Hitachi Integrated Report 2022

History of Hitachi

Whatʼs Hitachi

Introduction

Value Creation

Promoting Sustainable Management

Looking Back on Past Mid-term Management Plans

Business Strategies
Business of the Hitachi Group

Sustainability

Corporate Governance

Data6

Global Business Overview

Looking Back on Past Mid-term Management Plans
Mid-term Management Plan 2012 (FY2010–2012)
Rebuilding Management

Mid-term Management Plan 2015 (FY2013–2015)
Building a Foundation for Growth

Recovery

The Swapping Out of Businesses

Achievements
1. Created a product-based company systemclarifying responsibilities and authority• Clarified responsibility and authority through		 introduction of an in-house company system• Consolidated business into six Groups, focusedon growth fields under an integrated system ofoperations, and accelerated management
2. Rebuilt/Withdrew from low-profit businesses• Automotive systems business:		 Rebuilt through structural reform• Flat-panel TV business:		 Withdrew from in-house production• HDD business: Divestiture
3. Strengthened cost competitiveness•	Started “Hitachi Smart Transformation Project”
for cost structure reform• Expanded centralized purchasing and global		procurement• Optimized and consolidated manufacturing sites

Mid-term Management Plan 2018 (FY2016–2018)
Strengthened the Social Innovation Business Leveraging Digital Technologies

Challenges

Challenges• Realizing further improvements to business profitability• Enhancing business with social innovations as a core
• Developing business globally• Speeding up management to rapidly respond to changes in market environments• Launching a platform for digital growth• Addressing low-profit businesses to improve profitability

Achievements

Achievements

1. Promoted the Social Innovation Business on a global
basis by strengthening frontline functions• Expanded service businesses through use of digitalization• Strengthened digital capabilities through the acquisition		of Pentaho
2. Reviewed non-core businesses• Thermal power business: Established joint-venture		 firm with Mitsubishi Heavy Industries• Air-conditioning business: Established joint-venture		 firm with Johnson Controls• Batteries business: Relisted Hitachi Maxell, drew		 down its stake in the company
3. Promoted globalization• Relocated the railway systems business headquarters		 to the United Kingdom• Introduced Global Performance Management aimed		at enhancing the use of global human capital

1. Transitioned away from a product-based company
system to a three-level structure comprising 		
frontline, platform, and product tiers• Accelerated decision-making with the introduction		
of a business unit system
2. Strengthened the global frontline• Bolstered global frontline operations through 				acquisitions (Ansaldo STS, Sullair)
3. Expanded the digital solutions business with Lumada• Launched Lumada• Established Hitachi Vantara to deliver digital solutions• Lumada business revenue grew to 1 trillion yen

4. Executed ongoing business reviews• Divestiture and deconsolidation of listed		subsidiaries		 Divestiture of Hitachi Koki and Clarion		 Sold a part of shares in Hitachi Transport		 System, Hitachi Capital, and Hitachi Kokusai		Electric• Reduced/Withdrew from low-profit businesses		 such as the information and telecommunications		 equipment business and the overseas EPC		business

Mid-term Management Plan 2021 (FY2019–2021)(billion yen)

Realized Social Innovations with Digitalization, Built a Platform for Global GrowthChallenges•	Business growth through expansion ofco-creation with Lumada as a core
• Completing business portfolio revisions• Improving capital efficiency

Performance targets and results
Although targets at the start of fiscal
2019 were revised due to the COVID-19
pandemic in 2020, revenue expanded,
profitability was maintained and operating
cash flows were generated, and net income
attributable to Hitachi, Ltd. stockholders
reached an all-time high.

Mid-term Management
Plan 2021 targets(as announced in April 2021)

Fiscal 2021
results

9,500.0

10,264.6

Adjusted operating
income/ratio

740.0 / 7.8%

738.2 / 7.2%

Net income attributable toHitachi, Ltd. stockholders

550.0

583.4

Over 2,100

Approx. 2,100

8.3%

7.7%

Revenue

Operating cash flows(FY2019–2021 cumulative total)

ROICAchievements
1. Launched the digital business platform and achieved growth• Launched the Lumada Solution Hub and Lumada
Alliance Program• Expanded Lumada business revenue from 1.1 trillion
yen to 1.6 trillion yen
2. Enhanced efforts toward digital and environmental growth• 2019: Acquired JR Automation• 2020: Made Hitachi High-Tech a wholly owned			
subsidiary Established Hitachi ABB Power			
Grids (now Hitachi Energy)• 2021: Established Hitachi Astemo			
Acquired GlobalLogic			
Transferred the diagnostic imaging–related business			
Participated in COP26 as a principal partner3. Reinforced and improved the business foundation
by resolving management issues• Made progress in reviewing the capital policies		 of listed subsidiaries• Divestiture of Hitachi Chemical and Hitachi Metals*• Sale of a part of shares in Hitachi Construction		 Machinery and Hitachi Transport System*• Responded to management issues• Settled with Mitsubishi Heavy Industries on		 South Africa projects• Withdrew business operations on the UK nuclear
power stations construction project•	Promoted diversity, increased digital talent, andenhanced risk management*Scheduled for completion during fiscal 2022