Hitachi, Ltd. · TSE:6501

Hitachi — Investor Day (June 2015)

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

  1. Slide 1: Hitachi Smart Transformation Project

    Hitachi Smart Transformation Project Hitachi IR Day 2015 June 11, 2015 Shinjiro Iwata Executive Vice President and Executive Officer CTrO Hitachi, Ltd. © Hitachi, Ltd. 2015. All rights reserved.

  2. Slide 2: Contents

    Hitachi Smart Transformation Project Contents 1. Hitachi Smart Transformation Project Outline 2. Progress of Hitachi Smart Transformation Project 3. Specific Activities to Achieve the Targets of 2015 Mid-term Management Plan 4. Conclusion © Hitachi, Ltd. 2015. All rights reserved.

  3. Slide 3: 1-1. Hitachi Smart Transformation Project Objective

    1-1. Hitachi Smart Transformation Project Objective Strengthen earnings power and cash generation capacity to achieve growth Drive business growth by strengthening the Social Innovation Business STP* objective Cost structure reform Innovation  Sustained cost reductions of over 100.0 billion yen per

  4. Slide 4: 1-2. Approach to Establishing a Business Base to Support Growth

    1-2. Approach to Establishing a Business Base to Support Growth Far-reaching reforms to business base, guided by Hitachi’s strategy to strengthen its Social Innovation Business STP Simplicity Establish and streamline Work standard work processes Corporate strategy Organization Achieve an optimal and

  5. Slide 5: 1-3. Vision

    1-3. Vision Transform to a globally competitive structure CCC Cost structure Benefits of STP Vision 1 reform 420.0 billion yen or more*1 2 3 75.0 FY2015 days Forecast 2 CCC*2 reforms CCC:76.5 days 1 80.0 FY2013 FY2014 days 3 Establish a business base Circle size indicates revenue size 5.5% 7% Operat

  6. Slide 6: Contents

    Hitachi Smart Transformation Project Contents 1. Hitachi Smart Transformation Project Outline 2. Progress of Hitachi Smart Transformation Project 3. Specific Activities to Achieve the Targets of 2015 Mid-term Management Plan 4. Conclusion © Hitachi, Ltd. 2015. All rights reserved.

  7. Slide 7: 2-1. Progress of Hitachi Smart Transformation Project (Project Benefits)

    2-1. Progress of Hitachi Smart Transformation Project (Project Benefits) Steady execution to deliver project benefits of 420.0 billion yen or more FY2014(Result) FY2015(Forecast) Achieved higher target Reach even higher to achieve medium-term plan Previous Previous forecast Result forecast Target 90

  8. Slide 8: 2-2. Progress of Project (Cost Structure)

    2-2. Progress of Hitachi Smart Transformation Project (Cost Structure) Focus on reducing SG&A expenses while continuing to reduce cost of sales Reduce cost of sales Operating income SG&A * Cost of sales  Design and achieve cost of sales to attain ideal cost of sales 100% 4.7% 5.6% 6.2% • Incorporat

  9. Slide 9: 2-3. Factors for Change in Operating Income

    2-3. Factors for Change in Operating Income (FY2013  FY2014) Project benefits contributing to improved business results and the creation of growth investments Impact of business Benefits of Hitachi Smart Transformation Billions of yen reorganization : * (21.0) Project: +100.0 Cost reduction, etc.:

  10. Slide 10: 2-4. Progress of Project (CCC)

    2-4. Progress of Hitachi Smart Transformation Project (CCC (Manufacturing and Services, etc.)) Strengthen cash generation capacity by revising work processes from end to end Improve inventory turnover days CCC Improved by (days) 5 days Accelerate development of modular design and parts 81.3 81.5 st

  11. Slide 11: Contents

    Hitachi Smart Transformation Project Contents 1. Hitachi Smart Transformation Project Outline 2. Progress of Hitachi Smart Transformation Project 3. Specific Activities to Achieve the Targets of 2015 Mid-term Management Plan 4. Conclusion © Hitachi, Ltd. 2015. All rights reserved.

  12. Slide 12: 3-1. Priorities for Driving the Project Forward

    3-1. Priorities for Driving the Project Forward Achieve further transformation to establish a business structure that can stay on top of changes in the operating environment Priorities • Strengthen ability to reduce cost STP Cost structure of sales in anticipation of activities reform 3-3  Reduce c

  13. Slide 13: 3-2. Scenario for Achieving the Targets of 2015 Mid-term Management Plan

    3-2. Scenario for Achieving the Targets of 2015 Mid-term Management Plan (Operating Income) Ensure achievement of operating income target by resolutely implementing Smart Transformation activities Billions of yen Benefits of Hitachi Smart Transformation Cost reduction, Impact of business reorganizat

  14. Slide 14: 3-3. Strengthen Ability to Reduce Cost of Sales in Anticipation of Changes

    Strengthen Ability to Reduce Cost of Sales in Anticipation 3-3. of Changes in the Operating Environment Accelerate speed of management cycle to achieve further improvements in profitability Strengthen response capabilities Management cycle for changing business environment Improve Rigorous scenario

  15. Slide 15: 3-4. Strengthen project management (PM)

    3-4. Strengthen project management (PM) Curb risks & secure earnings by strengthening PM Activities to strengthen PM & EPC infrastructure Concrete examples of development Concentrate PM expertise based on past Training of PM Cultivate project examples of successes and failures human resources (19 co

  16. Slide 16: 3-5. Optimize the Global Workforce

    3-5. Optimize the Global Workforce (Expand Global Usage of Shared Services) Establish a global BPO platform for back-office operations <Progress on promoting BPO in back-office operations> Overseas back-office operations China Asia India Europe Americas Japan  Expand BPO to new cost areas and geogr

  17. Slide 17: 3-6. Establish a core value chain that can instantly adapt to supply-demand dynamics

    Establish a core value chain that can instantly 3-6. adapt to supply-demand dynamics Shorten total lead times by linking to function-based measures from an end-to-end perspective Build global PSI operations  Unification of supply-demand adjustments Global logistics scheme Modular design Currently b

  18. Slide 18: 3-7. Strengthening cash flow management

    3-7. Strengthening cash flow management Strengthen cash generation capacity by improving working capital efficiency Strengthen cash management by business model PDCA activities to improve cash(example: project type) Emphasis on Project type for each product Design-to-order contractual conditions Pow

  19. Slide 19: 3-8. Establish Operations and IT Services (Market-Oriented Organization)(1)

    Establish Operations and IT Services to Support 3-8. the Social Innovation Business (Market-Oriented Organization)(1) Implement a conceptual framework for a business base that realizes highly efficient, market-oriented management on a global scale Towards a market-oriented organization Main items to

  20. Slide 20: 3-9. Establish Operations and IT Services (Market-Oriented Organization)(2)

    Establish Operations and IT Services to Support 3-9. the Social Innovation Business (Market-Oriented Organization)(2) Integrated management of performance and operations beginning with project pipeline management Strengthen pre-order project management, Management Improve speed of response to busine

  21. Slide 21: 3-10. Future Plans

    3-10. Future Plans Reap benefits to achieve the targets of the 2015 Mid-term Management Plan and commence initiatives in anticipation of the next mid-term plan FY2014 FY2015 FY2016～ Cost structure reform CCC reforms Establish business base Global SCM reforms Cost structure reform Production costs Mo

  22. Slide 22: Contents

    Hitachi Smart Transformation Project Contents 1. Hitachi Smart Transformation Project Outline 2. Progress of Hitachi Smart Transformation Project 3. Specific Activities to Achieve the Targets of 2015 Mid-term Management Plan 4. Conclusion © Hitachi, Ltd. 2015. All rights reserved.

  23. Slide 23: 4-1. FY2015 Targets

    4-1. FY2015 Targets Reap project benefits in step with changes in the business environment to achieve the targets of the 2015 Mid-term Management Plan Project benefit Company-wide forecast Operating FY2014 FY2015 Cumulative income 5.6% 6.2% 6.7% (single year) (single year) through FY2015*1 SG&A expe

  24. Slide 24: © Hitachi, Ltd. 2015. All rights reserved.

    © Hitachi, Ltd. 2015. All rights reserved. 24

  25. Slide 25: 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

  26. Slide 26: © Hitachi, Ltd. 2015. All rights reserved.

    © Hitachi, Ltd. 2015. All rights reserved.

Hitachi — Investor Day (June 2015) on 6ix