Hitachi, Ltd. · TSE:6501

Hitachi — Investor Day (June 2018)

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

  1. Slide 1: Building Systems Business Unit Business Strategy

    Building Systems Business Unit Business Strategy Hitachi IR Day 2018 June 8, 2018 Hideaki Seki Senior Vice President and Executive Officer CEO of Building Systems Business Unit Hitachi, Ltd. © Hitachi, Ltd. 2018. All rights reserved.

  2. Slide 2: Contents

    Building Systems Business Unit Business Strategy Contents 1. Business Overview and Analysis of Current Status 2. Business Strategy 3. Conclusion © Hitachi, Ltd. 2018. All rights reserved. 2

  3. Slide 3: 1-1. Business Overview

    1-1. Business Overview FY2017 revenues 603.0 Providing high-value-added products and services globally by utilizing data from E&E and other building equipment billion yen 31% Smart-building services Building E&E maintenance services Building equipment Services (Inspection, adjustment, replacing part

  4. Slide 4: 1-2. Progress of the 2018 Mid-term Management Plan (1): FY2017 Results

    1-2. Progress of the 2018 Mid-term Management Plan (1): FY2017 Results Profitability decreased in FY2017 and FY2018 forecast updated due to competition in the Chinese E&E market pushing prices down FY2015 FY2016 FY2017 FY2018 Against previous forecast *1 YoY (Results) (Results) (Results) (Forecast)

  5. Slide 5: 1-3. Progress of the 2018 Mid-term Management Plan (2): FY2018 Outlook

    1-3. Progress of the 2018 Mid-term Management Plan (2): FY2018 Outlook Improve profitability year over year in FY2018 promoting cost reduction in the China business Billion yen Billion yen Revenues Adjusted Operating Income [Ratio] 603.0 Drop in selling prices in China 52.0 50.1 Drop in selling pric

  6. Slide 6: 1-4. Towards FY2021(1): Market Trends

    1-4. Towards FY2021(1): Market Trends ■E&E NI Market Trends* (Thousand units) CAGR:2.1% 975 910 920 59 Americas 880 52 54 51 133 Europe 120 122 124 Asia / 199 211 252 Middle East 187 China 490 505 500 500 21 21 20 20 Japan FY2016 FY2017 FY2018 FY2021 (Results) (Results) (Forecast) (Forecast) ■Hitach

  7. Slide 7: 1-5. Towards FY2021(2): Competition Strategy

    1-5. Towards FY2021(2): Competition Strategy 1. Evaluating Achievements and Direction for Future Growth ■Past Achievements ■Our Position in the E&E Industry* -Realized strong revenues growth with Company B expansion of E&E NI Hitachi business in China 5% Company D ■Direction for Future Company E Rat

  8. Slide 8: 1-6. Towards FY2021(3): Business Targets

    1-6. Towards FY2021(3): Business Targets Expand business and improve profitability by accelerating overseas promotion of high-value-adding building service business utilizing data Overseas revenue 56% over Realize growth exceeding market trends*1 55% ratio 59% at over 5% / year*2 Realize strong grow

  9. Slide 9: Contents

    Building Systems Business Unit Business Strategy Contents 1. Business Overview and Analysis of Current Status 2. Business Strategy 3. Conclusion © Hitachi, Ltd. 2018. All rights reserved. 9

  10. Slide 10: 2-1. World Trends and Social / Environmental Values

    2-1. World Trends and Social / Environmental Values Aging Climate Digitalization Urbanization Globalization society change Business opportunities in social changes and challenges Maintaining, Global Strengthening Work style expansion of urban innovation improving facility value governments, infrastr

  11. Slide 11: 2-2. Basic Strategy

    2-2. Basic Strategy Utilizing data, provide fine-tuned building services globally  Expand globally, utilizing 20 years of experience in Japan with IoT services for E&E and building equipment  Provide new services combining OT × IT × Products utilizing the IoT platform Lumada Customers Provide Supp

  12. Slide 12: 2-3. China: Market Environment and Strategy

    2-3. China: Market Environment and Strategy 1. Market Environment Slow down in growth Government policies and rising competition since FY2015 Real GDP Construction - New-Urbanization Plan 110% - China Manufacturing 2025 Investments - Belt and Road Initiative Year over 100% year growth Business oppor

  13. Slide 13: 2-4. China: Key Measures (1)

    2-4. China: Key Measures (1) E&E sales & manufacturing Accelerating cost structure reforms 1. Reducing Material Costs  Improve cost competitiveness: locate new suppliers through Hitachi group collaboration, revise specs, standardize, multiple purchases, review internal / external production Strengt

  14. Slide 14: 2-5. China: Key Measures (2)

    2-5. China: Key Measures (2) E&E sales & manufacturing Expand exports from China  Expand exports aligned with strategic partners expanding overseas, such as to Asia  Improve product competitiveness by introducing global unified model, standardized components (modular design) Orders received projec

  15. Slide 15: 2-6. China: Key Measures (3)

    2-6. China: Key Measures (3) Expand E&E maintenance business and Building services introduce new building service business ■Shifting Our Business Model Before After - Respond to growing E&E NI - Increase E&E maintenance units by responding to NI and modernization demand growth demand - Improve maint

  16. Slide 16: 2-7. Asia / Middle East: Market Environment and Strategy

    2-7. Asia / Middle East: Market Environment and Strategy 1. Market Environment 115% Expanding building-related demand supported by economic growth Social trends E&E NI market - Rapid urbanization 110% - Conglomerates and state-owned Year over 105% enterprises gaining presence year growth Constructio

  17. Slide 17: 2-8. Asia / Middle East: Strengthening Business Structure

    2-8. Asia / Middle East: Strengthening Business Structure Expand sales / service bases, develop product supply structure corresponding to growth in NI demand Korea China Japan Kuwait As “global mother Supply function”, deploy Qatar (Total 4 factories) Oman components key technology, Saudi Arabia Ind

  18. Slide 18: 2-9. Asia / Middle East: Key Measures

    2-9. Asia / Middle East: Key Measures E&E Enforcing standardization strategy and utilizing sales & manufacturing resources in China to expand business  Increase competitiveness with standardized ■Change in E&E NI Demand, O/R units products / components, products from China 183 Demand (Thousand unit

  19. Slide 19: 2-10. Japan: Business Strategy / Key Measures(1)

    2-10. Japan: Business Strategy / Key Measures(1) Develop cutting-edge technology, products and services and realize efficient business operation, led by Japan as “global mother function” through use of data Building services Develop new service, expand globally  Collecting and utilizing a broad ran

  20. Slide 20: 2-11. Japan: Business Strategy / Key Measures(2)

    2-11. Japan: Business Strategy / Key Measures(2) E&E Strengthen E&E modernization capability sales & manufacturing  Increase remote monitoring units by ■Change in E&E modernization target units continued introduction of new products and (Hitachi E&E units installed) expanding O/R - 31,500 Hitachi E

  21. Slide 21: 2-12. Cost Strategy and Strengthen Cash Generation

    2-12. Cost Strategy and Strengthen Cash Generation Furthering Hitachi Smart Transformation Improvement point  Reduce indirect material cost expense 2.0 SG&A  Reap operation reform effects of 1.0 SG&A ratio investments in IT etc. 0.0  Promote standardization for global (1.0) Gross profit margin pr

  22. Slide 22: Contents

    Building Systems Business Unit Business Strategy Contents 1. Business Overview and Analysis of Current Status 2. Business Strategy 3. Conclusion © Hitachi, Ltd. 2018. All rights reserved. 22

  23. Slide 23: 3-1. Business Performance Trends

    3-1. Business Performance Trends Orders received 580.8 583.9 600.0 (Billion yen) 626.2 Overseas 54% 56% 55% revenue ratio 59% Revenues Adjusted operating (Billion yen) income / EBIT (Billion yen) 650.9 70.5 585.8 603.0 80 600 67.3 [10.8%] 580.0 [10.3%] 57.3 58.4 [9.8%] [10.0%] 50.1 49.3 52.0 51.8 60

  24. Slide 24: 3-2. Summary

    3-2. Summary Regrowth towards FY2021  Organic growth, mainly in High growth CAGR in China, Asia / Middle East revenues: exceeding  Non-continuous growth market trends over +5% with M&A etc.  Expand building service Adjusted Increasing business operating profitability income ratio:  Strictly enfo

  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 Inspire the Next

    HITACHI Inspire the Next

Hitachi — Investor Day (June 2018) on 6ix