FOR IMMEDIATE RELEASE

Cost Structure Reform and Strategies for Seven Businesses
toward Achieving “2015 Mid-term Management Plan” Goals
Tokyo, June 13, 2013 – Hitachi, Ltd. (TSE: 6501) today announced CostStructure Reform and strategies for seven businesses toward achieving the goals ofits “2015 Mid-term Management Plan.” On May 16, 2013, Hitachi announced the“2015 Mid-term Management Plan.” The primary goals of this new medium-term
management plan are to promote achieving growth and Hitachi’s transformation
driven by Social Innovation Business.
■ Cost Structure Reform: Hitachi Smart Transformation Project1. Cost Reduction Results and Targets (Cumulative from FY2011)[Billions of yen]
FY2011Results
Cost Reduction Benefits

35.0

FY2012
Results
110.0

FY2013
Forecasts

FY2014
Forecasts

210.0

310.0

FY2015
Targets
400.0

2. Activity Policy“Speed up cost structure reforms through activities across the entire HitachiGroup and cross-functional activities”
3. Activities by Cost Areas(1) Production costs
 Centralize manufacturing bases
 Utilize a unified IT platform to visualize information on a global basis
 Revamp the value chain from design through manufacturing(2) Direct materials costs
 Increase global corporate procurement bases
 Established Hitachi China Materials Technology Innovation Center Promote measures to address higher raw materials prices(3) Indirect costs
 Visualize and centralize costs
 Use outsourcing for financial, indirect materials procurement and otheroperations
 Simplify the Group structure by eliminating redundant functions- more --2-■ Strategies for Seven Businesses
1. Information & Telecommunication Systems Business Strategy
1-1. FY2012 Results, Forecasts for FY2013 and Targets for FY2015[Billions of yen]
FY2012 Results

FY2013 ForecastsFY2015 Targets

1,786.5

1,820.0

2,100.0

5.8% (5.9%)

6.0%

9.8% (10.0%)

Overseas revenue ratio

26%

29%

35%

Service revenue ratio

60%-Over 65%Revenues
EBIT(1) (Operating income) ratio(1) EBIT: Earnings before Interest and Taxes

1-2. Business Policy“Become a global major player by 3Gs (Growth, Global and Group)”
1-3. Business Strategy(1) Strengthen Priority Fields
 Create new customer value and business opportunities using Big Data Provide second-generation cloud computing services to address morediverse and sophisticated customer needs in response to expanding use ofcloud computing services
 Provide security services covering entire social infrastructure and corporate
activities(2) Expand Global Businesses Accelerate growth in global markets centered on Hitachi Data Systems
 Hitachi Consulting drives global business by the approach from upstreamlevel Strengthen global solutions delivery as One Hitachi(3) Strengthen Services Businesses Strengthen upstream: Management/operation consulting, Big Data utilization
 Expand comprehensive services: comprehensive outsourcing, managed
service, second generation cloud
1-4. Cost Structure Reform (Hitachi Smart Transformation Project)[1] Reduce manufacturing cost by consolidating manufacture facilities[2] Integrate IT within Hitachi Group[3] Reduce indirect cost by consolidating administration and commonoperations and expanding shared services
Cumulative cost reduction benefits from FY2011 to FY2015: 65.0 billion yen- more --3-

2. Infrastructure Systems Business (2)2-1. FY2012 Results, Forecasts for FY2013 and Targets for FY2015[Billions of yen]
FY2012 Results

FY2013 Forecasts

FY2015 Targets

785.5

840.0

1,000.0

4.0% (3.6%)

3.7% (3.7%)

Over 7%(Over 7%)

Overseas revenue ratio

21%

22%

33%

Service revenue ratio

28%30%

Over 35%Revenues
EBIT (Operating income) ratio(2) The Infrastructure Systems Business figures are the simple sum of two companies: the Infrastructure
Systems Company (including Hitachi Plant Technologies, Ltd., which was merged with Hitachi, Ltd. in April2013), and Hitachi Industrial Equipment Systems Co., Ltd. A certain amount of revenues and operating
income of the Infrastructure Systems Company is included in the Information & Telecommunication
Systems Company, the Power Systems Company and the Rail Systems Company.

2-2. Business Policy“Become the best solutions partner by providing answers to business challenges
faced by global customers”
2-3. Business Strategy(1) Strengthen Solutions Capabilities
 Apply demonstrated technologies
 Leverage distinctive technologies to expand into growth markets
 Provide total solutions with total engineering(2) Expand Service Business Strengthen cloud-based lifecycle support business Expand infrastructure operation service business(3) Strengthen Global Supply Chain
 Expand customer-centric businesses in growth markets
 Establish relationships with big accounts
 Expand in emerging markets leveraging local production bases(4) Strengthen Management Base
 Promote Hitachi Smart Transformation Project Strengthen cash flow management- more --4-2-4. Cost Structure Reform (Hitachi Smart Transformation Project)[1] Centralize overlapping operations and resources, and improve efficiency[2] Build an optimal business framework, including Group companies[3] Reduce costs through modular design-based product reforms, and process
reforms due to the application of standard work breakdown structure[4] Nourish local staff and appoint locals to management positions, and promotelocalization
Cumulative cost reduction benefits from FY2011 to FY2015: 41.0 billion yen
3. Rail Systems Business
3-1. FY2012 Results, Forecasts for FY2013, and Targets for
FY2015 and FY2016[Billions of yen]

Revenues
EBIT (Operating income) ratio

FY2012FY2013

FY2015FY2016

Results

Forecasts

Targets

Targets

146.7

150.0

200.0

240.0

3.6% (3.4%)

3.2% (3.4%)

6.5% (6.5%)

8.0% (8.0%)

26%

39%

60%

65%

Overseas revenue ratio

3-2. Business Policy“Accelerate globalization with technologies developed in Japan and promoteSocial Innovation Business”
3-3. Business Strategy(1) Global Expand existing bases (Japan, UK and China)
 Actively develop new bases (India, Brazil and Southeast Asia)(2) Transformation
 Reshape business portfolio
 Expand and enhance product portfolio(3) Innovation
 Provide the total rail solutions- more --5-

3-4. Cost Structure Reform (Hitachi Smart Transformation Project)[1] Further promote local manufacturing bases and global procurement(UK, China, Brazil and India)[2] Optimize global logistics[3] Centralize IT and business systems
Cumulative cost reduction benefits from FY2011 to FY2015: 11.0 billion yen
4. Urban Planning and Development Systems Business
4-1. FY2012 Results, Forecasts for FY2013 and Targets for FY2015[Billions of yen]
FY2012 Results

FY2013 Forecasts

FY2015 TargetsRevenues

491.0

500.0560.0

EBIT (Operating income) ratio

7.4%

8.0%

Over 10%(Over 10%)

Overseas revenue ratio

41%

50%

56%

4-2. Business Policy“Aim to expand business further, centered on overseas business, and actively
promote the Hitachi Smart Transformation Project”
4-3. Business Strategy[1] China Expand sales in new installation market and enhance production system Raise brand value by developing and introducing the world’s No.1 products[2] Southeast Asia, India and the Middle East
 Enhance production system, and expand business in India[3] New regions
 Penetrate new markets by cooperating with local partners[4] Japan
 Expand and strengthen service business (maintenance, modernization)- more --6-4-4. Cost Structure Reform (Hitachi Smart Transformation Project)[1] Raise production efficiency by centralizing production of commoncomponents
Apply modular design[2] Expand global procurement
Strengthen cost planning and development purchasing[3] Unify global IT platform
Reduce indirect manufacturing costs through improved operational efficiency
Cumulative cost reduction benefits from FY2011 to FY2015: 10.0 billion yen
5. Power Systems Business5-1. FY2012 Results, Forecasts for FY2013 and Targets for FY2015 *3[Billions of yen]
FY2012 Results

FY2013 Forecasts

FY2015 Targets

Revenues

904.6

750.0

500.0

EBIT ratio

3.3%

1.9%

11.6%

Overseas revenue ratio

36%

43%

28%

(3) The results of the thermal power systems business will be recorded in an integrated company(equity-method affiliate) to be established with Mitsubishi Heavy Industries, Ltd. from the fourth quarter ofFY2013.

5-2. Business Policy“The world market leader advancing the future global society with evolutionary
energy technologies”
5-3. Business Strategy
Focus on growth business fields and building earnings base(1) Expand Base Businesses: Build new nuclear power plant, etc.

(2) Expand GrowthBusinesses: Power transmission and distribution, renewableenergy, particle beam therapy systems
Launch energy solutions business(3) Expand Services Business : Expand preventive maintenance and enhanced
maintenance services- more --7-

5-4. Strategy by Businesses(1) Nuclear Power Business[Billions of yen]

FY2012 Results
Revenues

160.0

FY2020 Targets
360.0[1] Respond to the Fukushima restoration and revitalization, and promotemeasures to increase plant safety[2] Promote and strengthen overseas energy solutions business(2) Transmission & Distribution Business
FY2012 Results
Revenues

70.0[Billions of yen]
FY2015 Targets
110.0[1] Expand T&D business globally based on competitive products and abundant
supply experiences[2] Strengthen systems integration business fusing equipment and IT(3) Renewable Energy Business and Others
FY2012 Results
Revenues[1] Renewable EnergyBusiness[2] Particle Beam Therapy
System Business

160.0[Billions of yen]
FY2015 Targets
240.0: Help create a low-carbon society with wind andphotovoltaic power systems
Provide integrated services extending from gridconnection and construction to maintenance,
operation and monitoring: Expandbusiness through leading-edge
technologies such as world-leading advanced
spot scanning irradiation technology, andoutstanding operational track records in Japanand the U.S.

- more --8-

5-5. Cost Structure Reform (Hitachi Smart Transformation Project)[1] Reduce production costs : Create global manufacturing system and valuechain[2] Reduce direct materials : Expand global procurement and engineeringcosts[3] Reduce indirect costs: Optimize business structure by IT and structuralreforms

Cumulative cost reduction benefits from FY2011 to FY2015: 53.0 billion yen
6. Automotive Systems Business
6-1. FY2012 Results, Forecasts for FY2013 and Targets for FY2015[Billions of yen]
FY2012 Results

FY2013 Forecasts

FY2015 Targets

Revenues

806.8

820.0

1,000.0

EBIT (Operating income) ratio

4.5%

5.0%

7.0% (7.0%)

50%

55%

60%

Overseas revenue ratio forglobal customer bases*4(4) Customer bases that install automotive components in finished vehicles. This is different from overseas
revenues in the consolidated accounts.

6-2. Business Policy“Harness advanced technologies in the environment, safety and information fields
to create new value for people, automobiles and society, and a richer society”
6-3. Business Strategy(1) Customer Strategy
Expand sales to global automakers(2) Regional Strategy
Produce locally for local consumption in regions around the world(3) Product Strategy
Build next-generation environment, safety systems- more --9-6-4. Cost Structure Reform (Hitachi Smart Transformation Project)[1] Globally develop low-cost, standard production lines
Cost reduction due to defective work through Zero Defects activities[2] Costs reduction by VEC activities and rigorously adopting overseasmaterials
Maintain procurement networks compatible with global TSCM
[3] Optimize global logistics
7. Hitachi Appliances, Inc
7-1. FY2012 Results, Forecasts for FY2013 and Targets for FY2015[Billions of yen]

Revenues
EBIT (Operating income) ratio
Overseas revenue ratio

FY2012FY2013

FY2015ResultsForecasts

Targets

569.9

610.0700.0

2.2% (1.3%)

3.2%

Over 5%(Over 5%)

32%

34%

Over 40%7-2. Business Policy“Supply eco-friendly, comfortable home appliances and air-conditioning products
based on cutting-edge technologies to the world”
7-3. Business Strategy[1] Growth Strategy
 Actively business expansion in emerging nations markets
 Promote environmental technology
 Develop and use resources[2] Strengthen earnings base Cost structure reform Global business reform Improve cash flows- more -- 10 -7-4. Strategy by Businesses[1] Air Conditioning Business[Billions of yen]

FY2012 Results

FY2015 Targets

288.8

380.0

Revenues Support customers with a broad lineup ranging from home-use airconditioners to building- and industrial-use air conditioners
 Launch No.1 energy-saving products compliant with environmental
regulations in each area
 Concentrate investments into manufacturing and sales channel in emerging
nations markets[2] Home Appliances Business

Revenues[Billions of yen]

FY2012 Results

FY2015 Targets

281.1

320.0

 Develop premium strategy according to the market
 Target Asian belt zone leveraging the domestic business Strengthen new environmental technologies business (LED lighting, solar
power generation systems )7-5. Cost Structure Reform (Hitachi Smart Transformation Project)[1] Produce more key components internally, and reduce costs[2] Promote business reforms such as orders, logistics and services, and utilize
procurement schemes linked with Hitachi Group companies[3] Standardize and centralize IT and business systems, and utilize sharedservices
Cumulative cost reduction benefits from FY2011 to FY2015: 27.0 billion yen
About Hitachi, Ltd.
Hitachi, Ltd. (TSE: 6501), headquartered in Tokyo, Japan, is a leading global
electronics company with approximately 326,000 employees worldwide. Thecompany’s consolidated revenues for fiscal 2012 (ended March 31, 2013) totaled
9,041 billion yen ($96.1 billion). Hitachi is focusing more than ever on the Social
Innovation Business, which includes infrastructure systems, information &telecommunication systems, power systems, construction machinery, highfunctional material & components, automotive systems and others.
For more information on Hitachi, please visit the company's website at
http://www.hitachi.com.

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Cautionary Statement
Certain statements found in this document may constitute “forward-looking statements” asdefined in the U.S. Private Securities Litigation Reform Act of 1995. Such “forward-lookingstatements” reflect management’s current views with respect to certain future events andfinancial 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 andare subject to various risks and uncertainties that could cause actual results to differ materiallyfrom those projected or implied in the “forward-looking statements” and from historical trends.
Certain “forward-looking statements” are based upon current assumptions of future events
which may not prove to be accurate. Undue reliance should not be placed on “forward-lookingstatements,” as such statements speak only as of the date of this document.
Factors 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 investment inHitachi’s major markets, particularly Japan, Asia, the United States and Europe, as well as
levels of demand in the major industrial sectors Hitachi serves, including, without limitation, theinformation, electronics, automotive, construction and financial sectors;•exchange rate fluctuations of the yen against 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, 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 DigitalMedia & Consumer Products segments;•uncertainty as to Hitachi’s ability to continue to develop and market products that incorporate
new technologies on a timely and cost-effective basis and to achieve market acceptance forsuch 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 othermaterials, such as copper, steel, aluminum, synthetic resins, rare metals and rare-earth
minerals, or shortages of materials, parts and components;•

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 or
shortages of materials, parts and components;•

uncertainty as to Hitachi’s ability to achieve the anticipated benefits of its strategy tostrengthen its Social Innovation Business;•uncertainty as to the success of restructuring efforts to improve management efficiency bydivesting or otherwise exiting underperforming businesses and to strengthen competitiveness;•uncertainty as to the success of cost reduction measures;•

general socioeconomic and political conditions and the regulatory and trade environment ofcountries where Hitachi conducts business, particularly Japan, Asia, the United States andEurope, including, without limitation, direct or indirect restrictions by other nations on imports
and differences in commercial and business customs including, without limitation, contract- more -- 12 -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 keyproducts;•

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 havebecome or may become parties;•the possibility of incurring expenses resulting from any defects in products or services ofHitachi;•

the possibility of disruption of Hitachi’s operations by earthquakes, tsunamis or other naturaldisasters;•

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 or that of its customers;•uncertainty as to the accuracy of key assumptions Hitachi uses to evaluate its significantemployee 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 othermaterials published by Hitachi.

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Information contained in this news release is current asof the date of the press announcement, but may be subject
to change without prior notice.
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