Hitachi, Ltd. · TSE:6501

Hitachi — Investor Day (June 2015)

38 slides from Hitachi's investor day presentation, Jun 11, 2015

  1. Slide 1: Rail Systems Business Strategy

    Rail Systems Business Strategy Hitachi IR Day 2015 June 11, 2015 Alistair Dormer Vice President and Executive Officer Global CEO, Rail Systems Business Hitachi, Ltd. © Hitachi, Ltd. 2015. All rights reserved.

  2. Slide 2: Contents

    Rail Systems Business Strategy Contents 1. Business Overview 2. Key Achievements 3. Business Performance and Updated Forecasts 4. Market Environment and Industry Trends 5. Acquisition of Ansaldo STS and AnsaldoBreda 6. Conclusion 7. Appendix A: Supplementary Information © Hitachi, Ltd. 2015. All rig

  3. Slide 3: We operate across the entire rail value chain

    1-1. We operate across the entire rail value chain Rolling Stock Japan Transportation Service Components and Rail Control Systems Equipment Solutions • Shinkansen • Turn-key solutions • Whole life • Traction converters • Automatic Train Protection • Commuter  Metro Systems maintenance • Auxiliary c

  4. Slide 4: Solid FY2014 performance vs forecasts

    1-2. Solid FY2014 performance vs forecasts (Based on US GAAP) Revenues Op. Income Ratio Forecast Actual Forecast Actual ¥154.0B ¥171.4B 4.0% 4.6% Chg (Billion yen):+17.4 Chg (bps): +60 Chg (%): +11.3 Free Cash Flow EBIT EBIT Ratio Forecast Actual Forecast Actual Forecast Actual ¥-11.0B ¥6.9B ¥3.7B ¥

  5. Slide 5: Contents

    Rail Systems Business Strategy Contents 1. Business Overview 2. Key Achievements 3. Business Performance and Updated Forecasts 4. Market Environment and Industry Trends 5. Acquisition of Ansaldo STS and AnsaldoBreda 6. Conclusion 7. Appendix A: Supplementary Information © Hitachi, Ltd. 2015. All rig

  6. Slide 6: We continue to deliver on existing orders

    2-1. We continue to deliver on existing orders… Inauguration of Hokuriku Arrival of the first IEP train Daegu completed  Production of  Arrival of the first  Completion of Kanazawa / pre-series Class the Daegu Metro Hokuriku 800 train for IEP Line 3, the first Shinkansen E7/W7, at the port of mon

  7. Slide 7: Successfully secure new orders in wide countries and regions

    2-2. … and successfully secure new orders in wide countries and regions England Scotland Russia China RS/Services RS/Services Components Signalling Preferred bidder for 29 Inverters for St trains for First 70 trains for Petersburg Signalling for Great Western Abellio ScotRail Metro LRT in Zhuhai Jap

  8. Slide 8: We are executing our strategy

    2-3. We are executing our strategy… Our Strategy 1 Implementation of a global organisation ● Europe ● China 1 Implementation of a global organisation • Global HQ established • Established signalling / control system manufacturing base • New office set up in Glasgow • New HRE executive management • E

  9. Slide 9: Leading the global consolidation

    2-4. …and leading the global consolidation On February 24th, 2015 the Boards of Directors of Hitachi, Ltd. and Finmeccanica S.p.A. announced that they had signed binding agreements for the sale and purchase of: Hiroaki Nakanishi and Prime Minister Renzi the majority of the current business of Ansal

  10. Slide 10: Contents

    Rail Systems Business Strategy Contents 1. Business Overview 2. Key Achievements 3. Business Performance and Updated Forecasts 4. Market Environment and Industry Trends 5. Acquisition of Ansaldo STS and AnsaldoBreda 6. Conclusion 7. Appendix A: Supplementary Information © Hitachi, Ltd. 2015. All rig

  11. Slide 11: Solid financial performance

    3-1. Solid financial performance (Based on US GAAP) Orders (Billion yen) Revenues (Billion yen) OP Income (Billion yen / %) 7.5% 600.0 600 300.0 300 25.0 25 479.9 4.5% 4.6% 3.4% 4.0% 400 200 20.0 20 400.0 200.0 168.2 171.4 15.0 400 296.7 200 146.7 154.0 15.0 15 180 10.0 10 7.6 8.0 200.0 200 152.4 10

  12. Slide 12: Making a strong contribution to the Group

    3-2. …making a strong contribution to the Group Orders 152.4 479.9 180.0 (Billion yen) Service 8.4% 10.6% 10.6% 10.6% 10.6% revenue ratio Overseas 35% 38% 62% 38% 62% revenue ratio Revenues Operation (Billion yen) income*1 (Billion yen) 200.0 200.2 200 168.2 171.4 167.4 150 8.9% 20 8.1% 8.1% 7.5% 7.

  13. Slide 13: We expect further growth and success in 2015

    3-3. We expect further growth and success in 2015 FY2015 US GAAP IFRS Revenues 200.0 200.2 (Billion yen) Overseas 62 62 revenue ratio (%) Operating 7.5 8.1*1 income ratio (%) EBIT ratio (%) 7.5 8.1  Gross margin improvement 120bps (vs FY12) HSTP results *2  SG&A to revenue ratio improvement 250bps

  14. Slide 14: Contents

    Rail Systems Business Strategy Contents 1. Business Overview 2. Key Achievements 3. Business Performance and Updated Forecasts 4. Market Environment and Industry Trends 5. Acquisition of Ansaldo STS and AnsaldoBreda 6. Conclusion 7. Appendix A: Supplementary Information © Hitachi, Ltd. 2015. All rig

  15. Slide 15: Macro trends are supporting growth in the sector

    4-1. Macro trends are supporting growth in the sector Urbanisation and environmental factors continue to drive growth in the rail sector Environmental *1 Accessible World Rail Market Growth – by product *3 CO2 emissions targets and rising fuel 100.7 118.7 price will drive the (Billion euro) (Billion

  16. Slide 16: Clear trend towards consolidation in the sector

    4-2. There is a clear trend towards consolidation in the sector The global rail sector is witnessing a clear trend towards consolidation * Recent rail deals: Asia Rolling Stock Global Integrated  Nov 12 – Siemens acquisition Providers % of sales in home market Rolling stock of Invensys Rail Rolling

  17. Slide 17: Market demands and IoT will drive true integration

    4-3. Market demands and IoT will drive true integration The market is looking for rail providers capable of offering fully integrated solutions * Integrated Full Offering Turnkey/PPP Likely polarisation between global fully integrated rail CAGR 3.5% providers and global component players Rolling St

  18. Slide 18: Contents

    Rail Systems Business Strategy Contents 1. Business Overview 2. Key Achievements 3. Business Performance and Updated Forecasts 4. Market Environment and Industry Trends 5. Acquisition of Ansaldo STS and AnsaldoBreda 6. Conclusion 7. Appendix A: Supplementary Information © Hitachi, Ltd. 2015. All rig

  19. Slide 19: The acquisitions support further growth and success

    5-1. The acquisitions support further growth and success Hitachi Rail -Newco  Acquisition of the entire 40% stake owned by  The purchase of AnsaldoBreda’s assets for 36 million Finmeccanica in Ansaldo STS euro, with the exclusion of some revamping activities and certain residual contracts, from Fi

  20. Slide 20: Ansaldo STS is a global leader in rail systems

    5-2. Ansaldo STS is a global leader in rail systems *1 Key strengths and capabilities 1 Proven ability to win new orders Total 2009-2014 ca. Jumbo Orders 1 Unparalleled ability to win orders demonstrated over time Order Intake 11 billion euro Orders (ca.11 billion euro since 2009) (million euro) A

  21. Slide 21: AnsaldoBreda will enhance rolling stock capacity

    5-3. AnsaldoBreda will enhance rolling stock capacity Key Strengths and Capabilities 1 Engineering and Construction Capabilities 1 Unique expertise in engineering and construction solutions for a  50 VHS trains wide range of products internationally ETR 1000  Max speed of 360 km/h 2 Global presenc

  22. Slide 22: Rationale is underpinned by core three elements

    5-4. Rationale is underpinned by core three elements  Build on stated growth /  Competitive landscape expansion objectives characterised by a trend towards consolidation  Acquire business volumes and  Become an active player manufacturing capacity in the competitive arena (vs. reactive to compet

  23. Slide 23: We are creating a truly global organisation

    1 Global 2 Transform 3 Innovate 5-5. We are creating a truly global organisation… Hitachi Rail Ansaldo STS Ansaldo STS | AnsaldoBreda Hitachi Rail | Ansaldo STS | AnsaldoBreda Sales by Geography (FY2014) * MEA Asia Pacific MEA MEA 0% MEA 3% 3% 4% Asia Pacific 7% 12% Italy Americas 25% Asia Pacific J

  24. Slide 24: By increasing and globalising our footprint

    1 Global 2 Transform 3 Innovate 5-6. …by increasing and globalising our footprint… Pittsburg, USA Newton Aycliffe, Pistoia, Italy Naples, Italy Mito(rail), Japan Type: Assembly / UK Type: Assembly Type: Components Type: Components Testing Type: Assembly Size: 107,000 m2 Size: 58,850 m2 Size: 28,000

  25. Slide 25: Expanding our sales base and localisation

    1 Global 2 Transform 3 Innovate 5-7. …and expanding our sales base and localisation  Hitachi Rail Project Offices  Hitachi Rail Regional Offices  STS Head Office (Genoa, Italy)  STS Regional HQ / Offices Headcount by Country Ansaldo Ansaldo Ansaldo Ansaldo Ansaldo Ansaldo Country Hitachi *1 STS

  26. Slide 26: We have a complementary product mix

    1 Global 2 Transform 3 Innovate 5-8. We have a complementary product mix… Systems TMS Signalling ERTMS Turnkey Combined Rolling Stock Commuter HSR Locos Monorail Trams Metros Combined Full Range Comprehensive Range Partial Range Presence No Products TMS : Traffic Management System. ERTMS : European

  27. Slide 27: That transforms us into a global player

    1 Global 2 Transform 3 Innovate 5-9. …that transforms us into a global player  The combination of Hitachi Rail, Global A Ansaldo STS and AnsaldoBreda Global B Full offering creates a company with a full Asia A Global C product offering – a transformational event for us and the industry Europe A  H

  28. Slide 28: With improved R&D capabilities

    1 Global 2 Transform 3 Innovate 5-10. With improved R&D capabilities Wayside V-train 3 Monitoring Traffic Control for Mining Satellite Next Gen Signalling Monitoring State of the High Speed Art Lab at Train Tito Scalo Engineering Driverless Centre of Rolling Stock Excellence Optimising Integrated Bi

  29. Slide 29: Contents

    Rail Systems Business Strategy Contents 1. Business Overview 2. Key Achievements 3. Business Performance and Updated Forecasts 4. Market Environment and Industry Trends 5. Acquisition of Ansaldo STS and AnsaldoBreda 6. Conclusion 7. Appendix A: Supplementary Information © Hitachi, Ltd. 2015. All rig

  30. Slide 30: Conclusion

    6. Conclusion  Surpassed forecasts for FY 2014 successfully delivering large contracts  Start the year with record ¥818.5B backlog of exceptional quality  In FY2015 forecast ¥200B sales and 7.5% EBIT ratio  Rail industry displays steady GDP growth – Hitachi exceeding this and gaining share  The

  31. Slide 31: Contents

    Rail Systems Business Strategy Contents 1. Business Overview 2. Key Achievements 3. Business Performance and Updated Forecasts 4. Market Environment and Industry Trends 5. Acquisition of Ansaldo STS and AnsaldoBreda 6. Conclusion 7. Appendix A: Supplementary Information © Hitachi, Ltd. 2015. All rig

  32. Slide 32: Growth case study – IEP and Newton Aycliffe

    7-1. Growth case study – IEP and Newton Aycliffe Project Overview (Largest UK Rolling Stock PPP)  Customer : UK Department for Transport  No. of rolling stocks : Total 866 cars with 27.5 years’ maintenance  Delivery : 2017 - 2019  Procurement method : PPP (Public Private Partnership) Progress •

  33. Slide 33: Growth case study – UK West of England

    7-2. Growth case study – UK West of England Being Nominated as preferred bidder in March 2015 and procuring WoE based on the success of the Class 800 and Class 395 Project Overview  Customer : First Group  No. of rolling stocks : 22 x 5-car Bi-Mode unit, 7 x 9-car Bi-mode unit (Total 173 cars, 29

  34. Slide 34: Growth case study – UK Abellio ScotRail

    7-3. Growth case study – UK Abellio ScotRail New train and maintenance for the Abellio franchise in Scotland, introduction of our AT200 series to the UK Project Overview  Customer : Abellio  Contract : Completed the contract on March 3rd  Local office : Open new office in Scotland  Delivery : 70

  35. Slide 35: Growth case study – Ho Chi Minh City Line 1

    7-4. Growth case study – Ho Chi Minh City Line 1 “Urban Railway Line 1” in Ho Chi Minh City, Vietnam: Design submitted for customer approval. Production to start from 2015. Project Overview (1st Turn-key business in Vietnam)  Customer : Management Authority for Urban Railways of the People’s Commit

  36. Slide 36: Growth case study – Monorail Daegu, Korea

    7-5. Growth case study – Monorail Daegu, Korea Daegu Urban Railway Line 3 Monorail System (Korea): Train set delivery completed and commercial operation started on April 23rd Project Overview  Line Length : 24 km (Elevated double track)  Number of Stations : 30 Stations  Car Depot : 2 Places  Co

  37. Slide 37: 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

  38. Slide 38: © Hitachi, Ltd. 2015. All rights reserved.

    © Hitachi, Ltd. 2015. All rights reserved.

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