Hitachi, Ltd. · TSE:6501

Hitachi — Investor Day (June 2014)

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

  1. Slide 1: Rail Systems Business Strategy

    Rail Systems Business Strategy Hitachi IR Day 2014 June 12, 2014 Alistair Dormer Hitachi Rail Global CEO of Hitachi, Ltd. and Executive Chairman and CEO, Hitachi Rail Europe Ltd. © Hitachi, Ltd. 2014. All rights reserved.

  2. Slide 2: Global CEO

    Global CEO Hitachi Rail Systems moved HQ & strategy function to London as of 1st April, 2014 Who am I ? Alistair Dormer, Hitachi Rail Global CEO Joined Hitachi as Business Development Director, Rail 2003 - led team to secure Class 395 Managing Director/CEO Hitachi Rail Europe 2005 - 14 - led team to

  3. Slide 3: Contents

    Rail Systems Business Strategy Contents 1. Business Overview 2. Market Environment 3. We are here 4. Business Policy and Growth Strategies 5. Business Performance Trends and Forecast 6. Conclusion © Hitachi, Ltd. 2014. All rights reserved.

  4. Slide 4: 1-1. World class technology for global markets

    1-1. World class technology for global markets Full lineup of rail systems products and services FY2013 Revenues : 168.2 billion yen Operating income ratio: 4.5% EBIT* ratio: 3.9 % Employees : 2,890 (Overseas revenue ratio: 35% raising to 53% (FY2015)) Transport management & Rolling stock systems 61

  5. Slide 5: Contents

    Rail Systems Business Strategy Contents 1. Business Overview 2. Market Environment 3. We are here 4. Business Policy and Growth Strategies 5. Business Performance Trends and Forecast 6. Conclusion © Hitachi, Ltd. 2014. All rights reserved.

  6. Slide 6: 2-1. Targeting a growing global market

    2-1. Targeting a growing global market Overall rail market: 20 trillion yen/year with stable growth n Firm Japanese market, highly competitive n Expansion of UK renewal market; EMUs, ETCS, CBTC, traffic management n Chinese market is recovering n Strong potential demand of metro (turnkey) in emergin

  7. Slide 7: Contents

    Rail Systems Business Strategy Contents 1. Business Overview 2. Market Environment 3. We are here 4. Business Policy and Growth Strategies 5. Business Performance Trends and Forecast 6. Conclusion © Hitachi, Ltd. 2014. All rights reserved.

  8. Slide 8: 3-1. IEP – Building a long term UK base

    3-1. IEP – Building a long term UK base On schedule to deliver 1st train set in 2015 with preparation of launch maintenance and local production Project Overview l Customer : UK Department for Transport l No. of rolling stocks : Total 866 cars with 27.5 years’ maintenance l Delivery : 2017 - 2019 l

  9. Slide 9: 3-2. Entering new markets

    3-2. Entering new markets “Urban Railway Line 1” in Ho Chi Minh City, Vietnam: Project office launched in August 2013 and design process is on going Project Overview (1st urban transport in Vietnam) l Customer : Management Authority for Urban Railways of the People’s Committee of Ho Chi Minh City l

  10. Slide 10: 3-3. Monorail is a key growth sector

    3-3. Monorail is a key growth sector Daegu Urban Railway Line 3 Monorail System (Korea): Train set delivery completed and now test run for commercial operation Project Overview l Line Length : 24 km (Elevated double track) l Number of Stations : 30 Stations l Car Depot : 2 Places l Contract Scope :

  11. Slide 11: 3-4. Going global and solution

    3-4. Going global and solution Hitachi’s Target Position Size of circle show the revenues 40% Hitachi Last 2 years revenues growth ratio of each players (FY2016) 30% Hitachi (FY2013) 20% European A (FY2013) European B Japanese (FY2013) 10% European Rolling stock A Signalling A (FY2013) (FY2013) 0% -

  12. Slide 12: 3-5. Well placed to challenge for growth

    3-5. Well placed to challenge for growth 2.7 trillion yen backlog are secured Challenges are expanding profile in emerging countries uBacklog: approx. 2.7 trillion yen from 3 core market l UK (IEP trains and maintenance), Japan and China uHistorical order intake (excluding maintenance contracts in U

  13. Slide 13: 3-6. Active in the whole value chain

    3-6. Active in the whole value chain Hitachi to be a global total solution provider Cover full lineup of products and service in rail system’s value chain Value Component System Service (Traction/ Assembly (Maintenance/ Operation (Turnkey Chain signalling) (Rolling stock) Project) lease) l Component

  14. Slide 14: Contents

    Rail Systems Business Strategy Contents 1. Business Overview 2. Market Environment 3. We are here 4. Business Policy and Growth Strategies 5. Business Performance Trends and Forecast 6. Conclusion © Hitachi, Ltd. 2014. All rights reserved.

  15. Slide 15: 4-1. Going for growth

    4-1. Going for growth Rail Systems Business Growth Strategy Global n Implementing new global organisation n Expand existing bases further (Japan, UK, and China) n Actively develop market presence/localisation (India, Brazil, and Southeast Asia) Transformation n Reshape business portfolio Expand serv

  16. Slide 16: 4-2. Going global

    4-2. Going global Implementing Global Organisation to accelerate global growth Hitachi Rail Systems to contribute broadly to global society with world-class rail technologies which has been developed with Japanese customers n Implementing global management system to develop strategy with the best mi

  17. Slide 17: 4-3. Leveraging a world-wide network

    4-3. Leveraging a world-wide network Increasing market presence/localisation Europe China n Global HQ established (2014) n Established signalling / control system n Expand maintenance business manufacturing base (2014) throughout the U.K. n Establish rolling stock n Expand electrical component manuf

  18. Slide 18: 4-4. World class technology

    4-4. World class technology Product Business: Develop world-class “marketable” products Global A-Train n Optimally standardised product lineup for global market n AT100 (metro/ commuters) n AT200 (regional) n AT300 (high-speed) n AT400 (monorail) Global Signalling System n Develop products compliant

  19. Slide 19: 4-5. Growing the customer base

    4-5. Growing the customer base Review/Develop regional strategy to accelerate global expansion n Newly established “International Business Development” function in London to review strategy to win new business leveraging UK intelligence (network) n Further develop existing core market (Japan, UK and

  20. Slide 20: 4-6. Transforming into a strong global player

    4-6. Transforming into a strong global player Hitachi Smart Transformation Project : Targeting 5% Cost reduction benefits benefits(11 billionyen) (9 billion yen) over overthe theperiod periodfrom fromFY2011 FY2011to toFY2015 FY2015 Major Initiatives (Ongoing) Production n JIT i.e. Reduce lead time,

  21. Slide 21: 4-7. Delivering better cash performance

    4-7. Delivering better cash performance Maximize cash flow to prepare next strategic investment Generate cash flow by; u Reduction of lead time u Vendor Managed Inventory (VMI) u Global supply chain management u Strategic investment with high return u Intensive post-investment monitoring In conjunct

  22. Slide 22: Contents

    Rail Systems Business Strategy Contents 1. Business Overview 2. Market Environment 3. We are here 4. Business Policy and Growth Strategies 5. Business Performance Trends and Forecast 6. Conclusion © Hitachi, Ltd. 2014. All rights reserved.

  23. Slide 23: 5-1. Taking action to grow

    5-1. Taking action to grow We are on track to achieve target of FY2015 65% 22.0-24.0 Revenues Operation (Billion yen) income 53% 240.0 (Billion yen) 15.0 15 Overseas Revenue Ratio 44% 200.0 200 35% 28% 26% 10 168.2 7.6 154.0 9~10% 150 139.6 146.7 (8%) 6.2 7.5% 4.7 5.0 (6.5%) 5 4.5% 4.0% 100 (3.9%) 3

  24. Slide 24: Contents

    Rail Systems Business Strategy Contents 1. Business Overview 2. Market Environment 3. We are here 4. Business Policy and Growth Strategies 5. Business Performance Trends and Forecast 6. Conclusion © Hitachi, Ltd. 2014. All rights reserved.

  25. Slide 25: 6-1. FY2015 Targets

    6-1. FY2015 Targets Previous targets FY2015 Targets announced on June 13, 2013 Revenues 200 billion yen 200 billion yen (Overseas revenue ratio) (53%) (53%) Operating income ratio 7.5% 6.5% (EBIT ratio) (6.5%) 2.0% 1.0% Gross margin improvement (vs. FY2012) (vs. FY2012) SG&A to revenue ratio 2.1% 2.

  26. Slide 26: 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

  27. Slide 27: © Hitachi, Ltd. 2014. All rights reserved.

    © Hitachi, Ltd. 2014. All rights reserved.

Hitachi — Investor Day (June 2014) on 6ix