2012 Mid
Mid-term
term Management Plan
“Growth Driven by Social Innovation Business”& “S“Solidlid Fi
Financial
i lBBase””

May 31, 2010

Hiroaki Nakanishi
President
Hitachi Ltd.
Hitachi,Ltd© Hitachi, Ltd. 2010. All rights reserved.

2012 Mid-term Management Plan
“Growth Driven by Social Innovation Business” & “Solid Financial Base”[Contents]

1. Key Strategy
2. Global Growth Strategy
3. Focusing Business Resources on the Social Innovation Business
4. Strengthening the Business Structure to Stabilize Profitability
5. FY2012 Targets© Hitachi, Ltd. 2010. All rights reserved.

2

2012 Mid-term Management Plan
“Growth Driven by Social Innovation Business” & “Solid Financial Base”[Contents]

1. Key Strategy
2. Global Growth Strategy
3. Focusing Business Resources on the Social Innovation Business
4. Strengthening the Business Structure to Stabilize Profitability
5. FY2012 Targets© Hitachi, Ltd. 2010. All rights reserved.

3

1-1. Key Strategy [Financial Results]

FY2008FY2009

Revenues¥ 10,000.3 billion¥ 8,968.5 billion

Operating income(1.3%)¥ 127.1 billion(2.3%)¥ 202.1 billion

Net loss attributable
to Hitachi, Ltd.

(¥ 787.3 billion)(¥ 106.9 billion)

D/E Ratio*

1.29 times

1.04 times

Total Hitachi, Ltd.
Stockholders’ equity
Stockholders

11.2%

14.4%
* Including noncontrolling interests© Hitachi, Ltd. 2010. All rights reserved.

4

1-2. Key Strategy [FY2012 Financial Targets]

FY2012 Targets
Revenues¥ 10,500 billion

Operating income

Over 5%

Net income attributable
to Hitachi, Ltd.

Consistently generate at least ¥ 200 billion

D/E Ratio*

0.8 times or below

Total Hitachi, Ltd.
Stockholders’ equity
Stockholders

20%* Including noncontrolling interests© Hitachi, Ltd. 2010. All rights reserved.

51-3. Key Strategy [Core Initiatives]“Growth Driven by Social Innovation Business”& “Solid Financial Base”
The Social Innovation Business is made up of:
Fusion of social infrastructure and IT , and materials
and key devices
1. Leverage Hitachi’s strengths to promote a global growth strategy
Strengthen locally led project control centers, develop detailed strategies in each region

2. Focus business resources on the Social Innovation Business
Invest ¥1 trillion in the FY2010 to FY2012 period, spend ¥ 600 billion on R&D expenses

3. Strengthen the business structure to stabilize profitability
Rigorously cut costs, improve net other deductions, etc., become a global CSR leader© Hitachi, Ltd. 2010. All rights reserved.

6

1-4. Key Strategy [Business Focus]

Social Innovation BusinessIndustrial,
transportation andurban development systems
Eco-friendly city (Water treatment)
Cloud computing Construction
Elevators and escalators
machinery
Green mobility
Consulting
Data centers
EnergyStorageg
Smart grids((Thermal,
nuclear, renewable))

Information and Healthcare
Telecommunication
Power systemsysystems＋

Materials and key devices© Hitachi, Ltd. 2010. All rights reserved.

71-5. Key Strategy [Management Focus]

GlobalLeverage Information, Experienceand Trust of Hitachi to develop
globally

FusionAddress social innovation needs
by synergistic integration of social
infrastructure and IT

Environment

Refine ability to build environmental
systems by drawing on advanced
environmental technologies andexperiencep© Hitachi, Ltd. 2010. All rights reserved.

8

1-6. Key Strategy [Stronger Hitachi]

FY2010-FY2012: From “Defense” to “Offense”
Concentrate investment on key business fields“Offense”

Strengthengcooperationpwith leadingg Japanesepandoverseas partners
Accelerate locally-led business to expand globally
Embrace Hitachi’s pioneering venture spirit
ー Return to our roots on our 100th anniversary ーStrengthen cost competitiveness“Defense”

Reinforce financial position
Contin e realigning b
Continuebusinesssiness portfolio© Hitachi, Ltd. 2010. All rights reserved.

9

2012 Mid-term Management Plan
“Growth Driven by Social Innovation Business” & “Solid Financial Base”[Contents]

1. Key Strategy
2. Global Growth Strategy
3. Focusing Business Resources on the Social Innovation Business
4. Strengthening the Business Structure to Stabilize Profitability
5. FY2012 Targets© Hitachi, Ltd. 2010. All rights reserved.

102-1. Global Growth Strategy(1) Promote and expand global localization
Strengthen project control center via local leadership
Rigorously develop a more market-centric approach through leadershipb llocall companies
byiGrasp local values, standards and risks under local leadershipA
Acceleratelt developmentdlt off a detailed
d t il d strategyt tini eachh regioni
Maintain Japan as a strong business base
Emerging
markets

Tap into robust social innovation demand, cooperate with partners

Industrializedcountries

Make environmental and integrated technology proposals to address
demand to upgrade social infrastructureJapan

Develop environmental and integrated services leveraging astrong business base© Hitachi, Ltd. 2010. All rights reserved.

112-2. Global Growth Strategy(2) Expand business opportunities in collaboration with partners
Partner

Project name
Cooperative projects in low-carbon
society building and resource
recycling fields

National Development and Reform
Commission

Sino-Singapore Tianjin Eco-City
project

Sino-Singapore Tianjin Eco-City
Investment and Development Co., Ltd.

India

Delhi Mumbai Industrial Corridor(Dahej)Delhi Mumbai Industrial Corridor
Development Corporation Limited

Singapore

Strengthening of Social Innovation
Business in the “Asian belt” zone

Singapore/ Economic Development
Board

China

(3) Expand new businesses leveraging Hitachi’s strengths
Eco-friendlyE
f i dl cityit
Eco-friendly data centers

Water
W
t and
d sewage operation
ti andd managementt
Energy-saving systems for LNG plants© Hitachi, Ltd. 2010. All rights reserved.

122-3. Global Growth Strategy [Emerging Markets (1): China]
Hitachi’s China Revenues

Market features(Trillion yen)

- Rapidly
p yg
growing
g social innovation market- Requires partnerships with local partners
1.5

Hitachi’s achievements
Developed bases for construction
machinery, elevators andescalators, home appliances, etc.

2000s

Achieved consolidated
revenues of over ¥1 trillion

1.0
0.5

～
～

1980s1990s

0

05

06

07

08

09

2010 FY2012

Th MostThe
M t Trusted
T t d Partner
P t
i Chinain
Chi
Future strategy
Strengthen competitiveness of individual businesses
Construction machinery, elevators and escalators, turbines, pumps, industrial
machinery, ATMs, railway systems, IT solutions, high functional materials andcomponents
Differentiate with environmental and
Grow environmental systems businessenergy-saving technologies© Hitachi, Ltd. 2010. All rights reserved.

13

2-4. Global Growth Strategy [Emerging Markets (2): China]
China: Focus on creating a low-carbon society and eco-friendly cities
Low carbon
Water circulation

Cooperative project fields
Highly efficient power generationand smart grids
Water treatment system

Water

Profitability

Energygy efficiencyyHigherRailwaysefficiency

Recycling

Energysaving Factories

pp
y g
recycling
Home appliance
Urban transportation (Subways)

Power

Airports

Disaster
Distribution
prevention

Smart ggrids

IT andcontrol
technologies

Roads

Electric
vehiclesGreen IT

Trading companies, financial services, construction, academia,
think tanks, local governments

Develop in Asian belt zone (India to Southeast Asia)
Package environmental systems
Utilize Hitachi brand strength in home appliancesgy utilize existing
g local p
production and maintenance systemsyProgressively
Accelerate investment in and alliances with local partners(E.g. Maldives water and sewage operation and management)© Hitachi, Ltd. 2010. All rights reserved.

14

Countries (1):2-5. Global Growth Strategy [Industrialized
Europe][Thermal power plants: Tri-polar local business framework]

Market features- Strict environmental regulations- IncreasingI
i demanddd ffor renewing
i agingi
infrastructure

Hitachi’s
Hitachis achievements-Built thermal power plant projectcontrol center locally to respond toEurope’sEuropes needs-U.K./High-speed railway started
operation, establish maintenancebase

Europep

Asia

Americas

Hitachi Power
Europe GmbHPower Systems
Company, etc.

Hitachi Power
Systems
America Ltd.
America,Ltd

China/Dongfang
Electric

MD&A

Hitachi Power
Africa Pty. Ltd.

Europe andSouth Africa
EPC businessJapanbusiness
Asia businessAmericasbusiness

Future strategy

Europe,EuropeSouth Africa

Expand locally led thermal power plant business
Build an integrated formation from rolling stock
manufacture to maintenance

U.K.

Expand eco-friendly data center business

Europe© Hitachi, Ltd. 2010. All rights reserved.

15

Strengthen Europe
2-6. Global Growth Strategy [E.g.
Project Control Center]
South Africa—Medupi-Kusile[Europe Project Control Center]

Commencement of operation of first plant
beginning of 2012: Approx. ¥ 570 billion.

Include India
in the future
000 people)
Hitachi Power Europe [Germany] (1(1,000Under construction in Europe: 10 plants
R&D: Development of CCS and A-USC
with local universities

Overall plant plan

Coordinating withthe government andfund raising

Local projectcontrol
centerConstruction

Risk management

Personnel training(1,400 people)

Hitachi Power Africa [South Africa] (100 people)
Under construction in South Africa:
12 plants

CCS： Carbon Dioxide Capture and Storage
A-USC： Advanced Ultra Super Critical© Hitachi, Ltd. 2010. All rights reserved.

16

Countries (2):2-7. Global Growth Strategy [Industrialized
North America][Storage, etc.: Global business led by U.S. control center]

Market features-New IT and standards set in
Silicon Valley
Hitachi’s
Hitachis achievements

Japan

U.S.

Information &T lTelecommunication
i ti
Systems Company

Hitachi Data
Systems-Product and sales strategy
led by U.S. side

Regional
headquarters

Americas
EuropeAsia-World-leading share in enterpriseclass storage systems

Japan business(Hitachi estimate, monetary basis)

Overseas business

Product strategy, development,
design and connectivity testing

Manufacturing bases(Japan, U.S., France)-Established U.S. consulting
business platform (10-year history)
Future strategy

Expand globally distinctive solutions centered on storage
Extend consulting business developed in the U.S. to Asia and elsewhere© Hitachi, Ltd. 2010. All rights reserved.

172-8. Global Growth Strategy [Overseas Revenues]
Aim to achieve an overseas revenue ratio of more than 50% in FY2012[Revenues by Region]
Asia, etc.

Asia, etc.

[14]

[13]
China Emerging

J
Japan

[11] markets
Europe

[9]

China

[59]

[16]

Overseasrevenue ratio

Japan

Emerging
markets
Overseasrevenue ratio

41%

48%

North
America[52]

EuropeOver 50%[9] North[8]

America[9][ ]:%] % ratioti

Head CountFY2009231 k

In Japan

FY2012
217 k

129 k

Overseas

161 k© Hitachi, Ltd. 2010. All rights reserved.

18

2-9. Global Growth Strategy [Japan]
Technologies and experiencebuilt up with customers
Top-classpmarket shares
Present
Large-scale systems

Information &Telecommuni-cation
Systems(Financial institutions,public, industry)

Reliability- Support
pp customers expandingpg overseas -Initiatives from FY2010
Expand high-value-added services businesses

Storage, JP1*
JP1

Expand smart grid business

Equipment and control

Make sophisticated cross-organizational
proposals from the whole Hitachi Group

Experience

Power
Systems

Challenge further as an importantbase market

Nuclear power plants(ABWR*)

Continue to make steady progress withconstruction (Shimane and Oma)

Technology

SocialInfrastructure
and Industrial
Systems

Aluminum trains

Respond to demand for new bullet trains

Operation control
Building systems

Expand high-value-added services business for
entire buildings
JP1: Integrated Systems Management
ABWR: Advanced Boiling Water Reactor© Hitachi, Ltd. 2010. All rights reserved.

19

2012 Mid-term Management Plan
“Growth Driven by Social Innovation Business” & “Solid Financial Base”[Contents]

1. Key Strategy
2. Global Growth Strategy
3. Focusing Business Resources on the Social Innovation Business
4. Strengthening the Business Structure to Stabilize Profitability
5. FY2012 Targets© Hitachi, Ltd. 2010. All rights reserved.

20

3-1. Focusing Business Resources [Portfolio Realignment]Reebuilding initiatives
Buusiness po
ortfolioStreengthening initiatives
Soc
cial Innovation Busines
ss

Realigned the equivalent of 30% of revenue portfolio (Strengthening, rebuilding)
2007/102010/2 2010/4
2010/2,2010/4

Commenced operations at arolling stock maintenance yard in Europe

Made 5 listed subsidiaries
wholly owned
subsidiaries

2007/6

Hitachi Information Systems, Ltd.
Hitachi Software Engineering Co., Ltd.
Hitachi Systems & Services, Ltd.
Hitachi Plant Technologies, Ltd.
Hitachi Maxell, Ltd.

10/10 merger(Plan)Started global alliance withGE in nuclear power business2008/3

Ongoing
Portfolio
realignment

2010/3
Hitachi Construction
Machinery Co., Ltd. made Telco Construction
Equipment Company Limited a subsidiary

2009/3

2010/6 (Plan)

Converted Hitachi Koki Co., Ltd. andHitachi Kokusai Electric Inc. into
consolidated subsidiaries

Plan to integrate mobile phonebusiness with NEC

Investment by Canon Inc. and Panasonic Corp.
in Hitachi Displays Co., Ltd.

2010/4Integrated business operations at Renesas
Technology Corp. and NEC Electronics
Corporation

2007/10

2009/7, 2009/9

2010/6 (Plan)

Withdrew from consumer PC
business

Transferred manufacturing facilities
and plant of Hitachi Plasma Display
LimitedPlanned transfer of IPS Alpha
Technology, Ltd.

2007

2008

2009

2010
© Hitachi, Ltd. 2010. All rights reserved.

21

and Strategic
3-2. Focusing Business Resources [Capex
Investments]

Concentrate investment on the Social Innovation Business
GlobalGl b lF i
FusionE i
Environmentt(1) Concentrate investments in FY2010-FY2012
FY2010 FY2012
Allocated 70% of total amount (¥ 1.4 trillion) for capital expendituresand strategic investments in this business

FY2010-FY2012
FY2010FY2012 total investment ¥ 1 trillion
Conduct M&As
■ Examples of main investments:
Focus on strengthening large-scale systems globally
Investment purpose
Information &Telecommunication
Systems

Expand data center business

Power Systems

Strengthen competitiveness in highly efficient thermal power,
power systems
yand nuclear p

Social Infrastructure& Industrial Systems

Establish rolling stock manufacturing and maintenance functionsin the U.K.

Timing
FY2010～12
FY2011～© Hitachi, Ltd. 2010. All rights reserved.

22

3-3. Focusing Business Resources [R&D Investment]
Concentrate investment on the Social Innovation Business
GlobalGl b lF i
FusionE i
Environmentt(2) Strategically allocate R&D investment
Allocate 50% of total amount(¥ 1.2 trillion)

FY2010-FY2012 R&D investment ¥ 600 billion■ Examples of main investments:
Establish an R&D framework according to region
GlobalRegionalg
R&D for Social
Innovation BusinessNorth America: Storageg systemsyChina: Smart grids

FusionInformation platforms for social
infrastructure

Large capacity, real time, highly reliable,
knowledge extraction

Environment New electronics researchCore andplatform

Efficient design based on analysis
technology

New power devices, inverters
Lithium-ion batteries
Increase and strengthen super computersstrengthen analysis technologies
Slash design time
© Hitachi, Ltd. 2010. All rights reserved.

23

3-4. Focusing Business Resources [¥ 1.6 trillion Investment]
Concentrate investment on the Social Innovation Business(Billion yen)

400

Capex and
Strategic Investments

R&D Investment¥ 1 trillion¥ 600 billion(FY2010～FY2012)(FY2010FY2012)(FY2010～FY2012)(FY2010FY2012)

350
152%
300

230
200

I f
Informationti & Telecommunication
T li ti Systems
S t

Data center business
Power Systems

Ramp up productionRd ti off nuclearlpower plants
Social Infrastructure & Industrial Systems

Information &Telecommunica
tion Systems

122%

Power
Systems
SocialInfrastructure &Industrial
Systems

220
180

Construction Machinery

Increase production in emerging
markets
Develop hybrid, electric drive

Construction
Machinery

100
High Functional
Materials &Components

High Functional Materials & Components

0

FY2009 FY2012

Increase production of railway
systems
Elevator and escalator researchlaboratory
Healthcare

FY2009 FY2012

Develop materials for batteries
batteries,
inverters and other environmental
products© Hitachi, Ltd. 2010. All rights reserved.

24

Functional Materials
3-5. Focusing Business Resources [High& Components, etc.]

Focus on advanced technologies for supporting the Social Innovation Business

MetalsEnvironmental and energy-saving materials(Rare-earth magnets, amorphous)

Power, railway and communications materials
Cables(Radiation-resistant cables for nuclear power plants,
cables for railways)

Environmental and energy materials
Chemicals(High thermal conductive materials, battery electrodematerials solar cell components)
materials,

Eco-car and railway key components
Batteries(Standard-type lithium-ion batteries for social infrastructure
and industrial systems))

Energy-saving equipment and devices
Key devices((Inverters,, high-efficiencygy motors,, powerpdevices,,transformers)© Hitachi, Ltd. 2010. All rights reserved.

25

2012 Mid-term Management Plan
“Growth Driven by Social Innovation Business” & “Solid Financial Base”[Contents]

1. Key Strategy
2. Global Growth Strategy
3. Focusing Business Resources on the Social Innovation Business
4. Strengthening the Business Structure to Stabilize Profitability
5. FY2012 Targets© Hitachi, Ltd. 2010. All rights reserved.

26

of Improvement in
4-1. Strengthening the Business Structure [Status“Underperforming” Businesses]

Flat-panel TV business
Ceased in-house production of panels
and TVs overseas
Using OEM and production outsourcing

Operating income (loss):
Billion yen
100

Automotive
systems

50

Automotive systems-related business

0

Structural reforms (Cost cutting,site realignment, workforce reductions)(50)

RespondRd tto hhybridb id andd electricl t i vehicles,
hi land high-efficiency engine needs

Hard Disk Drive

Digital media andconsumerproducts(100)

Hard disk drive business(150)

Profitable for past two years, posted record
earnings in January-MarchJanuary March 2010 quarter
Grow new business such as SSD andexternal HDDs
SSD: Solid State Drive

(200)

08

09

FY2010© Hitachi, Ltd. 2010. All rights reserved.

27

4-2. Strengthening the Business Structure [Cost-Cutting Measures]
Reduce procurement costs

Continue reducing fixed cost

(1) ExpandE
d centralizedt li d purchasing
h i(1) Continue
C tiloweringli fixedfi d costt ratiotiExtend to 35% of total procurements(2) Expand global procurement
Increase to 50% of total
procurements(3) Save resources
resources, strengthen
Value Engineering activities
Replace materials, design change,etc.

(4) Expand procurement fromemerging markets(2) Promote Corporate-led
cost cutting
ProjectP
j t tot reducedindirecti di t materials
t i l
costs
(Use economies of scale)
Expand shared services(IFRS adoption, etc.)Open
p new offices ((Brazil,, China))
Strengthen functions (India, Vietnam)

Strengthen cost competitiveness to prevail against global competition
IFRS： International Financial Reporting Standards© Hitachi, Ltd. 2010. All rights reserved.

28

Financial
4-3. Strengthening the Business Structure [Reinforce
Position]

Improve profitability
Expand strong products toimprove operating income
ratio
Solid asset management
Expand scope of
consolidated tax filing

Consistently generate
Net income attributable to
Hitachi, Ltd. of at least ¥ 200 billion

Strengthen financial position
Raise Net income attributable to
Hitachi, Ltd. to strengthen total
Hitachi, Ltd. stockholders’equityReduce total assets

D/E ratio* to 0.8 times or below
Total Hitachi, Ltd. Stockholders’equity ratio 20%

Reduce interest-bearing
g debtContinuously generate positive free cash flows* Including noncontrolling interests© Hitachi, Ltd. 2010. All rights reserved.

29

In-house Company
4-4. Strengthening the Business Structure [Promote
System]In-house Company

Strengthen ability to quickly respond to change

Delegation of authority by internal ratings
Speedy, autonomous management
In-house Company evaluations based on FIV*,
operating income and cash flows
Corporate* FIV: Future Inspiration Value

Promote Hitachi Group management focused on
generating synergies

Share global advanced IT platform, manufacturing, procurement andbrand
Lead the improvement of in-housein house companies competitivenessIn-house Capture faster synergies in in-house Corporate marketing,g
g divisions
R&D and engineering
Expand business coordination fields across in-house companies© Hitachi, Ltd. 2010. All rights reserved.

30

a Global CSR
4-5. Strengthening the Business Structure [Become
Leader]Group vision

Contribution to Environment

Contribute to the solution of fundamental
global issues, and pursue the realization of abetter, more p
prosperouspgglobal societyyTTargetst by
b FY2025

CSR policy
Commitment to Corporate Social Responsibility,
Corporate ethics and human rights
Contribution to societyy throughg business
Environmental conservation and corporate
citizenship activities, etc.

Reduce annual CO2
emissions byy 100 million
tons through Hitachi
products and services
Make all Hitachi Groupd t Eco-Products*
E P d t *products
Eco-Products: Products that meetcertain standards under theAssessment for DfE (Design forEnvironment) system

Integrate CSR with management and business strategy
Transform into a truly global company with the samevalues as society© Hitachi, Ltd. 2010. All rights reserved.

31

2012 Mid-term Management Plan
“Growth Driven by Social Innovation Business” & “Solid Financial Base”[Contents]

1. Key Strategy
2. Global Growth Strategy
3. Focusing Business Resources on the Social Innovation Business
4. Strengthening the Business Structure to Stabilize Profitability
5. FY2012 Targets© Hitachi, Ltd. 2010. All rights reserved.

32

5-1. FY2012 Targets [Position Chart by Segment]
O
Operatingti income
i
ratio
ti

FY2009 Results
Operating income(Billion yen)%
10

Circle size indicates revenue size

Target over 5%
3.7
23
2.3
0

Components & Devices

Construction Machinery 5.0

Digital Media &Consumer ProductsElectronic Systems &Equipment

5

Fi
Financial
i lS
Services
i

09

2010

～
～

Automotive Systems

Target 7%

Information &T lTelecommunication
i ti
Systems

Social Infrastructure& Industrial Systems High Functional
Materials & Components
Power Systems

100

Social Innovation Business

Total
FY2012

Operating income ratio(%)

FY2012 Targets
Arrows point to FY2015 targets
Social Infrastructure& Industrial Systems

100
Digital Media &Consumer Products

Information &Telecommunication
Systems
Electronic Systems &q pEquipment
Components &Devices

Automotive Systems

High Functional
Materials & Components

Construction
Machinery
Power Systems

Financial Services

5.0

Operating income ratio(%)© Hitachi, Ltd. 2010. All rights reserved. 33

5-2. FY2012 Targets [Revenues by Segment]
Social Innovation Business lead growth

Revenues(Trillion yen)

10.5
10.0

5.0

Information & Telecommunication
Systems

Socia
al Innovatio
on Businesss

9.0Power Systems
Social Infrastructure & Industrial
Systems

60%

Construction Machinery
High Functional Materials &Components
Digital Media & Consumer Products,
Financial Services and others
Components & Devices

40%

Automotive Systems～～

Electronic Systems & Equipment

0
FY2009FY2012© Hitachi, Ltd. 2010. All rights reserved.

34

[Expand Operating Income and5-2. FY2012 Targets Improve Net Other Deductions]
Change company’s structure to generate consolidated net income
ome attributtable to
Net inco
Hitachi, Ltd.

Net incoome attributtable tononconttrolling interrests

Income taxes

Operatingme
incom

FY2012 Targets
Net losss attributablle to
Hitachi, Ltd.

Net incom
me attributa
able tononcontrrolling intere
ests

Income taxes

202.1

Net otheerdeductioons

Operatingme
incom

FY2009 Results

Net othher
deducttions(Billion
yen))
500

0
(106.9)Reduce business structural reform expenses,
improve net equity in losses of affiliated companiespthrough
g expandingpg scopep ofReduce tax expenses
consolidated tax filing
Reduce outflows attributable to noncontrollinginterests-Limited incurrence of businessstructural reform expenses-Integration in Renesas and
NEC Electronics-5 listed subsidiaries converted
to wholly owned subsidiaries© Hitachi, Ltd. 2010. All rights reserved.

35

5-4. FY2012 Targets

FY2009 Results

FY2012 Targets

Revenues¥ 8,968.5 billion¥ 10,500 billion

Operating income(2.3%)¥ 202.1 billion

Over 5%

Net income attributable
to Hitachi, Ltd.

(¥ 106.9 billion)

Consistently generate
at least ¥ 200 billion

D/E Ratio*

1.04 times

0.8 times or below

Total Hitachi, Ltd.
Stockholders’ equity
Stockholders

14.4%

20%
* Including noncontrolling interests© Hitachi, Ltd. 2010. All rights reserved.

36

5-5. Conclusion

FY2010-FY2012: From “Defense” to “Offense”
Focus on Global, Fusion, Environment
Venture into the next 100 years
Respond to society’s
society s needs in the Social Innovation Business© Hitachi, Ltd. 2010. All rights reserved.

37

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 performance and include any statement that does not directly relate to any historical or
current fact. Words such as “anticipate,” “believe,” “expect,” “estimate,” “forecast,” “intend,” “plan,” “project” and similar expressions which indicate future events and trends may identify“forward-looking statements.” Such statements are based on currently available information and are subject to various risks and uncertainties that could cause actual results to differ
materially from those projected or implied in the “forward-looking statements” and from historical trends. Certain “forward-looking statements” are based upon current assumptions of future
eventst whichhi h may nott prove tto b
be accurate.
t U
Undue
d reliancelishouldh ld nott b
be placedld on “f“forward-looking
d l ki statements,”t t
t ” as suchh statementst tt speakk only
l as off theth dated t off thisthi document.
dtFactors that could cause actual results to differ materially from those projected or implied in any “forward-looking statement” and from historical trends include, but are not limited to:- economic conditions, including consumer spending and plant and equipment investments in Hitachi’s major markets, particularly Japan, Asia, the United States and Europe, as well as levels of demand in the majorindustrial sectors which Hitachi serves, including, without limitation, the information, electronics, automotive, construction and financial sectors;- exchange rate fluctuations for the yen and other currencies in which Hitachi makes significant sales or in which Hitachi’s assets and liabilities are denominated, particularly against the U.S. dollar and the euro;- uncertainty as to Hitachi’s ability to access, or access on favorable terms, liquidity or long-term financing;- uncertainty as to general market price levels for equity securities in Japan, declines in which may require Hitachi to write down equity securities that it holds;- the potential for significant losses on Hitachi’s investments in equity method affiliates;- increased commoditization of information technology products and digital media-related products and intensifying price competition for such products, particularly in the Components & Devices and the Digital Media &Consumer Products segments;- uncertainty as to Hitachi’s ability to continue to develop and market products that incorporate new technology on a timely and cost-effective basis and to achieve market acceptance for such products;- rapid technological innovation;- the possibility of cost fluctuations during the lifetime of or cancellation of long-term contracts, for which Hitachi uses the percentage-of-completion method to recognize revenue from sales;- fluctuations in the price of raw materials including, without limitation, petroleum and other materials, such as copper, steel, aluminum and synthetic resins;- fluctuations in product demand and industry capacity;- uncertainty as to Hitachi’s ability to implement measures to reduce the potential negative impact of fluctuations in product demand, exchange rates and/or price of raw materials;- uncertainty as to Hitachi’s ability to achieve the anticipated benefits of its strategy to strengthen its Social Innovation Business;- uncertainty
y as to the success of restructuring
g efforts to improvep
managementgefficiency
y byy divestingg or otherwise exitingg underperformingpg businesses and to strengthengcompetitivenessp
and other cost reduction
measures;- general socio-economic and political conditions and the regulatory and trade environment of Hitachi’s major markets, particularly Japan, Asia, the United States and Europe, including, without limitation, direct orIndirect restrictions by other nations on imports, or differences in commercial and business customs including, without limitation, contract terms and conditions and labor relations;- uncertainty as to the success of alliances upon which Hitachi depends, some of which Hitachi may not control, with other corporations in the design and development of certain key products;- uncertainty as to Hitachi’s access to, or ability to protect, certain intellectual property rights, particularly those related to electronics and data processing technologies;- uncertainty as to the outcome of litigation, regulatory investigations and other legal proceedings of which the Company, its subsidiaries or its equity method affiliates have become or may become parties;- the possibility of incurring expenses resulting from any defects in products or services of Hitachi;- the possibility of disruption of Hitachi’s operations in Japan by earthquakes or other natural disasters;- uncertainty as to Hitachi’s ability to maintain the integrity of its information systems, as well as Hitachi’s ability to protect its confidential information and that of its customers;- uncertainty as to the accuracy of key assumptions Hitachi uses to valuate its significant employee benefit related costs; and- uncertainty as to Hitachi’s ability to attract and retain skilled personnel.

The factors listed above are not all-inclusive and are in addition to other factors contained in Hitachi’s periodic filings with the U.S. Securities and Exchange Commission and in othermaterials published by Hitachi.

© Hitachi, Ltd. 2010. All rights reserved.

38

© Hitachi, Ltd. 2010. All rights reserved.