Hitachi, Ltd. · TSE:6501

Hitachi — Investor Day (June 2014)

30 slides from Hitachi's investor day presentation, Jun 12, 2014

  1. Slide 1: Power Systems Business Strategy

    Power Systems Business Strategy Hitachi IR Day 2014 June 12, 2014 Katsumi Nagasawa Vice President and Executive Officer President & CEO, Power Systems Company Power Systems Group Hitachi, Ltd. © Hitachi, Ltd. 2014. All rights reserved.

  2. Slide 2: Contents

    Power Systems Business Strategy Contents 1. Business Overview, Performance Trends and Targets 2. Market Trends and Competitive Environment 3. Business Policy and Growth Strategy 4. Orders received and Differences From Previous Forecast 5. Conclusion © Hitachi, Ltd. 2014. All rights reserved.

  3. Slide 3: 1-1. Main Business segments and composition ratios

    1-1. Main Business segments and composition ratios Aim for growth and a highly profitable business framework, focusing on the Nuclear Power, Transmission & Distribution, and Renewable Energy businesses Nuclear Power Business(27%) Transmission & Distribution Businesses(20%) GIS: Gas circuit breaker T

  4. Slide 4: 1-2. Business Performance Trends

    1-2. Business Performance Trends Rebuild the business platform and aim for growth and high earnings Overseas revenue ratio [43%] 40% Service revenue ratio Revenues Orders 32% received 30% EBIT (Billion yen) (Billion 41% (Billion yen) 34% 36% 31% yen) 1,000 848.3 28%*1 21% [28%] 19% 200 685.7 904.6 6

  5. Slide 5: Contents

    Power Systems Business Strategy Contents 1. Business Overview, Performance Trends and Targets 2. Market Trends and Competitive Environment 3. Business Policy and Growth Strategy 4. Orders received and Differences From Previous Forecast 5. Conclusion © Hitachi, Ltd. 2014. All rights reserved.

  6. Slide 6: 2-1. Market Trends & Prospects

    2-1. Market Trends & Prospects Market Trends Japan Overseas Nuclear power : Positioning of important power sources Nuclear power : Many countries going ahead with plans Renewable energy : Market expansion by continuing the FIT system Transmission & : Rapidly changing market due to changes in Transmi

  7. Slide 7: 2-2. Main Structural Reforms to Date

    2-2. Main Structural Reforms to Date FY ~2011 2012 2013 2014~ lSigned a comprehensive agreement about technological cooperation on electric power distribution infrastructure lStrategic G-SCM of the (April 2012 & June 2013: Russia, May 2013: Mongolia) transmission & distribution lStrengthened fusion

  8. Slide 8: 2-3. Vision and Global Position

    2-3. Vision and Global Position Provide the market with optimum solutions through powerful machinery and information control technologies EBIT ratio (%) Hitachi Key FY2020 Others Nuclear Power Transmission Company B & Renewable Distribution Energy Hitachi FY2015 Company D Company F Company A Company

  9. Slide 9: Contents

    Power Systems Business Strategy Contents 1. Business Overview, Performance Trends and Targets 2. Market Trends and Competitive Environment 3. Business Policy and Growth Strategy 4. Orders received and Differences From Previous Forecast 5. Conclusion © Hitachi, Ltd. 2014. All rights reserved.

  10. Slide 10: 3-1. Basic Policy

    3-1. Basic Policy Become a major global player that is increasingly competitive around the world nExecute global growth strategy l Strengthen global operations (Make progress as a local player) l Leverage abundant experience in EPC management (Thermal Power & Nuclear Power → Transmission & Distribut

  11. Slide 11: 3-2. Cost Structure Reforms

    3-2. Cost Structure Reforms Accelerate promotion of Hitachi Smart Transformation Project Cost reduction target: 53 billion yen* n Upgrade production technologies of global manufacturing bases Production Costs n Strengthen development capabilities in core production technology at mother factories Dir

  12. Slide 12: 3-3. Strengthen the proposal-based sales for solution business

    3-3. Strengthen the proposal-based sales for solution business [Overseas] Strengthen account activities for prioritized customers nPromote transformation from conventional approach to solution provider approach l Strengthen strategic activities in accordance with management policies, investment plan

  13. Slide 13: 3-4. Nuclear Power Business (1)

    3-4. Nuclear Power Business (1) Expand global business by utilizing world-class safety technologies FY2013 FY2014 FY2015 FY2020 Revenues 110.0 Billion yen 120.0 Billion yen 140.0 Billion yen 280.0 Billion yen n Japan Strengthen initiatives to improve safety and trust as a base load electric power so

  14. Slide 14: 3-5. Nuclear Power Business (2)

    3-5. Nuclear Power Business (2) Respond to new regulatory standards UK: Horizon Nuclear Power Limited project n Promote countermeasures to improve the safety margin n Accelerate construction preparation by establishing UK l Venting filter System (cooperation with AREVA) engineering base l Fire prote

  15. Slide 15: 3-6. Transmission & Distribution Business (1)

    3-6. Transmission & Distribution Business (1) Expand business by strengthening global operations FY2013 FY2014 FY2015 FY2020 Revenues 70.0 Billion yen 80.0 Billion yen 100.0 Billion yen 200.0 Billion yen Overseas revenue 32% 40% 50% Over 70% ratio n Expand components business by extending global pro

  16. Slide 16: 3-7. Transmission & Distribution Business (2)

    3-7. Transmission & Distribution Business (2) Expand components business by extending global production framework Achieve high quality and low costs through supply chain management n Achieve further cost reductions through standardization (switchgear) & modular design (transformers) n Make progress

  17. Slide 17: 3-8. Transmission & Distribution Business (3)

    3-8. Transmission & Distribution Business (3) Expand systems business by leveraging global engineering framework Promote transformer substation EPC business by using the EPC platform Supplied transformer substation EPCs Customers (approx. 300 transformer substations) Construction Delivered approx. 2

  18. Slide 18: 3-9. Transmission & Distribution Business (4)

    3-9. Transmission & Distribution Business (4) Expand systems business by leveraging global engineering framework Accelerate wide-area grid stabilization systems business in North America n Completed joint research on grid stabilization n Conduct storage system demonstration testing in systems with U

  19. Slide 19: 3-10. Renewable Energy Business

    3-10. Renewable Energy Business Strengthen business by maintaining the top share in the wind power market and securing orders in the solar power market FY2013 FY2014 FY2015 FY2020 Revenues 70.0 Billion yen 80.0 Billion yen 90.0 Billion yen 150.0 Billion yen Wind Power Solar Power n Aim to increase s

  20. Slide 20: 3-11. Renewable Energy Business: Wind Power Systems

    3-11. Renewable Energy Business:Wind Power Systems Maintain top share in Japan and extend to the offshore market Maintain top share in Japan by developing new models and strengthening proposal capabilities Expand the lineup and menu of services n Development and demonstration of improved 2MW model (

  21. Slide 21: 3-12. Renewable Energy Business: Photovoltaic Power Systems

    3-12. Renewable Energy Business:Photovoltaic Power Systems Expand EPC, PCS, and service business n EPC:Win steady orders for large domestic FIT projects against the backdrop of abundant coordinated results n PCS:Increase orders won by strengthening product features (capabilities, performance, cost c

  22. Slide 22: 3-13. Service Business

    3-13. Service Business Increasing sophistication and earnings of maintenance services business Expand business by utilizing Increase sophistication of maintenance services to improve profitability maintenance services platform “Components IT” (ICT, predictive diagnosis system, Examples of products e

  23. Slide 23: 3-14. Energy Solutions Business

    3-14. Energy Solutions Business Expand business by proposing solutions in accordance with grasping significant changes in the power market Customers Proposal solutions Power generation business, n Distributed power systems & storage Manufacturing industry, systems Multi-use retail facilities, etc. n

  24. Slide 24: Contents

    Power Systems Business Strategy Contents 1. Business Overview, Performance Trends and Targets 2. Market Trends and Competitive Environment 3. Business Policy and Growth Strategy 4. Orders received and Differences From Previous Forecast 5. Conclusion © Hitachi, Ltd. 2014. All rights reserved.

  25. Slide 25: 4-1. Business Performance Trends

    4-1. Business Performance Trends Rebuild the business platform and aim for growth and high earnings Overseas revenue ratio [43%] 40% Service revenue ratio Revenues Orders 32% received 30% EBIT (Billion yen) (Billion 41% (Billion yen) 34% 36% 31% yen) 1,000 848.3 28%*1 21% [28%] 19% 200 685.7 904.6 6

  26. Slide 26: 4-2. Differences From Previous Forecast

    4-2. Differences From Previous Forecast n FY2013 Actual & FY2015 Forecast ( ): Figures do not include thermal-related and transferred businesses (Billion yen) FY2013 (Results) FY2015 (Forecast) Previous forecast 750.0 500.0 Revenues Results and revised forecast 777.3 520.0 (330.0) (450.0) Previous f

  27. Slide 27: Contents

    Power Systems Business Strategy Contents 1. Business Overview, Performance Trends and Targets 2. Market Trends and Competitive Environment 3. Business Policy and Growth Strategy 4. Orders received and Differences From Previous Forecast 5. Conclusion © Hitachi, Ltd. 2014. All rights reserved.

  28. Slide 28: 5. Conclusion

    5. Conclusion Become a major global player that is increasingly competitive around the world nExecute global growth strategy l Strengthen global operations(Make progress as a local player) l Leverage abundant results in EPC management (Thermal Power & Nuclear Energy → Transmission & Distribution and

  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. 2014. All rights reserved.

    © Hitachi, Ltd. 2014. All rights reserved.

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