Hitachi, Ltd. · TSE:6501

Hitachi — Investor Day (June 2021)

34 slides from Hitachi's investor day presentation, Jun 8, 2021

  1. Slide 1: Hitachi Investor Day 2021 Automotive Systems Business

    Hitachi Investor Day 2021 Automotive Systems Business June 8, 2021 Brice Koch President & CEO Hitachi Astemo, Ltd. © Hitachi, Ltd. 2021. All rights reserved.

  2. Slide 2: Today's key messages

    Today’s key messages Hitachi Astemo is a global leading technology company committed to delivering on a triple bottom line: 1 Social contribution • Improve safety, comfort and QoL with AD/ADAS systems and advanced chassis Environmental contribution 2 • Contribute to a greener world through efficient

  3. Slide 3: Contents

    Automotive Systems Business Contents 1. Business overview 2. Market trends 3. Growth strategy 4. Conclusion 5. Appendix © Hitachi, Ltd. 2021. All rights reserved. 2

  4. Slide 4: Contents

    Automotive Systems Business Contents 1. Business overview 2. Market trends 3. Growth strategy 4. Conclusion 5. Appendix © Hitachi, Ltd. 2021. All rights reserved. 3

  5. Slide 5: 1-1. Position of Hitachi Astemo

    1-1. Position of Hitachi Astemo Automotive IT Industry Mobility Energy Smart Life Systems Business Financial Institutions BU Systems BU Social Infrastructure BU Industry & Distribution Water & Environment BU Building Systems BU Railway Systems BU Nuclear Energy BU Energy BU Solutions Hitachi Global

  6. Slide 6: 1-2. Business structure

    1-2. Business structure Hitachi Astemo revenues Hitachi Astemo revenues by business as a percentage of Hitachi as a whole Others Others 5% 1% IT 21% Motorcycle Listed Bus. Div. subsidiaries 8% 16% Powertrain & Safety FY2020 Chassis Bus. Div. Systems Bus. Div. Consolidated Revenues 41% FY2020 50% 8,7

  7. Slide 7: 1-3. Business portfolio

    1-3. Business portfolio Create new value for next generation automotive & motorcycle components / systems Powertrain & Safety Motorcycle Business Systems Business Division Chassis Business Division Division ICE BU Brake BU Brake BU Leveraging Invest selectively in Maximize synergies Strengthen marke

  8. Slide 8: 1-4. Progress of 2021 Mid-term Management Plan

    1-4. Progress of 2021 Mid-term Management Plan Unit：Billions of yen FY2019 FY2020 FY2021 Forecast YoY Target Change from YoY YoY the previous (as of June 2021) (as of June 2019) target Revenues 811.5 84% 987.5 122% 1,600.0 162% 1,200.0 133% Overseas revenue ratio 59% +4 points 66% +7 points 68% +2 p

  9. Slide 9: 1-5. Growth: Stronger portfolio and relative market share gain

    1-5. Growth: Stronger portfolio and relative market share gain (organically and in-organically) FY2017 – FY2020 sales average growth rate of (5.6%) was 1.3 points ahead of (6.9%) Forecasting FY2019 – FY2025 proforma annual sales market decline (Excl. M&A*1; FY2017: 816.0 billion yen, FY2020: FY687.5

  10. Slide 10: Contents

    Automotive Systems Business Contents 1. Business Overview 2. Market Trends 3. Growth Strategy 4. Conclusion 5. Appendix © Hitachi, Ltd. 2021. All rights reserved. 9

  11. Slide 11: 2-1. Market trends

    2-1. Market trends Automotive market will increasingly demand CASE technologies and investment in R&D - Governments globally increasingly setting EV, ZEV and other targets Global vehicle production vs xEV AD/ADAS Significant increase in R&D expense among OEMs (M units) (Billions of yen) 100.0 Vehicl

  12. Slide 12: 2-2. Competitive environment

    2-2. Competitive environment Competitive in xEV-related products with expanding market share Motor share estimate* Inverter share estimate* 2019 Target for 2025 2019 Target for 2025 Hitachi Automotive Systems Gr. >5M pcs >5M pcs A S Others Others Others Others B D K L R C Q S K A G J E A I Keihin D

  13. Slide 13: Contents

    Automotive Systems Business Contents 1. Business Overview 2. Market Trends 3. Growth Strategy 4. Conclusion 5. Appendix © Hitachi, Ltd. 2021. All rights reserved. 12

  14. Slide 14: 3-1. Social, Environmental and Economic value

    3-1. Social, Environmental and Economic value Provide advanced mobility solutions that contribute to building a sustainable society Social value Environmental value Improve safety, comfort and QoL Contribute to a greener world with AD/ADAS systems and advanced Connected car technologies through effi

  15. Slide 15: 3-2. Environmental contribution: Astemo for a greener future

    3-2. Environmental contribution: Astemo for a greener future Global trend toward NetZero by 2045 NetZero by 2050 NetZero by 2060 carbon neutrality Factories: Realize “carbon neutrality” in production lines by 2030 Astemo targets Products: Reduce CO2 emission from product usage by 50% by 2030 Carbon

  16. Slide 16: 3-3. Leading-edge solutions leveraging Lumada

    3-3. Leading-edge solutions leveraging Lumada Lumada Ready: An advanced product group providing digital solutions Lumada Ready products AD/ADAS-related In-vehicle Units (AD/ADAS ECU, MPU, CGW, AP etc.) Equipped with functions required for autonomous driving and MaaS, such as recognition, perception,

  17. Slide 17: 3-4. Enhance investment to secure competitiveness

    3-4. Enhance investment to secure competitiveness Hitachi Astemo vs suppliers’ R&D ratio (% in FY2019) CAPEX index when set FY2017=100 9.9 Leveraging Hitachi’s global R&D: 100 95 7.8 7.6 8.0 - Cloud-based tech 5.4 - Software development 63 - Materials engineering 47 FY2017 FY2018 FY2019 FY2020 Hitac

  18. Slide 18: 3-5. LEAP: Our path to a stronger and efficient company

    3-5. LEAP: Our path to a stronger and efficient company Leadership Engagement Acceleration Performance The four pillars of LEAP Costs Competitiveness Strengthen Portfolio Reinforce Critical Enablers Mitigate Risks 1.1 Procurement savings 2.1 xEV powertrain 3.1 Superior visibility thanks DATA AGGREGA

  19. Slide 19: 3-6. Acceleration of synergies and a focus on costs

    3-6. Acceleration of synergies and a focus on costs Synergies planned vs FY2019 14.0% ～ 15.0% 13.0% 10.9% 12.1% ● EBITDA ratio ～ 12.0% ■ ROIC 9.5% 10.8% （Return on invested capital） B JPY 60 6.2% 7.8% 60 Budgeting costs to accelerate 40 Footprint / G&A synergies Synergies One-off expenses for 20 int

  20. Slide 20: 3-7. Key factors for success

    3-7. Key factors for success Offer products and solutions that outcompete and achieve global market leadership through differentiated technologies and scale Maximize global and regional customer reach through geographical proximity and advanced technologies in high growth areas Prioritize investment

  21. Slide 21: 3-8. Growth (value) drivers and risk factors

    3-8. Growth (value) drivers and risk factors Challenges and opportunities in a quickly changing market Growth (value) drivers Risk factors ⚫ Decarbonization regulation in ⚫ Exchange rate fluctuations ⚫ Prolonged economic many countries slowdown due to COVID-19 Macro ⚫ Government support for ⚫ Emerge

  22. Slide 22: Contents

    Automotive Systems Business Contents 1. Business Overview 2. Market Trends 3. Growth Strategy 4. Conclusion 5. Appendix © Hitachi, Ltd. 2021. All rights reserved. 21

  23. Slide 23: 4-1. FY2021 forecast

    4-1. FY2021 forecast ~15.0％ 10.9% ~12.0％ Excluding gain on sale of Clarion 7.5% 6.6% ● EBITDA ratio 5.0% ■ ROIC 6.2% （Return on invested capital） 3.4% 4.8% 3.1% ～2,000.0 2W Div. 1,600.0 2W Div. CS Div. 1,200.0 Revenues 987.5 (billions of yen) 971.0 811.5 Others 1% CS Div. Clarion, others 3% 2W Div.*

  24. Slide 24: 4-2. Conclusion

    4-2. Conclusion Contribute to a sustainable society and improved QoL by providing world-leading advanced mobility solutions that satisfy our customers FY2020 FY2021 forecast FY2025 target Revenues 987.5 billion yen 1,600.0 billion yen ~2,000.0 billion yen Adjusted operating income ratio 3.5% 6.1% ~1

  25. Slide 25: Contents

    Automotive Systems Business Contents 1. Business Overview 2. Market Trends 3. Growth Strategy 4. Conclusion 5. Appendix © Hitachi, Ltd. 2021. All rights reserved. 24

  26. Slide 26: Appendix-1. Management vision for Hitachi Astemo

    Appendix-1. Management vision for Hitachi Astemo Contribute to a sustainable society and improved QoL by providing world-leading advanced mobility solutions that satisfy our customers Advanced Market Business scale & technologies leadership comprehensive that define in selected core footprint tomorr

  27. Slide 27: Appendix-2. Key differentiators against xEV competitors

    Appendix-2. Key differentiators against xEV competitors Compact e-Axles that meet OEM requirements for better vehicle packaging and competitive high-power density ⚫ Enables flexible layout to increase space for various vehicles Efficient e-Axles with less product line-up but broad application with “

  28. Slide 28: Appendix-3. Adoption of electrification products

    Appendix-3. Adoption of electrification products Main examples of adoption Global expansion of vehicles that have adopted our xEV products Electrification related products 1994 2005 2010 2015 2020 2005 2016 2020 Motors Motors ＋ 1999 2005 2006 2011 2019 2020 Inverters 1994 2007 2009 2014 2018 2019 20

  29. Slide 29: Appendix-4. Sales growth in xEV products

    Appendix-4. Sales growth in xEV products Expanding motor and inverter sales to achieve global leadership Year : SOP timing Motor volume Sales target x 5.1 >5,000 5,000 Motor [inc. Gr Inverter Expansion Production volume K pcs./ year comp] 4,000 OEM A 2006～ 3,000 OEM B OEM E 2010～ Potential (中村)B ＋ 2

  30. Slide 30: Appendix-5. The right structure to monitor and manage global risks

    Appendix-5. The right structure to monitor and manage global risks A clear and effective corporate management and governance structure BOARD Supervision A global leader in both the automotive and motorcycle industries: • Approx. 90,000 staff Corporate management • 1.6 trillion yen in revenues Execut

  31. Slide 31: Appendix-6. Leveraging founding companies' best practice

    Appendix-6. Leveraging founding companies’ best practice Full effort to discover and adopt the best practices of our four integrating companies Over 400 best Almost 300 ideas Prioritize: practices under analysis for ✓Business impact Identified adoption and ✓Ease of adoption integration ✓Synergy cont

  32. Slide 32: 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

  33. Slide 33: Hitachi Social Innovation is POWERING GOOD

    Hitachi Social Innovation is POWERING GOOD

  34. Slide 34: HITACHI Inspire the Next

    HITACHI Inspire the Next

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