Hitachi, Ltd. · TSE:6501

Hitachi — Investor Day (June 2016)

28 slides from Hitachi's investor day presentation, Jun 1, 2016

  1. Slide 1: Automotive Systems Business Strategy

    Automotive Systems Business Strategy Hitachi IR Day 2016 June 1, 2016 Hideaki Seki President & CEO Hitachi Automotive Systems, Ltd. © Hitachi, Ltd. 2016. All rights reserved.

  2. Slide 2: Contents

    中表紙 Automotive Systems Business Strategy [Contents] 1. Business Overview 2. Market Trends 3. Growth Strategy 4. Summary © Hitachi, Ltd. 2016. All rights reserved.

  3. Slide 3: 1-1. Business Concept

    1-1. Business Concept Implement growth strategy based on the development of intelligent cars in the fields of Environment, Safety, and Information Environment Safety Application of electronics Growth and integrated control Component Sophistication and Systemization Supporting the commercialization o

  4. Slide 4: 1-2. Business Structure

    1-2. Business Structure Aiming to expand the systems business by establishing the “Safety & Information Systems Division” in FY2016 Integrate Hitachi’s broad range of technologies ・Autonomous driving systems to develop and propose advanced safety ・Automatic parking systems driving systems. ・Over the

  5. Slide 5: 1-3. Summary of FY2015 Mid-term Management Plan

    1-3. Summary of FY2015 Mid-term Management Plan (Reference) 2015 Mid-Term FY2015 Result Previous Forecast*1 Difference Management Plan Initial Target*2 1,001.1 1,000 +1.1 1,000 Revenues billion yen billion yen billion yen billion yen Adjusted Operating Income Ratio 6.2% 6.8% (0.6)% 6.8% EBIT Ratio 5

  6. Slide 6: 1-4. Business Performance Trends

    1-4. Business Performance Trends Adjusted Operating ：Overseas revenue ratio for global customer bases Income/EBIT 63% (Billion yen) Revenues (Billion yen) Target achieved Automotive market 60% 61% growth rate 1,200 +3.2% VS+2.7% 120 1,100 1,001.1 1,000 (CAGR：FY15-18) 1,000 100 800 [7.0%] 80 [6.9%] 7

  7. Slide 7: Market Trends

    中表紙 Automotive Systems Business Strategy [Contents] 1. Business Overview 2. Market Trends 3. Growth Strategy 4. Summary © Hitachi, Ltd. 2016. All rights reserved.

  8. Slide 8: 2-1. Automotive Market Trends - By Region, By Powertrain Type

    2-1. Automotive Market Trends - By Region, By Powertrain Type Changes in Production Volume by Region ■In FY2015, factors such as the slower (CAGR ：FY15-18) growth of the Chinese market put the (Million units) +2.7% brakes on emerging markets. 103.1 92.4 96.4 ■CAGR will be +2.7% heading toward 85.8 8

  9. Slide 9: 2-2. Trends in Environmental and Safety Regulations

    2-2. Trends in Environmental and Safety Regulations [Environmental Field] Environmental regulations are becoming tighter globally, in both developed and emerging markets  Pressure to meet regulatory requirements both in terms of the global environment (global warming countermeasures) and the urban

  10. Slide 10: 2-3. Global Position Analysis

    2-3. Global Position Analysis Top 10 global parts suppliers by revenue Electronics products*1 share (FY2014 result) Change in electronics products Electronics products share Company A share of vehicle components market 70% FY2018 target of 56% (in yen terms) （FY2020 target of 60%) Company E Hitachi

  11. Slide 11: Growth Strategy

    中表紙 Automotive Systems Business Strategy [Contents] 1. Business Overview 2. Market Trends 3. Growth Strategy 4. Summary © Hitachi, Ltd. 2016. All rights reserved.

  12. Slide 12: 3-1. Growth Strategy

    3-1. Growth Strategy Execute 3 core strategies to achieve a robust management foundation and firm growth Product Strategy Expand environment Growth and safety businesses and provide Hitachi Group collaborative solutions Customer Strategy Regional Strategy Execute strategy of Strengthen functions cus

  13. Slide 13: 3-2. Product Strategy: Securing Fundamental Business

    3-2. [Product Strategy] Securing Fundamental Business Securing mainstay products which account for a large share of revenues to ensure achievement of the 2018 Mid-Term Management Plan * 3 Field Mainstay Share of Division Business promotion Revenue growth Div. products revenues *3 measures 2015 2018

  14. Slide 14: 3-3. Product Strategy: Expanding Mainstay Business

    3-3. [Product Strategy] Expanding Mainstay Business Expand the electronically controlled and electrically driven products business and promote systemization in this high growth market More efficient internal combustion engines, electrically driven products, enhanced safety performance Business expan

  15. Slide 15: 3-4. Growth Through Integrated Control and Safety Systems

    3-4. [Product Strategy] Achieve Growth Through Sophistication of the Integrated Control and Safety System Accelerate system development to achieve early commercialization of autonomous driving -- Aiming for 10% share of information and safety market, predicted to be worth over 3 trillion yen by 2020

  16. Slide 16: 3-5. Hitachi Group Collaborative Solutions

    3-5. [Product Strategy] Achieve Growth Through Hitachi Group Collaborative Solutions Provide high quality “one stop” solutions in the autonomous driving systems field Hitachi (1) (2) Differential Secure Provide one- Strengthen generation delivery stop solutions (1) Data center cooperation within Dif

  17. Slide 17: 3-6. Conduct Public Road Demonstration Experiments

    3-6. [Product Strategy] Conduct Public Road Demonstration Experiments Using Mass Produced Prototypes Accelerate the commercialization of systems with high cost effectiveness and performance in order to popularize autonomous driving systems Main system components (Expressway corresponding to level 2)

  18. Slide 18: 3-7. Customer Strategy

    3-7. [Customer Strategy] Execute Strategy of Customer Diversity Expand accounts with revenues Revenues composition exceeding 100 billion yen Strengths 1,100 (Billion yen) ■Leverage GAM and GAT operations 1,001.1 1,000 and global footprint to support customers developing business Others worldwide. Ot

  19. Slide 19: 3-8. Example of Expansion of Business with Customer

    3-8. [Customer Strategy] Example of Expansion of Business with Customer Increase revenues in business with Ford through cross-sales （FY2008⇒FY2018: Revenues increased 3 fold to exceed 100 billion yen) Expansion in sales of ■Won orders for electronically controlled advanced technologies and electroni

  20. Slide 20: 3-9. Regional Strategy: Strengthen Regional Headquarters Functions

    3-9. [Regional Strategy] Strengthen Regional Headquarters Functions Reform global operations, strengthening foundations by shifting from quantity to quality Spin off operations Achieve group governance and autonomy Expand global of overseas regions (regional headquarters to form independent footprin

  21. Slide 21: 3-10. Regional Strategy: Initiatives for Two Major Markets

    3-10. [Regional Strategy] Initiatives for Two Major Markets Americas China Revenues Indicates indices based on FY2010 revenues. (Based on USD) Indicates indices based on FY2010 revenues. Revenues （Based on CNY) 197 210 220 (CAGR:15-18) 230 (CAGR:15-18) +3.8% 180 +15% 148 100 [Market:+1.2%] 100 [Mark

  22. Slide 22: 3-11. Global Investment and R&D

    3-11. Global Investment and R&D Make transition from “expansion” phase to “reap phase” and strengthen development capability by generating cash Global investment amounts *1 Established Silicon Valley office (April 2016) Expansion phase Reap phase ・Strengthen the development of new products *2 in the

  23. Slide 23: 3-12. Harness the IoT to Strengthen Manufacturing

    3-12. Harness the IoT to Strengthen Manufacturing Promote high efficiency and high quality manufacturing by using the IoT to connect production lines in five key regions with customers and vendors Japan Quality Assurance China Americas Design Finance ERP WMS Enterprise Resource WMS Planning System C

  24. Slide 24: 3-13. Cost Structure Reform and Cash Generation

    3-13. Cost Structure Reform and Cash Generation Execute growth strategy through structural reform and continuous innovation Promotion details Improve CCC, Operating CF and ROA ■Strengthen global quality assurance capability Cost structure reform FY2015 FY2016 FY2018 ・Establishment of Suppliers Quali

  25. Slide 25: Summary

    中表紙 Automotive Systems Business Strategy [Contents] 1. Business Overview 2. Market Trends 3. Growth Strategy 4. Summary © Hitachi, Ltd. 2016. All rights reserved.

  26. Slide 26: 4. Summary

    4. Summary 4. Summary FY2018 Targets  Revenues 1.1 trillion yen (Increase of 10% compared to FY2015)  Adjusted operating income [EBIT] ratio 7.0%[6.9%] (Improvement of 0.8% [1.5%] compared to FY2015)  ROA 5.3% (Improvement of 1.0% compared to FY2015)  Operating CF [ratio] 105 billion yen [9.5%]

  27. Slide 27: 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

  28. Slide 28: © Hitachi, Ltd. 2016. All rights reserved.

    © Hitachi, Ltd. 2016. All rights reserved.

Hitachi — Investor Day (June 2016) on 6ix