About the Hitachi GroupIT solutions
Along with Vietnam Post, we are

Business of the Hitachi Group2

Revenues

expanding electronic services

Adjusted Operating Income

related to the distribution of

Revenues by Market

public funds. Starting in 2020,

Revenues/Adjusted Operating Income Ratio/Net Income

we will contribute to improved

Revenues of Lumada Businessconvenience for six million

The Hitachi Group Identity and Social Innovation Business4

subsidy recipients.

Growth History

6

About the Hitachi Group

Business of the Hitachi GroupIn April 2019, Hitachi announced its three-year 2021 Mid-term Management Plan, positioning IT, Energy, Industry,
Mobility and Smart Life as growth sectors, assigning relevant business units to each of them. Hitachi is characterized by
two strengths: The first is our ability to provide solutions that use digital technology to resolve issues facing customers
and society through our cutting-edge IT and our operational technology (OT), which moves social infrastructure such as
equipment and systems at production sites, railways and power plants. The second is our highly reliable and superior
products. In these five sectors, Lumada will function as a platform that creates value from customers' data and supports the
rapid delivery of solutions.

Revenues

Adjusted Operating Income

Composition ratio (%)

Adjusted operating income ratio (%)

OthersOthersHitachi Chemical
Hitachi Metals
HitachiConstruction
Machinery

5%

7%
10%

IT

20%

Revenues
by segment¥9,480.6 billion 9%(FY2018)

7%
HitachiHigh-Technologies

5.6%

10.8%

Hitachi Chemical
7.1%

Energy

4%

10%

IT

12%

Industry

Hitachi Metals

5.0%

HitachiConstruction
Machinery

Adjusted operating
incomeby segment¥754.9 billion

7.6%

Mobility

16%

Smart Life

2.3%

(FY2018)

11.2%

HitachiHigh-Technologies

Energy7.5%

Industry
Mobility

3.9%

9.1%

Smart Life

Note: Figures for each subsegment include intersegment transactions.

Revenues by Region

Revenues/Adjusted Operating Income Ratio/
Net Income

Composition ratio (%)
Europe1,018.5Asia

11%2,019.5

1,205.6

ASEAN, India
and others
1,009.7

North America

13%

10%

21%
11%

Adjusted operating income ratio (%)

Net income attributable to
Hitachi, Ltd. stockholders (¥ billion)
9,774.9

10,034.3
9,162.2

Japan¥4,664.5 billion
Outside Japan

China

Revenues (¥ billion)

6.6¥4,816.0 billion

7.6
6.3

6.4

Total

¥9,480.6

1,009.8

6%(FY2018)

billion49%

Japan4,664.5

217.4

9,368.6

172.1

9,480.6
8.0

362.9

231.2

222.5

Other Areas
572.3

FY20142

Hitachi Integrated Report 2019

FY2015FY2016FY2017FY2018

IT

EnergyConsulting

IT products

Systems integration(storage, servers)

Cloud services

Control systems

SoftwareATMs

Industry

Energy solutions
Power grid system

Industry & distribution system
Water & environment system
Industrial products

Mobility

Smart Life

Building services

Medical equipment
Smart life & eco-friendly system(Refrigerator, washing machine, air conditioner,
commercial air conditioning system)
Automotive systems(Powertrain, chassis parts, advanced driving
assistance system)(Elevators, escalators)

Revenues ofLumada Business

Railway system¥1,127.0 billion(FY2018)

P.48 Strengthen Lumada

Hitachi High-Technologies
Ownership percentage ofvoting rights:

51.8%

Main products and services

Hitachi Construction Machinery
Ownership percentage ofvoting rights:

51.5%

Main products and services

Hitachi Metals
Ownership percentage ofvoting rights:

53.5%

Main products and services

Hitachi Chemical
Ownership percentage ofvoting rights:

51.4 %

Main products and services

Medical and Life Science Products

Hydraulic Excavators

Specialty Steel Products

Functional materials

Analytical Equipment

Wheel LoadersFunctional Components and Equipment(Electronics materials, printed wiring board

Semiconductor Processing Equipment

Mining Machinery

Magnetic Materials and Applications

materials, electronic components)

Manufacturing and Inspection Equipment

Maintenance and Services

Power Electronics

Advanced components and systems

Advanced Industrial Products

Construction Solutions

Wires, Cables, and Related Materials(Mobility components, energy storage

Mine Management Systems

devices and systems, life science related
products)

3

About the Hitachi GroupThe Hitachi Group Identity andSocial Innovation Business
Grounded in the Hitachi Group Identity, we will raise the social, environmental and economic
value we provide to customers and aim to achieve a sustainable society by focusing on ourSocial Innovation Business.
The present world is said to be an era of volatility, uncertainty, complexity and ambiguity (VUCA), in which the future is difficult
to predict. Looking around the world, we can see a wide variety of steadily approaching change that will have an impact on
people's lives, including climate change, resource shortages, demographic changes due to aging and problems related tourbanization.
Since its establishment, Hitachi has operated under the Mission expressed by its founder: “Contribute to society throughthe development of superior, original technology and products.” In accordance with this Mission, we have solved challenges
facing society during each era through the development of social infrastructure technologies while raising people's quality oflife (QoL) and, in recent years, contributing to the achievement of a sustainable society.
Originally set by Hitachi founder Namihei Odaira, the Mission has been carefully passed on to generations of employees andstakeholders throughout the Company's 100-year history. The Values reflect the Hitachi Founding Spirit, which was shapedby the achievements of our company predecessors as they worked hard to fulfill Hitachi's Mission. The Vision has beencreated based on the Mission and Values. It is an expression of what the Hitachi Group aims to become in the future as it
advances to its next stage of growth. The Mission, Values and Vision are made to be shared in a simple concept: HitachiGroup Identity.

Our Social Innovation Business accelerates collaborative creation with customers using the latest digital technologies in a wide range of fields, including social
infrastructure. It also solves various issues faced by society and customers by taking advantage of the Hitachi Group's business bases; its total solutions, which combine
the operational technology (OT), IT, products and systems it has cultivated over many years; digital solutions such as Lumada; and open innovation achieved throughpartnerships with operators worldwide.

4

Hitachi Integrated Report 2019

MISSION
In 1910, Hitachi was founded as a mining machinery repair shop in Ibaraki Prefecture, Japan.
At a time when Japan was relying on imported products and technology, Hitachi founder Namihei Odaira formed
a team that chose to rely on a different resource—themselves. With perseverance and enduring passion, the teamcreated, developed, and delivered original products and technologies.
The driving force behind the team was Odaira's noble belief: “Contribute to society through thedevelopment of superior, original technology and products.” This belief was the starting point for the Hitachi Group.
Today, it forms Hitachi’s Mission, which is the overarching concept of the Hitachi Group Identity.

VALUES

Harmony

Sincerity

Pioneering
Spirit

The willingness to respect the

To act with a sense of ownership andTo work creatively, using novel

opinions of others and discusshonesty at all times and never pass

approaches to enter new areas. To

matters in a manner that is thoroughthe buck. The spirit to meet society's

always act as a pioneer within ourand frank, but fair and impartial, andexpectations and generate credibility

areas of expertise and to have theonce a conclusion has been reached,for Hitachi.

passion to pursue higher goals
beyond our capabilities.

to cooperate and work together toachieve a common goal.

The power station at the Hitachi mine (1916)
Six years after its establishment, Hitachi employees proudly sit in front of agenerator and a water turbine installed at the power station of the Hitachi mine.
From this photo, we can distinctly feel their senses of accomplishment andfulfillment, as well as their hopes for the future.
However, shortly after the station started operating, the generator broke down
due to defective parts, which had a serious impact on the operation of themine, leading our founder, Namihei Odaira, to prepare an unofficial resignation.
The employees worked tirelessly to restore the generator and investigate thecause of the breakdown. In addition to problems involving the generator, ouremployees faced difficult issues every time they set about making products.
They raised quality, cultivated technology and gained trust through their
devoted and resolute work on solving each and every one of these issues.
These efforts crystallized into Hitachi's Founding Spirit, which remains alive
and well to this very day.

5

About the Hitachi Group

Growth History
1910 1945 (founding period)

Major events

Challenges faced by Hitachi's pioneers
1910
1920
1934

Founded as a repairing yard attached to Kuhara Mining Co., Ltd.'s Hitachi mine
Split off independently as Hitachi, Ltd.
Listed on the Tokyo Stock Exchange and established Hitachi Research Laboratory

Together with society
6

Namihei Odaira, the founder of Hitachi, Ltd., wanted to utilize his own abilities to contribute to society by producing electric machinesand developing Japan's machinery industry. In accordance with these desires, he founded our company after constructing a power
station at Hitachi mine and directing the production of mining equipment.
At the time of our founding, our mistakes were as numerous as the number of products we produced, but we improved our technicalcapabilities by focusing on our own technologies and strengthening our testing and research. In 1918, we launched a technicaljournal and appointed a full-time patent authority in 1921. Later, in 1934, we established a research laboratory.
Mr. Odaira placed an emphasis on cost accounting since our founding and created a system allowing for regular cost estimation
meetings employees working in sales and in factories. Through this system, we secured orders based on careful cost accounting.
Overcoming many failures and difficulties since its establishment, Hitachi has grown into a technological powerhouse that has gained
the trust of its customers; in 1937, we had more than 10,000 stockholders. At that time, we produced a wide variety of major
products, including power generation equipment, large industrial machines, railway cars, elevators, escalators, electric fans,ventilating fans, well pumps, electric refrigerators, air conditioners and diesel buses.

1910
A five-horsepower
induction motor, one ofthe products we offeredduring our founding
period (motor)

1924
The ED15, the first large
electric locomotive
manufactured in Japan1932
Our first electric
refrigerator

1933
The world's largest mill motor at the time
(DC motor for metal rolling)

1942
Electron microscope (first forcommercial use produced inJapan)

School-based education that began with our founding
At the time of our founding, we were experiencing difficulty in securing orders due to the recession that occurred following the RussoJapanese War. Working to acquire promising human resources and educate employees, we established the Apprenticeship Training
School in 1910. This institution recruited human resources from all over Japanand trained them for two years. We often lost graduates from the school tocompetitors due to their high levels of education. Despite this, Mr. Odaira
always stated that “Our goal should be to train talented technicians andindustrialists.” The Apprenticeship Training School was renamed “Hitachi
Industrial College” in 1928 and continues to operate under this name today.
Each year, this institution produces human resources that handle
manufacturing for the Hitachi Group.
Class being conducted at the Apprenticeship Training School (1917)

Hitachi Integrated Report 2019

OT, IT and product development

OT and product development

Changes in management

Founding

1946 1960 (postwar reconstruction period)

1961 1970 (rapid growth period)

Path to reconstruction

Fostering comprehensive strength

1947
1958
1959
1960

Chikara Kurata becomes our 2nd president
Won the grand prize at the World Exposition
HITAC 301 computer is completed
MARS-1 seat reservation system is completed

1961
1964
1966

Kenichiro Komai becomes our 3rd president
The Tokaido Shinkansen and Tokyo Monorail cars are completed
Development of metal oxide semiconductor (MOS) transistors

Achievements produced through our originaltechnologies and our adoption of new technologies

Rapid progress toward becoming a comprehensive electricalmachinery manufacturer

Hitachi lost 40% of its production capacity due to war damage, andthe war's impact on the Hitachi factory, which lost 80% of its
capacity, was particularly strong. Despite these setbacks, under Mr.
Kurata, our second president, we grew into a company not only
involved in energy businesses, such as hydroelectric and thermal
power generation, but also in railways systems, social infrastructure,such as elevators and escalators, and consumer electronics. In
particular, we created a mass production system and sales network
using our “three sacred treasures,” TVs, refrigerators and washingmachines, becoming a major player in the industry.
At the Brussels World's Fair in 1958 (in Belgium), Hitachi's electron
microscope won the grand prize, while its portable analog computer
received first prize. By winning these awards, these products became
symbolic of our capacity for developing original technologies and our ability
to keep up with cutting-edge advancements by adopting new technologies.

Kenichiro Komai, who became our president in 1961, worked to strengthen ourinternational competitiveness by proactively raising funds overseas. Under his
direction, we focused on priority goals of strengthening our financial structure,raising production efficiency, enhancing sales and export systems, promoting
technological development and improving training. In terms of operations, wemade bold investments in growth sectors, including electronics and information
devices, such as semiconductors and computers, nuclear power plants andcontrol devices, while increasing our international competitiveness throughproactive efforts to adopt new technologies.
It was at this time that the “3C (color TVs, coolers [air conditioners], cars)
Boom” occurred, spurring substantial growth for Hitachi in terms of home
appliances and automotive parts. Thanks to this growth, Hitachi developed into
a comprehensive manufacturer of electrical machinery.

1964
The world's first Shinkansen (bullet train) cars toreach 200 km/h

1969
Developed and massproduced all-transistor
color televisions

1949
Escalators that became vertical metropolitan pathways

The “Hitachi Car,” the world's first vehicle for mass
stomach screenings
In 1960, we launched the “Hitachi Car,”the world's first vehicle for mass stomach
screenings targeting the early detection of
stomach cancer. Since then, Hitachi hasdeveloped medical equipment that hashelped improve people's health, including
ultrasound system reflectoscopes, X-ray
CT scanners and magnetic resonanceimaging (MRI) systems.

1965
Hitac 5020 system (produced in Japan)

1968
The fastest elevators in Japan at the time (in thehigh-rise Kasumigaseki Building)

For the development of electrical machinery industry
Since its founding, Hitachi has emphasized patents as an important indicator of
a company's technological capabilities. In September 1970, we had decided tomake our patents publicly available for sale to contribute to technologicalimprovement throughout the industry. Newspapers throughout Japan reported
this move as “the nation's first full-scale public opening of patents,” making
Hitachi a pioneer of technical exchange in the electrical machinery industry.

The “Hitachi Car,” the world's firstvehicle for mass stomach screenings(1960)

7

About the Hitachi Group

Growth History
1971 1985 (transitional period)

Together with society

OT, IT and product development

Changes in management

Major events

Focus on growth sectors

8

1971
1974
1975
1981
1982

1986 2008

Strengthening of

Hirokichi Yoshiyama becomes our 4th president
COMTRAC, Computer Aided Traffic Control System for Shinkansen, is completed
Operation begins at Chugoku Electric Power Company's Shimane Nuclear
Power Station, Japan's first domestic nuclear power plant
HITAC M-series, large-scale computer is completed
Katsushige Mita becomes our 5th president
We become a listed company on the New York Stock Exchange

1991

1995
1999
2006

Hitachi's restructuring

Reorganization initiatives

In the 1970s, the entire industry was forced to undergo major structural changes
due to events that shock the Japanese economy, such as the Nixon shock, thetransition to a free-floating exchange rate system and the oil crises of 1973 and1979. Hirokichi Yoshiyama, who became president of Hitachi in 1971, launched apolicy of “lightweight management” in anticipation of changes in the industrial
structure and a period of slow growth. Under his direction, Hitachi strengthened its
business structure by restructuring factories and reducing overhead costs while
focusing on the electronics-related business, which was an important growth sector
at the time. Katsushige Mita, who was appointed president in 1981, promoted
product planning based on market needs, rejecting policies aimed at pleasing every
single individual. During his tenure, he emphasized the importance of expanding
growth products designed to meet future needs.
As a result of this period of restructuring, we became a comprehensive electricalmachinery manufacturer with well-balanced electrical equipment and machinery andelectronics businesses.

In an era of global competition, the Japanese
economy was hit by trade friction and a highyen rate and, suffering from the aftereffects ofthe collapse of the bubble economy, entered along period of sluggish performance. During
this period, Hitachi focused on restructuring its
b u s i n e s s . U n d e r Ts u t o m u K a n a i , w h oassumed the position of president in 1991,
Hitachi implemented a Groupwide system
aimed at speeding up management andintegrating development, manufacturing andsales processes. During the tenure of Etsuhiko
Shoyama, who took office as president in 1999,
we formulated two Mid-term Management
Plans: i.e. HITACHI Plan and i.e. HITACHI Plan II.
Under these plans, we reviewed our business

1974
Shimane Nuclear Power Station, Japan's firstcommercial-use nuclear power station

1999
Super technical server (world's fastest at the time)
1972
COMTRAC, Computer Aided Traffic Control System for
Shinkansen, operations launched

1975
HITAC M-series, large-scale computer

Contribution to social living and industry in China

Social Contribution as a corporate citizen

The year 1978 marked the signing of the Japan-China Peace and Friendship Treaty.
As part of this agreement, a steel mill construction project was launched in
Shanghai. Hitachi also participated in the project and established a high level of trustwith the Chinese authorities. Since then, Hitachi has gradually built a system ofcooperation in China that ranges from plant construction to the establishment ofjoint ventures. Over the years, we have contributed to industry development,enhanced technological capabilities and improved lifestyles in China through ourbusiness.

Hitachi's social contribution activities were
inspired by the sentiments of its founder,
Namihei Odaira. Mr. Odaira dedicated himself
to his employees and to the development of theCity of Hitachi, where we were founded. His
spirit of social contribution was adopted by all
successive management teams, leading to theestablishment of seven charitable corporate
foundations in Japan and overseas (nowmerged into the Hitachi Global Foundation).

Hitachi Integrated Report 2019(reform period)

Group management
Tsutomu Kanai becomes our sixth president
Environmental Division is established.
Enacted the Hitachi Environmental Protection Principles.
Implemented a Group system
Etsuhiko Shoyama becomes our 7th president
Kazuo Furukawa becomes our 8th president

2009 2018 (regeneration period)

Toward a global Hitachi
2009 Takashi Kawamura becomes our 9th president
Implemented a Company system
2010 Hiroaki Nakanishi becomes our 10th president
2014 Toshiaki Higashihara becomes our 11th president
2016 Implemented a Business Unit system
Launched Lumada

Evolution of our Social Innovation Businessfrom the perspectives of consolidated management
and global expansion while actively engaging in M&A
and business collaboration. Later, Kazuo Furukawa, who
was appointed president in 2006, further implemented
these reforms under his policy of “collaboration and profit
management.” Hitachi became a company with morethan 1,000 consolidated subsidiaries, and its Group
companies expanded business through independentand creative management. However, Hitachi recorded
its largest loss ever in fiscal 2008, due to rising crude
oil and raw material prices and global financial
instability.

Takashi Kawamura was appointed chairman and president in 2009, as global economic
growth further slowed. In 2010, which marked the 100th anniversary of our founding,Hiroaki Nakanishi took over as president while Mr. Kawamura remained in the position ofchairman. Under this leadership structure, we launched initiatives aimed at reviving the
Hitachi Group and developing the Social Innovation Business. Further reforms were
implemented and we introduced a Company system under the 2012 Mid-termManagement Plan (FY2010 -FY2012) in an effort to clarify responsibilities and authorities.
In 2012, we started a Group system that consolidated strongly related businesses into fivegroups (later six). We have also promoted business reforms, severing non-corebusinesses and performing restructuring. Through the 2018 Mid-term Management Plan
(FY2016 -FY2018), we have determined our business areas of focus and, with primary
support from our Social Innovation Business, are aiming to become a leading global
innovation partner for the IoT era and to transform into a comprehensive digital solutions
company.

2001
Proton therapy system(University of Tsukuba
Hospital)

2004
The World's first storage system equipped with virtualization functions

2017
Class 800 train for the Intercity Express Programme (IEP)

Omika Works ▶︎ P.51

Promoting STEM education*1 as One Hitachi
The Hitachi Global Foundation complements Hitachi's social
contribution activities by conducting initiatives with a wide
range of aims, including the promotion of academic research,science and technology, the development of next-generation
human resources and building multicultural symbiotic &diversity societies. In 2002, Hitachi developed the principles
and policies that govern its social contribution activities andhas since focused on activities that take advantage of its
unique characteristics, concentrating primarily on humandevelopment, the environment and community support.

With the rapid development of information technology using artificial intelligence (AI) and big data,
the development of IT personnel has become a major issue. Under these circumstances, STEM
education is being regarded as important around the world as an education method that aims tonurture human resources who are capable of using cutting-edge technologies, primarily including
IT, to demonstrate their creativity, power of expression andproblem-solving skills. Hitachi is conducting a variety ofsocial contribution activities involving STEM education todevelop next-generation human resources who will provide
leadership in the future.
*1 STEM education is education in Science, Technology, Engineering and Mathematics.

Children learning through STEM education

9