Operating and Financial Review
1

Operating Results

the year ended March 31, 2018. Impairment losses increased ¥296.3
billion to ¥344.9 billion, as compared with the year ended March 31,
2018. This mainly reflected impairment losses recognized as the result

Summaryof the suspension of the UK nuclear power stations construction¥billion
2018

2019

Percentchange¥9,368.6¥9,480.6

1%

Adjusted operating income

714.6

754.9

6%

EBIT

644.2

513.9

-20%

Income from continuing operations,
before income taxes

638.6

516.5

-19%

Net income attributable toHitachi, Ltd. stockholders362.9

222.5-39%

Years ended March 31:

Revenues

project in power and energy business. Net gain on businessreorganization and others increased ¥174.8 billion to ¥184.6 billion, ascompared with the year ended March 31, 2018, due mainly to net gain
by selling shares of Hitachi Kokusai Electric Inc. stock, shares ofClarion Co., Ltd. stock in the Automotive Systems segment and a partof shares of Agility Trains West (Holdings) Limited stock in the Social
Infrastructure & Industrial Systems segment. Special termination
benefits increased ¥6.6 billion to ¥22.3 billion, as compared with theyear ended March 31, 2018. Expenses related to competition law andothers decreased ¥12.5 billion to ¥1.7 billion, as compared with theAnalysis of Statement of Operations

year ended March 31, 2018.
Financial income (excluding interest income) increased by 6.6 billion

Revenues increased 1% to ¥9,480.6 billion, as compared with the yearto ¥13.6 billion and financial expenses (excluding interest charges)

ended March 31, 2018, despite the effect of conversion of Hitachi

decreased ¥7.7 billion to ¥3.4 billion, as compared with the year ended

Kokusai Electric Inc. into an equity-method associate. This increase

March 31, 2018, respectively.

was due mainly to an increase in revenues in the Social Infrastructure &Share of loss of investments accounted for using the equity method

Industrial Systems segment owing to an increased revenues from thewas ¥15.0 billion, a deterioration of ¥77.4 billion from the year ended

railway systems business for Europe, in the Construction Machinery

March 31, 2018, due to an exchange loss at a foreign equity-method

segment where sales rose mainly in North America and Asia-Pacific, inassociate and impairment losses for investment on equity-method

the Information & Telecommunications Systems segment where theassociates.

system integration business remained firm and in the High Functional
Materials & Components segment owing to corporate acquisitions byHitachi Chemical Company, Ltd. and Hitachi Metals, Ltd.

As a result of the foregoing, EBIT decreased ¥130.3 billion to ¥513.9billion, as compared with the year ended March 31, 2018.
Interest income increased ¥8.1 billion to ¥23.1 billion, as compared

Cost of sales increased 1% to ¥6,964.6 billion, as compared with thewith the year ended March 31, 2018 and interest charges was ¥20.5

year ended March 31, 2018, and the ratio of cost of sales to revenues

billion, which was the same level as for the year ended March 31,

was 73%, which was the same level as for the year ended March 31,2018.

2018. Gross profit increased 1% to ¥2,515.9 billion, as compared withthe year ended March 31, 2018.
Selling, general and administrative expenses decreased 1% toIncome from continuing operations, before income taxes decreased¥122.1 billion to ¥516.5 billion, as compared with the year endedMarch 31, 2018.

¥1,761.0 billion, as compared with the year ended March 31, 2018,

Income taxes increased ¥54.6 billion to ¥186.3 billion, as comparedand the ratio of selling, general and administrative expenses towith the year ended March 31, 2018, despite of decreased income

revenues was 19%, which was the same level as for the year ended

from continuing operations, before income taxes owing mainly toMarch 31, 2018.

impairment losses recognized as the result of the suspension of the UK

Adjusted operating income increased by ¥40.3 billion to ¥754.9

nuclear power stations construction project. This increase was duebillion, as compared with the year ended March 31, 2018. The

mainly to increased taxable income due to such impairment losses

increase was due mainly to higher profits owing to increased revenues

being non-deductible.

and profitability improvement in the Information & Telecommunication
Systems segment, the Social Infrastructure & Industrial Systems
segment and the Construction Machinery segment. The increase waspartially offset by decreased profits in the High Functional Materials &Components segment and the Automotive Systems segment.
Other income increased ¥194.3 billion to ¥206.3 billion and otherexpenses increased ¥301.9 billion to ¥442.6 billion, as compared with

Loss from discontinued operations decreased ¥6.8 billion to ¥9.1billion, as compared with the year ended March 31, 2018.
Net income decreased ¥169.8 billion to ¥321.0 billion, as comparedwith the year ended March 31, 2018.
Net income attributable to non-controlling interests decreased ¥29.4billion to ¥98.4 billion, as compared with the year ended March 31,
2018.

the year ended March 31, 2018, respectively. The details are asAs a result of the foregoing, net income attributable to Hitachi, Ltd.

follows. Net gain on sales and disposal of fixed assets was improved

stockholders decreased ¥140.4 billion to ¥222.5 billion, as comparedby ¥20.9 billion and turned to gain of ¥18.4 billion, as compared with

with the year ended March 31, 2018.

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Data Section

Revenues by Geographic Area

(Other Areas)

The following is an overview of revenues attributed to geographic areas

Revenues in other areas increased 14% to ¥572.3 billion, as comparedbased on customer location.

with the year ended March 31, 2018. This was due mainly to higher
revenues in the Social Infrastructure & Industrial Systems segment¥billionowing to revenues recognized for overseas EPC project for industry

2018

2019

PercentchangeJapan

¥4,643.0¥4,664.50%Overseas Revenues Subtotal

4,725.5

4,816.02%

As a result of the foregoing, overseas revenues increased 2% toAsia

2,081.1

2,019.5-3%¥4,816.0 billion, as compared with the year ended March 31, 2018,

North America

1,177.5

1,205.62%

Europe964.4

1,018.5

6%

Other Areas

502.3

572.3

14%

¥9,368.6¥9,480.6

1%Years ended March 31:Total Revenues

and distribution field.

and the ratio to total revenues was 51%, which was 1% increase ascompared with the year ended March 31, 2018.

2

Summary of Financial Condition, etc.

JapanRevenues in Japan was ¥4,664.5 billion, which was the same level as

Liquidity and Capital Resources

the year ended March 31, 2018. This was due mainly to increased

Our management considers maintaining an appropriate level ofrevenues in the Information & Systems segment, the High Functionalliquidity and securing adequate funds for current and future

Materials & Components segment and the Construction Machinery

business operations to be important financial objectives. Throughsegment, which offset decreased revenues in the Electronic Systems &efficient management of working capital and selective investment inEquipment owing to the effect of business reorganization of Hitachi

new plants and equipment, we are working to optimize theKokusai Electric Inc.

efficiency of capital utilization throughout our business operations.
We endeavor to improve our group cash management byOverseas

centralizing such management among us and our overseas financial(Asia)

subsidiaries. Our internal sources of funds include cash flows

Revenues in Asia decreased 3% to ¥2,019.5 billion, as compared withgenerated by operating activities and cash on hand. Our

the year ended March 31, 2018. This was due mainly to reduced

management also considers short-term investments to be anrevenues in the Electronic Systems & Equipment segment owing to theimmediately available source of funds. In addition, we raise funds

effect of business reorganization of Hitachi Kokusai Electric Inc. and inboth in the capital markets and from Japanese and international

the Automotive Systems segment, despite higher revenues in thecommercial banks in response to our capital requirements. Our

Social Infrastructure & Industrial Systems segment owing to sales

management’s policy is to finance capital expenditures primarily by

growth in the building systems business in China and in theinternally generated funds and to a lesser extent by funds raised

Construction Machinery segment.

through the issuance of debt and equity securities in domestic andforeign capital markets. In order to flexibly access funding, we(North America)

maintain our shelf registration with the maximum outstanding

Revenues in North America increased 2% to ¥1,205.6 billion, asbalance of ¥300.0 billion.

compared with the year ended March 31, 2018. This was due mainly

We maintain commitment line agreements with a number ofto the higher revenues in the Construction Machinery segment, thedomestic banks under which we may borrow in order to ensure

Social Infrastructure & Industrial Systems segment and the Highefficient access to necessary funds. These commitment line

Functional Materials & Components segment, despite reducedagreements generally provide for a one-year term, renewable upon

revenues in the Information & Systems segment and the Automotive

mutual agreement between us and each of the lending banks, as well

Systems segment, etc.

as another commitment line agreement with a contract term of three
years ending on July 29, 2019. As of March 31, 2019, our unused

96(Europe)commitment lines totaled ¥465.0 billion, most of which is the balance

Revenues in Europe increased 6% to ¥1,018.5 billion, as compared withof unused loans.

the year ended March 31, 2018. This was due mainly to higher revenues

We receive debt ratings from Moody’s Japan K.K. (Moody’s), S&Pin the Social Infrastructure & Industrial Systems segment, reflecting sales

Global Rating Japan Inc. (S&P), as well as Rating and Investment

growth in the railway systems business, the Construction Machinery

Information, Inc. (R&I). Our debt ratings as of March 31, 2019 were as

segment and the Information & Systems segment.

follows.

Hitachi Integrated Report 2019

Long-term

Short-termyear ended March 31, 2019 were ¥3.7 billion, as compared withS&PAA-1¥104.8 billion of payments related to short-term debt in the year

Moody’sA3

P–2

ended March 31, 2018. Net cash outflow related to long-term debt*

R&IA+*

a–1*

Rating Company*R&I changed its rating from A+ to AA- and a-1 to a-1+ in August 2019.

in the year ended March 31, 2019 decreased by ¥67.6 billion, as
compared with the year ended March 31, 2018.
As a result of the foregoing, net cash used in financing activities wasWith our current ratings, we believe that our access to the global¥320.4 billion in the year ended March 31, 2019, a decrease of ¥1.0

capital markets will remain sufficient for our financing needs. We seekbillion compared with the year ended March 31, 2019.

to improve our credit ratings in order to ensure financial flexibility for* The proceeds from long-term debt, less the payments on long-term debt.

liquidity and capital management, and to continue to maintain accessto sufficient funding resources through the capital markets.

As a result of the foregoing, as of March 31, 2019, cash and cash
equivalents were ¥807.5 billion, an increase of ¥109.6 billion from

Cash Flows(Cash Flows from Operating Activities)
Net cash outflow from a change in trade payables increased by ¥114.0billion, as compared with the year ended March 31, 2018. Net cash

March 31, 2018. Free cash flows, the sum of cash flows fromoperating and investing activities, were an inflow of ¥447.1 billion in theyear ended March 31, 2019, an increase of ¥194.3 billion from the year
ended March 31, 2018.

inflow from a change in trade receivables and contract assets*
decreased by ¥45.4 billion, as compared with the year ended March31, 2018. Net cash outflow from a change in inventories decreased by¥31.7 billion, as compared with the year ended March 31, 2018.
As a result of the foregoing, net cash provided by operating activitieswas ¥610.0 billion in the year ended March 31, 2019, a decrease of¥117.1 billion compared with the year ended March 31, 2018.
* Due to the implementation of IFRS 15, "change in trade receivables" is presented as "change in tradereceivables and contract assets" from the year ended March 31, 2019.

(Cash Flows from Investing Activities)
Net amount of investments related to property, plant and equipment*was ¥410.6 billion in the year ended March 31, 2019. This net sum
increased by ¥4.1 billion compared with the year ended March 31,
2018. Proceeds from sale of investments in securities and otherfinancial assets (including investments in subsidiaries and investments
accounted for using the equity method) in the year ended March 31,
2019 increased by ¥128.7 billion, as compared with the year ended
March 31, 2018, due mainly to the sale of shares of Clarion Co., Ltd.
Purchase of investments in securities and other financial assets(including investments in subsidiaries and investments accounted forusing the equity method) in the year ended March 31, 2019 decreasedby ¥170.7 billion, as compared with the year ended March 31, 2018,
in which expenses related to acquiring Sullair business were paid.
As a result of the foregoing, net cash used in investing activities was¥162.8 billion in the year ended March 31, 2019, a decrease of ¥311.4
billion compared with the year ended March 31, 2018.

Assets, Liabilities and Equity
As of March 31, 2019, total assets amounted to ¥9,626.5 billion, adecrease of ¥480.0 billion from March 31, 2018. This was due mainly
to impairment losses recognized for the suspension of the UK nuclearpower stations construction project, the conversion of Hitachi Kokusai
Electric Inc. to an equity-method associate, and sales of shares ofClarion Co., Ltd. stock. Cash and cash equivalents as of March 31,
2019 amounted to ¥807.5 billion, an increase of ¥109.6 billion from theamount as of March 31, 2018.
As of March 31, 2019, total interest-bearing debt, the sum of shortterm debt and long-term debt, amounted to ¥1,004.7 billion, adecrease of ¥45.5 billion from March 31, 2018 as a result of repaymentof borrowings. As of March 31, 2019, short-term debt, consisting
mainly of borrowings from banks and commercial paper, amounted to¥111.0 billion, a decrease of ¥10.4 billion from March 31, 2018. As ofMarch 31, 2019, current portion of long-term debt amounted to¥185.2 billion, an increase of ¥68.0 billion from March 31, 2018. As of
March 31, 2019, long-term debt (excluding current portion), consisting
mainly of debentures, and loans principally from banks and insurancecompanies, amounted to ¥708.4 billion, a decrease of ¥103.1 billion
from March 31, 2018.
As of March 31, 2019, total Hitachi, Ltd. stockholders’ equity
amounted to ¥3,262.6 billion, a decrease of ¥15.4 billion from March31, 2018. As a result, the ratio of total Hitachi, Ltd. stockholders’equity
to total assets as of March 31, 2019 was 33.9%, compared with* The sum of the purchase of property, plant and equipment and the purchase of intangible assets, less theproceeds from sale of property, plant and equipment, and intangible assets.

32.4% as of March 31, 2018.

(Cash Flows from Financing Activities)

a decrease of ¥81.8 billion from March 31, 2018.

Non-controlling interests as of March 31, 2019 was ¥1,151.8 billion,
Net cash outflow related to purchase of shares of consolidated

Total equity as of March 31, 2019 was ¥4,414.4 billion, a decrease of

subsidiaries from non-controlling interests increased by ¥155.7¥97.2 billion from March 31, 2018. The ratio of interest-bearing debt tobillion, due mainly to the additional acquisition of shares of

total equity was 0.23 times, which was the same level as that as ofAnsaldo STS S.p.A. Proceeds related to short-term debt in theMarch 31, 2018.

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