Hitachi, Ltd. · TSE:6501
Hitachi — Investor Day (June 2021)
35 slides from Hitachi's investor day presentation, Jun 8, 2021
Slide 1: Hitachi Investor Day 2021: IT Sector
Hitachi Investor Day 2021 IT Sector June 8, 2021 Toshiaki Tokunaga Executive Vice President and Executive Officer Head of Systems & Services Business Head of the Social Innovation Business Hitachi, Ltd. © Hitachi, Ltd. 2021. All rights reserved.
Slide 2: Today's Key Messages
Today’s Key Messages Evolving into business organization which steadily generates double-digit adjusted operating income ratio 1 Evolving into business organization which steadily generates double-digit adjusted operating income ratio despite changes in business environment, supported by expansion o
Slide 3: Contents
IT Sector Contents 1. IT Sector Business Overview 2. Management Policy 3. Progress of 2021 Mid-term Management Plan 4. Growth Strategy 5. Summary 6. Appendix © Hitachi, Ltd. 2021. All rights reserved. 2
Slide 4: Contents
IT Sector Contents 1. IT Sector Business Overview 2. Management Policy 3. Progress of 2021 Mid-term Management Plan 4. Growth Strategy 5. Summary 6. Appendix © Hitachi, Ltd. 2021. All rights reserved. 3
Slide 5: 1-1. Position of IT Sector
1-1. Position of IT Sector Revenues (FY2020 results) 2,048.7 billion yen IT Sector Overview Number of domestic and foreign employees: approximately 72,000 Business locations in 47 countries / regions*1 Tokunaga Automotive Smart IT Executive Vice President and Executive Officer Energy Industry Mobili
Slide 6: 1-2. History of IT Business
1-2. History of IT Business We have developed IT by building mission-critical systems that support people’s lives and since the 2010s we have expanded our digital business to big data, AI and IoT Omika Works recognized as a “Lighthouse advanced factory” by the World Economic Forum 2020 Lumada Soluti
Slide 7: 1-3. BUs and Major Group Companies of IT Sector
1-3. BUs and Major Group Companies of IT Sector Front Business Builds and operates mission-critical systems, and develops and provides new financial solutions for megabanks, insurance companies, securities companies, local financial institutions and other clients Financial Institutions BU IT for ban
Slide 8: 1-4. Business Structure
1-4. Business Structure Listed subsidiaries (Composition ratio) Other Front Business 64% Smart (FY2020 results) ⚫ Financial Institutions BU Life Revenues : approx. ⚫ Social Infrastructure Systems BU 21％ ⚫ Hitachi Systems Adjusted operating income IT ⚫ Hitachi Solutions, etc. : approx. 53％ (Compositi
Slide 9: Contents
IT Sector Contents 1. IT Sector Business Overview 2. Management Policy 3. Progress of 2021 Mid-term Management Plan 4. Growth Strategy 5. Summary 6. Appendix © Hitachi, Ltd. 2021. All rights reserved. 8
Slide 10: 2-1. Hitachi's Businesses Vision
2-1. Hitachi’s Businesses Vision Ensure sustainable growth and profitability through the Social Innovation Business Improve Quality of Life Social value Environmental Economic value value Add value for customers Resolve social and management issues by focusing on three key areas Security & Environme
Slide 11: 2-2. Vision for IT Sector's Business
2-2. Vision for IT Sector’s Business Lead Social Innovation Business by digital technologies and achieve Hitachi's growth through co-creation with customers around the world and alliances with partners Global market and customers Social Innovation Business Co-creation, Alliances Knowledge and data O
Slide 12: 2-3. Management Policy
2-3. Management Policy Accelerate revenue growth of company-wide Lumada business globally offering the best solutions/services for DX of customers and the society Reinforcing DX supports Expanding global business for customers ⚫ Reliability ＋ Innovativeness ⚫ Strengthen front / delivery function ⚫ E
Slide 13: Contents
IT Sector Contents 1. IT Sector Business Overview 2. Management Policy 3. Progress of 2021 Mid-term Management Plan 4. Growth Strategy 5. Summary 6. Appendix © Hitachi, Ltd. 2021. All rights reserved. 12
Slide 14: 3-1. Progress of 2021 Mid-term Management Plan
3-1. Progress of 2021 Mid-term Management Plan Established business operations capable of generating double-digit adjusted operating income ratio even in a changing environment • Achieved record-high adjusted operating income and adjusted operating income ratio in FY2020 (269.4 billion yen, 13.2%) •
Slide 15: 3-2-1. Status of Lumada Business (1)
3-2-1. Status of Lumada Business ( 1 ) Lumada core business has expanded by steady promotion of Lumada business expansion measures, and the company-wide Lumada business has grown. Enter a phase of revenue growth exceeding the market growth (2021 Mid-term Management Plan target) Revenues of Lumada Bu
Slide 16: 3-2-2. Status of Lumada Business (2)
3-2-2. Status of Lumada Business ( 2 ) Lumada solutions are starting to scale smoothly into various areas Environment Resilience Security & Safety Management of environmental information Social infrastructure maintenance / IoT payment / Regional revitalization / Decarbonized management Building nati
Slide 17: 3-3-1. Outline of GlobalLogic Acquisition (1)
3-3-1. Outline of GlobalLogic Acquisition ( 1 ) With superior digital product engineering and experience design capabilities, deploy services which innovate customer’s operations and create new digital value Collaborative Creation 8 ⚫ Experience design with expertise in a wide range of industries an
Slide 18: 3-3-2. Outline of GlobalLogic Acquisition (2)
3-3-2. Outline of GlobalLogic Acquisition ( 2 ) Closing: Planned to be a wholly owned subsidiary by the end of July 2021 Acquired Business GlobalLogic Inc.*1 (Head office: San Jose, California, USA) Structure Reverse triangular merger method by cash consideration To be a wholly owned subsidiary of H
Slide 19: 3-3-3. Progress of GlobalLogic Acquisition
3-3-3. Progress of GlobalLogic Acquisition Build dedicated teams and driving necessary activities as planned for closing ⚫Regulatory approval for closing is progressing as scheduled ⚫Retention of employees, including key talent, is going steadily ⚫ The work for integration, such as examining the org
Slide 20: Contents
IT Sector Contents 1. IT Sector Business Overview 2. Management Policy 3. Progress of 2021 Mid-term Management Plan 4. Growth Strategy 5. Summary 6. Appendix © Hitachi, Ltd. 2021. All rights reserved. 19
Slide 21: 4-1. Market Analysis
4-1. Market Analysis North America and Europe account for two-thirds of the global IT market. Despite the uncertain economic conditions, customers' DX investment remained steady in all industries Changes in global IT investment Changes in global DX investment (by region) Percentage of total (IT, OT)
Slide 22: 4-2. Transformation for Growth
4-2. Transformation for Growth Accelerated gradual transformation of IT Sector for growth. Aim to become a business organization that supports DX of customers and society globally with GlobalLogic Global Business domain Growing Area Providing highly Utilization in FY2025 SoE + IoT/Edge/Cloud resilie
Slide 23: 4-3. Growth Strategy
4-3. Growth Strategy Achieve higher growth rate by GlobalLogic to develop Lumada business globally leveraging Hitachi company-wide assets Type 1 Cross-Selling Deploy GlobalLogic's innovative applications/services to Hitachi customers Offer Hitachi's business applications with strengths in mission-cr
Slide 24: 4-4. Business Position in the DX market
4-4. Business Position in the DX market Achieve a competitive business position in the DX market of social infrastructure which requires knowledge of OT and IT and development capabilities with reliability and innovativeness Security & Environment Resilience Safety Target Position Innovativeness Fig
Slide 25: 4-5. Mission-critical IoT demonstrating strengths in DX of social infrastructure
4-5. ”Mission-critical IoT” demonstrating strengths in DX of social infrastructure Expanding company-wide Lumada business by providing total solutions ranging from products to DX applications which digitally optimize social infrastructure Security & Environment Resilience Safety Containers Container
Slide 26: 4-6. Problem-solving application for Manufacturing
4-6. Problem-solving application for Manufacturing Digital twin solution enables to recreate 4M data of Physical Space in Cyber Space to optimize the entire production process Cyber Space AI and simulation Optimizing the entire factory with the digital twin Data modeling of 4M data from operations M
Slide 27: Contents
IT Sector Contents 1. IT Sector Business Overview 2. Management Policy 3. Progress of 2021 Mid-term Management Plan 4. Growth Strategy 5. Summary 6. Appendix © Hitachi, Ltd. 2021. All rights reserved. 26
Slide 28: 5-1. Environmental Initiatives
5-1. Environmental Initiatives Strengthening energy-saving and reducing CO2 emissions through internal activities and business operations to achieve Hitachi Carbon Neutrality 2030 Visualizing power demand and utilizing renewable energy Smart Meter Initiatives for carbon neutrality at the Omika Works
Slide 29: 5-2. Summary
5-2. Summary Security & Environment Resilience Safety Resolve social and management issues through digital technologies IT Sector will become a global digital company that leads the DX market by meeting the expectations of customers and society FY2022 : Hitachi targets 10% adjusted operating income
Slide 30: Contents
IT Sector Contents 1. IT Sector Business Overview 2. Management Policy 3. Progress of 2021 Mid-term Management Plan 4. Growth Strategy 5. Summary 6. Appendix © Hitachi, Ltd. 2021. All rights reserved. 29
Slide 31: Appendix: Growth (Value) Drivers and Risk Factors
Appendix: Growth (Value) Drivers and Risk Factors IT sector leads Hitachi’s growth as Hitachi seeks to transform into a digital company globally advancing the DX of social infrastructure Growth (value) drivers Risk factors Global ⚫ Increase in DX investment, mainly in North America and Europe ⚫ Glob
Slide 32: Appendix: Business Performance Trend
Appendix: Business Performance Trend Unit: billion yen FY2019 FY2020 FY2021 YoY YoY YoY (Result) (Result) (Forecast) Revenues 2,099.4 99% 2,048.7 98% 2,100.0 103% Overseas revenue ratio 26% (3) points 25% (1) point 30% +5 points Adjusted operating income 249.4 19.3 269.4 20.0 263.0 (6.4) Adjusted op
Slide 33: 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
Slide 34: Hitachi Social Innovation is POWERING GOOD
Hitachi Social Innovation is POWERING GOOD
Slide 35: HITACHI Inspire the Next
HITACHI Inspire the Next