overview Provide solutions based on collaborative creation to all customers in the energy value chain Nuclear Energy Business Unit Power Business Unit 42% 58% Renewable Energy Solutions Nuclear Power Plant (A

  5. Slide 5: Profitability of Power and Energy Business is improving steadily

    1. Power and Energy Business Updates 1-1. Progress of Mid-term Management Plan (2) Review of FY2017 Profitability of Power and Energy Business is improving steadily Adjusted Operating Legend Income Ratio FY2018 10.0% Revenue Revenue Revenue (Forecast) Main reasons for deviation Adjusted Adjusted Adj

  6. Slide 6: Structure reforms for revitalization were completed, putting business on growth track

    1. Power and Energy Business Updates Review of FY2017 1-1. Progress of Mid-term Management Plan (3) (Achievements) Structure reforms for revitalization were completed, putting business on growth track Power and Energy Business Implement business Strengthen solutions business Further strengthen cost

  7. Slide 7: Major projects progressed steadily and orders for large projects were also received

    1. Power and Energy Business Updates Review of FY2017 1-1. Progress of Mid-term Management Plan (4) (Major Achievements) Major projects progressed steadily and orders for large projects were also received Progress of Projects Completion of Ichigo Ceremony to pray for Completion of Phase Shifting Tra

  8. Slide 8: Both revenues and adjusted operating income are expected to exceed year-ago levels

    1. Power and Energy Business Updates FY2018 Outlook 1-1. Progress of Mid-term Management Plan (5) (Overview) Both revenues and adjusted operating income are expected to exceed year-ago levels Revenue Adjusted Operating Income Adjusted Operating Income Ratio FY2017 FY2018 FY2017 FY2018 FY2017 FY2018

  9. Slide 9: Transformation of the Power and Energy Market by the 3Ds

    1. Power and Energy Business Updates Transformation of the Power 1-2. Market Environment (1) and Energy Market by the 3Ds GW Global power generation capacity De-carbonization 10000 Thermal  Low-carbon/recycling/ harmony with nature are essential for the realization of a sustainable society 5000 Nuc

  10. Slide 10: Provide high added value solutions using digital technologies through collaborative creation

    1. Power and Energy Business Updates New Business Opportunities Arising 1-2. Market Environment (2) from Market Transformation Provide high added value solutions using digital technologies through collaborative creation Power systems for society that will be realized under Society 5.0 strategy Renew

  11. Slide 11: Vision

    1. Power and Energy Business Updates 1-3. Aspirations (1) Growth Strategy Aim to become a global major player in terms of revenue and profits Vision by actively investing in sectors where Hitachi has an advantage Business Strategies Provide world-leading products, services and solutions  Provide so

  12. Slide 12: Target Business Scale and Profits (FY2021 Targets)

    1. Power and Energy Business Updates 1-3. Aspirations (2) Target Business Scale and Profits (FY2021 Targets) Become a business that is expected to contribute to Group growth both in terms of revenue and adjusted operating income Adjusted Operating Income Ratio Over Further growth through additional

  13. Slide 13: Contents

    Power and Energy Business Strategy Contents 1. Power and Energy Business Updates 2. Business Strategy of Power Business Unit 3. Summary 4. Status of Nuclear Energy Business 5. Business Performance Data and Glossary © Hitachi, Ltd. 2018. All rights reserved. 13

  14. Slide 14: Priority Areas for Achievement of Targets

    2. Business Strategy of Power Business Unit 2-1. Priority Areas for Achievement of Targets Focus management resources on three businesses where high returns can be expected  Enter global market and expand business Renewable Energy  Maintain largest share of wind power market Solutions Business in

  15. Slide 15: Steps to Becoming a High Profit Business

    2. Business Strategy of Power Business Unit 2-2. Steps to Becoming a High Profit Business Implement structural reforms to focus on businesses where Hitachi has an advantage Sale of steel roll business Investment to increase scale, including M&A related to wind power Downsizing of business business o

  16. Slide 16: Renewable Energy Solutions Business (1)

    2. Business Strategy of Power Business Unit 2-3. Renewable Energy Solutions Business (1) To become one of the top renewable energy companies in the world both in terms of revenue and profitability Target Business Scale Income Ratio Top renewable energy companies in the world Company Over Company E C

  17. Slide 17: Renewable Energy Solutions Business (2)

    2. Business Strategy of Power Business Unit 2-3. Renewable Energy Solutions Business (2) Make use of downwind wind turbines to expand business and improve profitability  Leverage capability to withstand typhoons to gain entry to overseas Enter overseas markets markets  Steadily promote projects th

  18. Slide 18: Renewable Energy Solutions Business (3)

    2. Business Strategy of Power Business Unit 2-3. Renewable Energy Solutions Business (3) Improve profitability through expansion of solutions business  Expand solutions business with wind turbines Expand solutions at core and services business  Improve customer satisfaction by strengthening LTSA b

  19. Slide 19: Grid Solutions Business (1)

    2. Business Strategy of Power Business Unit 2-4. Grid Solutions Business (1) To become one of the top grid solutions companies in the world by proposing total solutions and expanding services business Target Business Scale Income Ratio Top grid solutions companies in the world 10% Company Company Ov

  20. Slide 20: Grid Solutions Business (2)

    2. Business Strategy of Power Business Unit 2-4. Grid Solutions Business (2) Provide solutions for achieving co-existence of decentralized systems with large-scale grids Large-scale grids Decentralized systems Large-scale power sources Wind farms EMS Users Multi-directional flow of power Decentraliz

  21. Slide 21: Grid Solutions Business (3)

    2. Business Strategy of Power Business Unit 2-4. Grid Solutions Business (3) Improve profitability by expanding services business  Take full advantage of opportunity to provide maintenance services for Improve maintenance large amount of installed equipment coverage ratio - Number of installed unit

  22. Slide 22: Services Business (1)

    2. Business Strategy of Power Business Unit 2-5. Services Business (1) Improve profitability through growth of High-value added services High-value Target Business Scale Added Services Business Adjusted Operating Income ratio Share of total services revenue Over 50% 160.0 25% 120.0 330% 10% 106.1 FY

  23. Slide 23: Services Business (2)

    2. Business Strategy of Power Business Unit 2-5. Services Business (2) Achieve growth through utilization of strong business base and core technologies Expand business based  Shift focus away from maintenance services for on collaborative creation own products in Japan and expand global by utilizin

  24. Slide 24: Contents

    Power and Energy Business Strategy Contents 1. Power and Energy Business Updates 2. Business Strategy of Power Business Unit 3. Summary 4. Status of Nuclear Energy Business 5. Business Performance Data and Glossary © Hitachi, Ltd. 2018. All rights reserved. 24

  25. Slide 25: FY2021 Targets

    3. Summary 3-1. FY2021 Targets FY2021 Target Contribute to industrial development and the realization of a sustainable society by providing energy systems that do not produce CO2 emissions during power generation FY2018 (Forecast)*1 Vs FY2015*2 FY2021 (Target)*1 Vs FY2018 Revenues 456.0 billion yen

  26. Slide 26: Contents

    Power and Energy Business Strategy Contents 1. Power and Energy Business Updates 2. Business Strategy of Power Business Unit 3. Summary 4. Status of Nuclear Energy Business 5. Business Performance Data and Glossary © Hitachi, Ltd. 2018. All rights reserved. 26

  27. Slide 27: Nuclear Energy Business Strategy

    4. Nuclear Energy Business Trends 4-1. Business Strategy Improve profitability, positioning domestic business as a core business and overseas business as a growing business Lead a nuclear industry based on reliability and technical expertise Domestic  Promote an early restart of BWRs, response to n

  28. Slide 28: Domestic Business

    4. 原子力事業動向 4. Nuclear Energy Business Trends 4-2. Domestic Business Strengthen an early restart of BWRs and Decommissioning of Fukushima Daiichi Nuclear Power Station Strengthen an early restart Decommissioning of Decommissioning of BWRs Fukushima Daiichi and long-term stable operation Business Nucl

  29. Slide 29: Overview of Horizon Project

    4. Nuclear Energy Business Trends 4-3. Overview of Horizon Project  Outline of Horizon Nuclear Power Limited 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, UK Dat

  30. Slide 30: Negotiations with the UK Government (1) Ministerial Statement

    4. Nuclear Energy Business Trends 4-4. Negotiations with the UK Government (1) Ministerial Statement Negotiations regarding financial support, etc. with the UK government continue Ministerial statement at the Parliament: Greg Clark, Secretary of State for Business, Energy and Industrial Strategy (Su

  31. Slide 31: Negotiations with the UK Government (2) Hitachi Policy

    4. Nuclear Energy Business Trends 4-5. Negotiations with the UK Government (2) Hitachi Policy Final investment decision to be made from the aspect of economic rationality as a private company Hitachi policy in negotiating with UK government  Details will be discussed in due course, Hitachi has welc

  32. Slide 32: Revenue Trend by Business Unit (Nuclear Energy Business Unit)

    4. Nuclear Energy Business Trends 4-6. Revenue Trend by Business Unit (Nuclear Energy Business Unit) Overseas Revenue Ratio 4％ 3％ 5％ 20％ Revenue (Billion yen) ［ FY2018 target 3,000 300.0 in previous year *1］ ［200.0］ [(Japan 185.0, Over 250.0 Overseas 15.0)] 50.0 Overseas 192.2 187.5 182.0 200.0 2,00

  33. Slide 33: Contents

    Power and Energy Business Strategy Contents 1. Power and Energy Business Updates 2. Business Strategy of Power Business Unit 3. Summary 4. Status of Nuclear Energy Business 5. Business Performance Data and Glossary © Hitachi, Ltd. 2018. All rights reserved. 33

  34. Slide 34: FY2017 Results (Power and Energy Business)

    5. Business Performance Data and Glossary 5-1. FY2017 Results (Power and Energy Business) Previous Difference FY2016 FY2017*2(2) FY2017*3 Forecast*1*2(1) (2)-(1) Revenues 495.7 billion yen 490.0 billion yen 465.0 billion yen (25.0) billion yen 450.9 billion yen Overseas revenue ratio 9％ 10％ 8％ - 9％

  35. Slide 35: Difference Between FY2017 Results and FY2018 Targets

    5. Business Performance Data and Glossary (Power and 5-2. Difference Between FY2017 Results and FY2018 Targets Energy Business) Revenue Slow expansion of the offshore wind power Slow expansion of the offshore market in Japan wind power market in Japan Change in timing of recording revenue from Chang

  36. Slide 36: Business Performance Trends (Power and Energy Business)

    5. Business Performance Data and Glossary 5-3. Business Performance Trends (Power and Energy Business) Orders Received 590.8 billion yen 540.5 billion yen 495.9 billion yen 443.5 billion yen Order Backlog 642.8 billion yen 746.1 billion yen 683.8 billion yen 671.3 billion yen Overseas Revenue Ratio

  37. Slide 37: SG&A expense, Gross Profit and CCC

    5. Business Performance Data and Glossary 5-4. SG&A expense, Gross Profit and CCC (Power and Energy Business) Improvement Points in Gross Profit SG&A expense  Reduce indirect costs through work and SG&A Margin style reform 4.4 Improvement Points 3.8  Promote project pipeline management (%) Gross P

  38. Slide 38: Revenues by Business Unit

    5. Business Performance Data and Glossary 5-5. Revenues by Business Unit FY2017 Results FY2017 FY2017 Difference FY2017 FY2016 (Forecast)*1*2(1) (Results)*2(2) (2)-(1) (Results)*3 Nuclear Energy Business Unit 192.2 billion yen 196.0 billion yen 187.5 billion yen (8.5) billion yen 187.5 billion yen P

  39. Slide 39: Revenue Trend by Business Unit (Nuclear Energy Business Unit)

    5. Business Performance Data and Glossary 5-6. Revenue Trend by Business Unit (Nuclear Energy Business Unit) Overseas Revenue Ratio 4％ 3％ 5％ 20％ Revenue (Billion yen) ［ FY2018 target 3,000 300.0 in previous year *1］ ［200.0］ [(Japan 185.0, Over 250.0 Overseas 15.0)] 50.0 Overseas 192.2 187.5 182.0 20

  40. Slide 40: Revenue Trend by Business Unit (Power Business Unit)

    5. Business Performance Data and Glossary 5-6. Revenue Trend by Business Unit (Power Business Unit) Overseas Revenue Ratio 9％ 9％ 14％ Over 40％ Revenue (Billion yen) 6000 600.0 Over 550.0 Other 500.0 5000 その他 Renewable 送変電 Energy システム [FY2018 target in 4000 400.0 previous year *2] Solutions [320.0] Bu

  41. Slide 41: Terminology (1)

    5. 5. Performance Data and Terminology 5-7. Terminology (1) ABWR : Advanced Boiling Water Reactor AGP : Advanced Gas Path BPO : Business Process Outsourcing CCC : Cash Conversion Cycle DR : Demand Response EBIT : Earnings Before Interest and Taxes EDF : Électricité de France EGAT : Electricity Gener

  42. Slide 42: Terminology (2)

    5. Performance Data and Terminology 5-8. Terminology (2) HEMS : Home Energy Management System HVDC : High Voltage Direct Current IoT : Internet of Things LCoE : Levelized Cost of Electricity LTSA : Long Term Service Agreement NAO : National Audit Office O&M : Operation & Maintenance OPEX : Operating

  43. Slide 43: 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

  44. Slide 44: © Hitachi, Ltd. 2018. All rights reserved.

    © Hitachi, Ltd. 2018. All rights reserved.

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