Hitachi, Ltd. · TSE:6501

Hitachi — Investor Day (June 2017)

30 slides from Hitachi's investor day presentation, Jun 8, 2017

  1. Slide 1: Railway Systems Business Unit Business Strategy

    Railway Systems Business Unit Business Strategy Hitachi IR Day 2017 June 8, 2017 Alistair Dormer Senior Vice President and Executive Officer, CEO of Railway Systems Business Unit Hitachi, Ltd. © Hitachi, Ltd. 2017. All rights reserved.

  2. Slide 2: Contents

    Railway Systems Business Unit Business Strategy Contents 1. Business Overview 2. Key Achievements 3. Market Environment and Industry Trends 4. Our Strategy and Key Themes 5. Business Performance and Updated Forecasts 6. Conclusion 7. Appendix A: Glossary © Hitachi, Ltd. 2017. All rights reserved.

  3. Slide 3: We have built a rail business with an integrated offering

    1-1. We have built a rail business with an integrated offering 53% ROLLING STOCK 26% SIGNALLING & SYSTEMS Rolling Stock Components Signalling & Traffic Management Station & Information Solutions Very High Shinkansen Bogies Interlocking Satellite Train Passenger Speed Control Information Commuter Int

  4. Slide 4: We have an international footprint

    1-2. We have an international footprint… We have a geographically diverse business with the ability to bid effectively on major projects all over the world Europe (excl. UK) Revenues: 32% UK Revenues: 26% Japan Revenues: 17% Americas Revenues: 11% Middle East & Africa Revenues: 4% Asia Pacific (excl

  5. Slide 5: …and a global management team

    1-3. …and a global management team Alistair Kentaro Keisuke Tetsuya Dormer Masai Yabuta Yamada Chief Executive Officer Chief Operating Officer Chief Financial Officer Chief Human Resources Officer Shinya Karen Maurizio Andy Noriharu Mitsudomi Boswell Manfellotto Barr Amiya Group Head of Sales and Ch

  6. Slide 6: We continue to grow, although this year has shown our increased exposure to FX changes

    1-4. We continue to grow, although this year has shown our increased exposure to FX changes FY2016 Results Revenues Adjusted Operating Income Forecast Result Forecast Result ¥500.0bn ¥497.9bn ¥27.5bn ¥20.7bn Adjusted Operating EBIT Free Cash Flow Income Ratio New Rock regional double-deck train Key

  7. Slide 7: Contents

    Railway Systems Business Unit Business Strategy Contents 1. Business Overview 2. Key Achievements 3. Market Environment and Industry Trends 4. Our Strategy and Key Themes 5. Business Performance and Updated Forecasts 6. Conclusion 7. Appendix A: Glossary © Hitachi, Ltd. 2017. All rights reserved.

  8. Slide 8: We are investing in our future and delivering for our customers

    2-1. We are investing in our future and delivering for our customers Delivering Projects First train delivered to Delivered first 4 cars of Hitachi-built battery powered trains Testing began on the The first driverless Miami Dade County 68 car order to Taipei began operation for Kyushu first of 70 c

  9. Slide 9: We continue to win major contracts in the global market

    2-2. We continue to win major contracts in the global market India China Japan UK UK Italy Signalling Components RS RS RS RS Framework HVAC & High West of England agreement for up CBTC systems Voltage Equipment options – 7 x 9 Hull trains – 5 x 5 to 300 regional for Noida-Greater for CRRC Inspection

  10. Slide 10: Contents

    Railway Systems Business Unit Business Strategy Contents 1. Business Overview 2. Key Achievements 3. Market Environment and Industry Trends 4. Our Strategy and Key Themes 5. Business Performance and Updated Forecasts 6. Conclusion 7. Appendix A: Glossary © Hitachi, Ltd. 2017. All rights reserved.

  11. Slide 11: Rail industry demand is underpinned by strong fundamentals

    3-1. Rail industry demand is underpinned by strong fundamentals Global Population (billions) (1) Population Growth 10.2 10.8 − Global population is forecast to grow to 9.2 7.8 approximately 10.8 billion by 2080 6.1 − Rail will play an increasingly important role in 4.4 3.0 the mass transit segment o

  12. Slide 12: We are well placed to compete in growing markets

    3-2. We are well placed to compete in growing markets Our core geographical and product markets are forecast to continue to grow strongly to 2021 Market Growth by Product (1) ¥ trillion Market Growth by Geography (1) ¥ trillion 14.6 14.6 3.2% 3.2% 1.7 1.3 12.1 12.1 2.9% 3.2% Middle East & Africa 1.1

  13. Slide 13: Contents

    Railway Systems Business Unit Business Strategy Contents 1. Business Overview 2. Key Achievements 3. Market Environment and Industry Trends 4. Our Strategy and Key Themes 5. Business Performance and Updated Forecasts 6. Conclusion 7. Appendix A: Glossary © Hitachi, Ltd. 2017. All rights reserved.

  14. Slide 14: Our ambition is to become a ¥1 trillion business

    4-1. Our ambition is to become a ¥1 trillion business Strategy overview − Hitachi Rail has become a major global player within the rail industry and we have ambition to grow further − We aim to become a ¥1 trillion revenue business with market leading profit margins by: “Our aim is to become a − Fur

  15. Slide 15: Strategy to action – strengthen core offering

    4-2. Strategy to action – strengthen core offering High quality manufacturing will remain at the core of our business and is an enabler for our wider product offering Investing in our rolling stock platforms − Double-deck EMU developed in Italy − Signed framework agreement with − New low-floor LRV i

  16. Slide 16: Strategy to action - grow rolling stock maintenance

    4-3. Strategy to action - grow rolling stock maintenance Hitachi has already had success in winning large, long-term rolling stock maintenance contracts and we plan to utilise technology to further grow this area of the business An overview of our current rolling stock maintenance business Increase

  17. Slide 17: Strategy to action - focus on IoT and Digital

    4-4. Strategy to action - focus on IoT and Digital Hitachi Rail is in a unique position in having an integrated supply chain to develop and roll-out its IoT and digital solutions Asset Management Dynamic Headway & Passenger Management − Using data analytics − Using data analytics − Transform from fi

  18. Slide 18: Continuing our business transformation

    4-5. Continuing our business transformation Transforming the way we operate will allow us to achieve our ambitious financial targets Objective What? Impact − Will enable the efficient management of our large, Project focused − Transform operating model from legal entity model global projects operati

  19. Slide 19: Contents

    Railway Systems Business Unit Business Strategy Contents 1. Business Overview 2. Key Achievements 3. Market Environment and Industry Trends 4. Our Strategy and Key Themes 5. Business Performance and Updated Forecasts 6. Conclusion 7. Appendix A: Glossary © Hitachi, Ltd. 2017. All rights reserved.

  20. Slide 20: Our performance has remained robust…

    5-1. Our performance has remained robust… Order Intake (1) (2) (3) ¥Billions Order Backlog (1) (2) (3) ¥Billions 2,231.4 484.5 473.1 486.9 2,043.8 2,012.6 2,020.5 408.4 FY2015 Result FY2016 Forecast FY2016 Result FY2016 Result FY2015 Result FY2016 Forecast FY2016 Result FY2016 Result (FX adjusted) (

  21. Slide 21: …and we forecast continued strong growth

    5-2. …and we forecast continued strong growth Order Intake ¥Billions Revenues ¥Billions Adjusted Operating Income ¥Billions | % 60 8.50% 681.6 615.0 7.0% 7.50% 540.0 50 572.0 497.9 5.6% 43.0 6.50% 473.1 40 5.50% 87% 72% 4.2% 30.0 4.50% 30 20.7 3.50% 20 2.50% 1.50% 10 0.50% 0 -0.50 FY2016 FY2017 FY20

  22. Slide 22: We continue to increase order intake and have a healthy manufacturing backlog

    5-3. We continue to increase order intake and have a healthy manufacturing backlog Orders Change in FX rates 408.4 473.1 572.0 681.6 Received (¥bn) − FY2018 forecast and target are based on our internal FX rate Order forecast for GBP : JPY 2,043.8 2,020.5 2,061.7 2,128.4 Backlog (¥bn) − At IR Day 20

  23. Slide 23: We will see a significant increase in FCF in FY2017 and FY2018

    5-4. We will see a significant increase in FCF in FY2017 and FY2018 Milestone payments for delivery of key projects in FY2017 and FY2018 will have a significant impact on our free cash flow. A focus on asset efficiency will also help us improve our cash conversion cycle Free Cash Flow ¥Billions − FY

  24. Slide 24: We will continue our successful growth and will work to expand our margins

    5-5. We will continue our successful growth and will work to expand our margins Revenues ¥Billions 75.0 615.0 65.7 540.0 146.5 40.4 497.9 -41.6 -23.6 352.6 FY2015 (Result) Full year of HRI FX impact Increase project FY2016 (Result) FX impact Increase project FY2017 Increase project FY2018 and Ansald

  25. Slide 25: Contents

    Railway Systems Business Unit Business Strategy Contents 1. Business Overview 2. Key Achievements 3. Market Environment and Industry Trends 4. Our Strategy and Key Themes 5. Business Performance and Updated Forecasts 6. Conclusion 7. Appendix A: Glossary © Hitachi, Ltd. 2017. All rights reserved.

  26. Slide 26: Conclusion

    6-1. Conclusion − The global rail market is healthy − Our aim is to become a ¥1 trillion revenue business by the early 2020s − We are investing in core platforms and technologies for future growth − Our core markets remain strong. Customers continue to value the technology developed and demonstrated

  27. Slide 27: Contents

    Railway Systems Business Unit Business Strategy Contents 1. Business Overview 2. Key Achievements 3. Market Environment and Industry Trends 4. Our Strategy and Key Themes 5. Business Performance and Updated Forecasts 6. Conclusion 7. Appendix A: Glossary © Hitachi, Ltd. 2017. All rights reserved.

  28. Slide 28: Glossary

    Glossary CAGR Compound Annual Growth Rate IEP Intercity Express Programme CBTC Communications-Based Train Control IoT Internet of Things CCC Cash Conversion Cycle LRV Light Rail Vehicle CRRC China Railway Rolling Stock Corporation MEA Middle East and Africa EBIT Earnings before Interest and Taxes NT

  29. Slide 29: 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

  30. Slide 30: © Hitachi, Ltd. 2017. All rights reserved.

    © Hitachi, Ltd. 2017. All rights reserved.

Hitachi — Investor Day (June 2017) on 6ix