Power Systems
Business Strategy
Hitachi IR Day 2013
June 13, 2013

Tatsuro Ishizuka
Vice President and Executive Officer
President & CEO
Power Systems Group andPower Systems Company
Hitachi, Ltd.
© Hitachi, Ltd. 2013. All rights reserved.

Power Systems Business Strategy

Contents
1. Business Overview and Market Environment
2. Business Policy and Growth Strategy
3. Base Businesses
4. Growth Businesses
5. Service Businesses
6. Business Performance Trends and Targets
7. Conclusion© Hitachi, Ltd. 2013. All rights reserved.

1-1. Business Overview
Thermal Power BusinessCoal-fired thermal power plants

Nuclear Power Business
Boiling water reactor nuclear power plants(ABWR・ESBWR)

Gas turbines

Preventive maintenance, nuclear fuel cycle, etc.
Major equipment of coal-fired thermal
power plants

Steam turbines

20%
FY2012
consolidated
60% revenues
904.6 billion
yenTransmission & Distribution,
Renewable Energy and Other Businesses
Particle beam
therapy systems

Wind power
generation systems

20%

Boilers

AQCS

Transmission &distribution (T&D) systems

Photovoltaic power
generation systems

Hydroelectric power generation systems, drive systems, smart grids, power
semiconductors, etc.
ABWR: Advanced Boiling Water Reactor

ESBWR: Economic and Simplified Boiling Water Reactor© Hitachi, Ltd. 2013. All rights reserved.

31-2. Market Trends
World Electricity Generation by Energy Source
40(Tr kWh)

158%
30
20

100%

Market trends
RenewableenergyNatural gas
Oil

117%

10

Coal
Nuclear

0

2010

2015

2030

World electricity generation is
expected to grow by approx.
1.6 times(from 2010 to 2030)
・ Many countries going ahead with nuclear
power plans
・ Accelerated adoption of renewable energy andincreased demand for systems to stabilize
power grids
・ Expansion of power transmission anddistribution market
・ Steady growth in demand for coal-fired thermal
power plants
・ Increasing demand for AQCS due to regulation

Source: World Energy Outlook 2012

Market Trends by Region
Emerging Countries (Asia, etc.)
Looking to secure stable power
supplies (demand for coal-fired
thermal and nuclear powersystems)
Demand to strengthen power
grids

Developed Countries(Europe/Americas)
Increasing and strengthening
power grids due to the increase inrenewable energy
Demand for new nuclear power
plants in Europe

Japan
Moves to separate power
generation and power distribution
Increasing and strengthening
power grids due to the increase inrenewable energy© Hitachi, Ltd. 2013. All rights reserved.

41-3. FY2012 Results
FY2011-FY2012 Results
FY2011 (Results)(Billion yen)

FY2012 (Results)

YoY

Revenues

832.4

904.6

109%

EBIT

△45.0

30.0

+75.0

Revenues rose mainly due to taking-over of the transmission and distribution
Revenues systems business from Japan AE Power Systems Corporation, higher salesof thermal power generation systems and other factors.

EBIT

The segment saw a marked improvement in profitability and moved back into
the black, mainly due to the absence of additional expenses in overseas
thermal power generation systems recorded in FY2011, as well as the
progress with cost-reduction measures.

EBIT: Earnings before Interest and Taxes© Hitachi, Ltd. 2013. All rights reserved.

51-4. Accelerate Global Business Development
GlobalBusiness integration of the thermal
power generation business

U.K.

PolandWon orders for ultra-super critical coal-fired
thermal power generation systems

Indonesia

原子力新設 事業化協議進展

Acquisition of Horizon Nuclear Power Limited

Enhanced production facility for 500kV GIS

GIS: Gas Insulated Switchgear© Hitachi, Ltd. 2013. All rights reserved.

61-5. Overview of the Thermal Power Business Integration
Thermal power business revenues

FY2012: 510 billion yen

Bolster and promote thermal power joint venture business to achieve leading global position

Scope of business integration
Thermal power generation systembusinesses (gas turbines, steam
turbines, boilers, generators, etc.)
Geothermal power system business
AQCS (De-NOx, De-SOx, etc.)

Synergies of Integrated Thermal Power Systems Company
Global competitors

Integrated Thermal Power
Systems Company
Synergies with Mitsubishi
Heavy Industries, Ltd.

Revenues

HitachiStrengthen further

Asia &
Pacific

Shareholding ratio

Regions

Europe,MiddleEast andAfrica

Hitachi 35%
Mitsubishi Heavy Industries,Ltd 65%

Schedule
Effective date

January 1 2014

Small andmediumGas
sizedturbines

Expand sales channels

Large-sized

Products

Coal-fired Low-grade High-grade
coal-fired
thermal coal-fired
boilers
power boilers
systems

Small andmediumsized

Large-sized +Small andmedium-sized

High- and low- High-grade
grade coalcoal-fired
fired boilers
boilers© Hitachi, Ltd. 2013. All rights reserved.

7

with Integrated Thermal
1-6. Cooperation
Power Systems Company
Expand business together with Hitachi’s wide range of products, services and networks to become the global lead ing company

Customers

Integrated Thermal
Power Systems Company Cooperation
 Gas turbines
 Steam turbines Boilers Control equipment
 Maintenance services

Power Systems Company
 Nuclear power systems
 Power transmission anddistribution
 Electric control systems
 Renewable energy

Information &Telecommunication
Systems Company
 Big Data utilization
 Cloud computing

Hitachi Capital,Ltd
 Finance
 Leasing

Hitachi Power
Solutions, Ltd.
 Monitoring Facility diagnosis

Hitachi Infrastructure
Systems Company
Group  Compressors
Inverters

 Demand Side Management (DSM) Smart cities

Hitachi Transport
System,Ltd
 Logistics© Hitachi, Ltd. 2013. All rights reserved.

81-7. Target Position
Business Portfolio Comparison
FY2012FY2015

FY2020
Nuclear PowerPower Solutions andPower Solutions andPower Solutions andOthersOthersOthersNuclear
Nuclear
Nuclear PowerPower
HitachiPower
Hitachi
800.0
Hitachibillion yen
500.0
394.6
billion yen
billion yen
Transmission &Renewable
Distribution
Renewable
Renewable
EnergyEnergyEnergyTransmission &Transmission &Distribution
Distribution

Transmission &Distribution
Transmission &Distribution

NuclearPower

OthersCompanyE
Renewable
EnergyCompanyD
Renewable
EnergyOthersCompany
A
Transmission &Distribution

Renewable
EnergyNuclearPower

CompanyC

Renewable
EnergyRenewable
EnergyCompany
B

Nuclear Power
Transmission &Distribution

Hitachi’s estimates of each company’s revenues (excluding thermal power business) (size of pie chart indicates revenue size) (Base year FY2012)© Hitachi, Ltd. 2013. All rights reserved.

9

Power Systems Business Strategy

Contents
1. Business Overview and Market Environment
2. Business Policy and Growth Strategy
3. Base Businesses
4. Growth Businesses
5. Service Businesses
6. Business Performance Trends and Targets
7. Conclusion© Hitachi, Ltd. 2013. All rights reserved.

Systems Company After Thermal Power Systems
2-1. Power
Integration-Business Expansion Strategy

Focus on growth business fields and building earnings baseFirst Pillar

Business Expansion

Expand base businesses(Billion yen)

 Build new nuclear power plant, etc.

8,000
800

800
ServiceBusiness

Second Pillar

Expand growth businesses Power transmission anddistribution, renewable energy,
particle beam therapy systems

500
4,000
400

400
GrowthBusinesses+
Base
Businesses

Launch energy solutions business
Third Pillar

Expand services business

00
FY2013

FY2015

FY2020© Hitachi, Ltd. 2013. All rights reserved.

112-2. Strengthen Business Base
Accelerate “Hitachi Smart Transformation Project”
Reduce costs by 53 billion yen through cost structure reforms (FY2011 to FY2015 total)
Production
cost

Create global manufacturing system and value chain
 Build new overseas manufacturing bases and ramp up production capacity

Directmaterials
cost

Expand global procurement and engineering

Indirectcost

Optimize business structure by IT and structural reforms

 Increase overseas procurement ratio
FY2012 11% (Excluding thermal power business)

FY2015 20%

 Use Group shared services to improve business efficiency

Strengthen cash flow management
Strengthen project management and improve profitability
Bolster global supply chain management© Hitachi, Ltd. 2013. All rights reserved.

122-3. Build Global Value Chain
Expand and enhance global procurement, engineering and manufacturing bases

Improve operational efficiency by strengthening global cooperation,and promote cost structure reforms
Bolster networks by globalizing human resources and IT systems

EuropeDalianDusseldorf

Power Systems Company

Americas
New York

China
Shanghai

Asia

Bangalore

Singapore
Power Systems Company‘s manufacturing and engineering bases
Power Systems Company’s procurement bases
Hitachi Group’s procurement bases© Hitachi, Ltd. 2013. All rights reserved.

13

Power Systems Business Strategy

Contents
1. Business Overview and Market Environment
2. Business Policy and Growth Strategy
3. Base Businesses
4. Growth Businesses
5. Service Businesses
6. Business Performance Trends and Targets
7. Conclusion© Hitachi, Ltd. 2013. All rights reserved.

3-1. Nuclear Power Business-Basic Policy
Raise the safety of nuclear power generation as an effective source ofenergy for curbing CO2 emissions to meet continuing global demand.
Revenues

FY2012: 160 billion yen

FY2020: 360 billion yen

Respond to the Fukushima restoration and revitalization, and promote measures to increase plant safety

Fuel debris* removal and eventual reactor decommissioning
Improve plant safety in conformity with the new safety standards fornuclear power plants
Develop ABWR designs with enhanced safety, next-generation
safety technologies

Promote and strengthen overseas energy solutions business
Implement measures for constructing ABWRs in the UK
Focus on expanding sales to countries continuing to construct
new nuclear power plants*Fuel debris: material in which fuel and its cladding tubes, etc. have melted and re-solidified© Hitachi, Ltd. 2013. All rights reserved.

15

to the Fukushima Restoration and Revitalization,
3-2. Respondand Steadily Promote Measures to Increase Plant Safety
Support the Fukushima restoration
and revitalization

Double-arm robots

Measures to enhance plant safety
Filter Containment Venting System (cooperation with AREVA)
 Strengthen cooperative relationshipwith AREVA

Strengthen performance ofhigh-pressure coolant
injection system

Water treatment systems

 Cooperate with GE-Hitachi
Nuclear Energy, Ltd.
Water supply pumps

FilterAdsorption towers© Areva GmbH 2013. All rights reserved.

© Hitachi, Ltd. 2013. All rights reserved.

16

3-3. Step Up Overseas Business Development
Promote overseas development of the nuclear power systems business under the “One Team” framework with GE

Acquired UK Horizon Nuclear Power (Nov. 2012)
Promote plans to construct new nuclear power
plants at two sites* Utilize PPP experience in IEP
 Promote acquisition of GDA approval

Focus on countries continuing to construct
new nuclear power plants
SwedenU.K.

Finland

CanadaU.S.

Lithuania■HEU
HNP Poland

Hitachi-GE Nuclear Energy■

Vietnam
Saudi
ArabiaIndia

Malaysia

HPSA ： Hitachi Power Systems America Ltd.
HEU ： Hitachi Europe Ltd.
HNP ： Horizon Nuclear Power Ltd.
*Wylfa and Oldbury■ HPSA■GE-Hitachi
Nuclear Energy■:Bases
IEP ：Intercity Express Programme
PPP ：Public Private Partnership
GDA ：Generic Design Assessment

Suppliers meeting in the UK

Continue to support Lithuania’s
nuclear power plant construction
plans
Propose ABWRs to Vietnam andother countries
Plan construction of ESBWRs for
Teollisuuden Voima Oyj (TVO) in
Finland and Dominion Resources,
Inc. in the U.S.
Cooperate with and strengthen
support for GE-Hitachi© Hitachi, Ltd. 2013. All rights reserved.

17

Power Systems Business Strategy

Contents
1. Business Overview and Market Environment
2. Business Policy and Growth Strategy
3. Base Businesses
4. Growth Businesses
5. Service Businesses
6. Business Performance Trends and Targets
7. Conclusion© Hitachi, Ltd. 2013. All rights reserved.

4-1. Transmission & Distribution Business-Basic Policy
Revenues

FY2012: 70 billion yen

FY2015： 110 billion yen

Develop into a core business alongside the thermal power and nuclear power businesses

Expand T&D business globally based on competitive products andabundant supply experiences
Strengthen systems integration business fusing equipment and IT

Accelerated Global Market Expansion(Trillion yen)Equipment

High-value-added
systems

CAGR 8％20

CAGR 6％
10

0

5

6

FY2000FY200510FY2010

Systems,
etc.

15

FY20152020
21 trillion
yen

21

Power
electronics
FY2020Transformers*Hitachi estimates

Switchgear

Automation

Japan:Expansion of wide-area grid systems and interconnection between*Hitachi estimatesWest and East, as well as separation of electricity generation and transmission
and introduction of renewable energy
Global: Expansion of a high-growth and globalized market driven by the economic growth in emerging
countries and demand for upgrade in developed countries.
CAGR: Compound Annual Growth Rate

© Hitachi, Ltd. 2013. All rights reserved.

194-2. Strengthen Transmission & Distribution Business
Provide integrated solutions from competitive components to systems
Substation equipment
Switchgear(GIS)

Transformers

Monitoring control systems
Supervisory
and control system

Protection andcontrol

Ultra high voltage andextra high voltage
transmission

Wide-area gridstabilization
systems

Battery storage
systems

Substationequipment
Monitoring
controlsystems

Powerelectronics

Fusion of equipment and IT

Power electronics
HVDC

STATCOM

Power supply
systems

HVDC
Smart grids

STATCOM: Static Synchronous Compensator© Hitachi, Ltd. 2013. All rights reserved.

20

4-3. Key Systems Businesses
Full turnkey substations

HVDC

Offer interconnection and transmission
with submarine cables
Support for strengthenwide-area grids withproven and stable
operation experiences

Provide integrated EPCs basedon high-quality equipment andsystems
Supply experiencesof more than
200 sites
worldwide

Ultra high voltage (UHV) systems(800-1,200kV)

Wide-area grid stabilization systems

Minimize long-distance transmission
lossesExpand business with world-leading
technologies

Prevent large-scale power outages
through forecast and simulation-based
control

Supply experiences

RussiaChina
India
South Africa
GCB: Gas Circuit Breaker

CanadaU.S.

Grid stabilization
With battery storage
systems, etc.

Total experiencesＵＨＶ ＧＣＢover 60 units

Brazil© Hitachi, Ltd. 2013. All rights reserved.

21

4-4. Strengthen Global Business Framework
Strengthen existing engineering and manufacturing bases, and build new bases
SDEE Hitachi High-Voltage
Switchgear Co., Ltd.

Hitachi Works

Hitachi HVB,Inc

Omika Works
Hitachi (Suzhou) EHV
Switchgear Corporation

US operation started in 1977

PT. Hitachi Power
Systems Indonesia

Kuwait officeHitachi T&D Systems
Asia Pte. Ltd. (Singapore)

Increased production buildingsin March 2013
(doubled production capacity):Manufacturing bases:Engineering bases

The only EHV switchgear
manufacturer company
in ASEAN area
© Hitachi, Ltd. 2013. All rights reserved.

22

4-5. Renewable Energy Business and Others-Basic Policy
Revenues

FY2012: 160 billion yen

FY2015： 240 billion yen

Renewable Energy Business
Help create a low-carbon society by wind andphotovoltaic power systems
Provide integrated services extending from gridconnection and construction to maintenance,
operation and monitoring

Particle Beam Therapy System Business
Expand business through leading-edge technologies
such as world-leading advanced spot scanning
irradiation technology*, and outstanding operational
track records in Japan and the U.S.

*Compatible with beam scanning system© Hitachi, Ltd. 2013. All rights reserved.

23

4-6. Renewable Energy BusinessWind Power Systems

Image of Offshore Wind FarmUsing 5 MW Wind Turbines

Won orders for more than 100 x 2 MW-class
Hitachi wind turbines to date
No.1 Japan market share in 2012*

Offshore initiatives (commenced trials of
experimental offshore floating wind farmprojects: Fukushima, Goto Islands)
Development of 5 MW-class, lightweight
Hitachi wind turbines Field test in 2014, commence sales in 2015
Photovoltaic Power Systems (Mega Solar)

Coordination ability trusted by operators
 Extensive track record in large-scale projects
 World-class core product lineup, including
power conditioners (PCS)
Battery System and Control Systems for Easing Output Fluctuation

Conducting demonstration trials with NEDO
and others in locations around the world*Source: A BTM Wind Report: World Market Update 2012

Japan’s Largest class
Mega-Solar Systems (82 MW)■Oita Solar Power
Total area: approx. 1km2(the area of approx. 22 Tokyo Domes)
Panels: approx. 340,000(approx. 500 km when laid down end to end:
distance between Tokyo and Osaka)© Hitachi, Ltd. 2013. All rights reserved.

24

4-7. Particle Beam Therapy System Business
Create technologies using accelerator technology and plant engineering skills amassed over many years

Operating Track Record
Outstanding operational track record
for more than 10 years in the U.S.
and Japan
Delivered Japan’s
first proton beam
spot scanning
irradiation system(scheduled to begin
offering treatment
Nagoya Proton Therapy Center
in FY2013)
Construction underway at three famous
hospitals in the U.S.

U.S. Minnesota

U.S. TennesseeMarket Prospects and Global Sales Promotion Activities

Expand markets to Europe/Russia,
Asia and the Middle East
Be a key player in Japan’s drive toexport medical technologies

Signing ceremony with Russian medical and research instituteHeld user meetings

Target: over 30% market share© Hitachi, Ltd. 2013. All rights reserved.

25

4-8. Energy Solutions Business
Hitachi will be leading energy solutions business
Energy shortages

Grid stabilization

Environmental problems

Fund shortages

Energy security
Various issues and needs among
countries, regions and power
Human resource development
customers

Optimal distributed power source demand

Renewable energy introduction

Energy grand design formulation

Provide optimal solutions combined to match customer needs
Components

IT integration

Systems proposals

Finance and leasing

Service enhancement

Thermal power generation solutions
Hitachi Group’s collective capabilities© Hitachi, Ltd. 2013. All rights reserved.

26

Power Systems Business Strategy

Contents
1. Business Overview and Market Environment
2. Business Policy and Growth Strategy
3. Base Businesses
4. Growth Businesses
5. Service Businesses
6. Business Performance Trends and Targets
7. Conclusion© Hitachi, Ltd. 2013. All rights reserved.

5.

Expand Service Business

Revenues

FY2013:140 billion yen

FY2015:210 billion yen

Expand preventive maintenance and enhanced maintenance services
Expand preventive maintenance business further
Provide advanced maintenance service businessbased on greater IT utilization
 Expand remote monitoring, long-term service agreements(LTSA) and enterprise asset management (EAM) Provide integrated service solutions through to operation andmaintenancePredictive diagnosis system
Learns facility operations
automatically anddetects abnormal
conditions

Customer facilities

Propose predictive diagnosis andmaintenance to customers

Automateddiagnosis
Operatingdata reference

Remote monitoring

Automated
operational
data collection

Cloud-based system

Plantfacilities

Industrial
facilities

Medicalequipment© Hitachi, Ltd. 2013. All rights reserved.

28

Power Systems Business Strategy

Contents
1. Business Overview and Market Environment
2. Business Policy and Growth Strategy
3. Base Businesses
4. Growth Businesses
5. Service Businesses
6. Business Performance Trends and Targets
7. Conclusion© Hitachi, Ltd. 2013. All rights reserved.

6-1. Orders
FY2013 forecast excludes the thermal power systems business for January-March 2014
Order received(Billion yen)

1,000

848.3
800

691.7

685.7

650.0

600
Thermal Power Business

400
Nuclear Power Business,
T&D,
Renewable Energy andOther Businesses

200
0FY2010FY2011FY2012FY2013
Forecast

Main FY2012 Orders

FY2013 Initiatives

Thermal: large projects in India, Poland,South Korea, etc.

Step up activities to win orders centered on
projects for improving the safety of exsting
nuclear power plants in Japan andrenewable energy, as well as overseas
thermal power and T&D projects

Renewable energy: large wind power
and mega solar projects© Hitachi, Ltd. 2013. All rights reserved.

30

6-2. Business Performance Trends

34%

EBIT
(Billion yen)

28%[58.0]
58.0

60

904.6
[6.1%]

832.4

813.2

[12.0]

30.0

400

40

500.0

30
20

～

3.3%

1.9%

14.0

10

1.9%

FY2010～△45.0
FY2012△5.4%
FY2011

Nuclear powerbusiness revenues(450.0)[950.0][1.4%]

15.6

0

50

11.6%

750.0

600

200

(30%)
[50%]

36%
[840.0]

1000
800

43%

Overseas revenue ratio [39%]～

Revenues(Billion yen)

39%

T&D businessrevenues

Renewable energy
business and others
revenues

FY2013
Forecast

0

FY2015
Target

Thermal powerbusiness revenues

EBIT

EBIT ratio*1: [ ] Figures announced on June 14, 2012 (EBIT and the EBIT ratio were calculated based on previous forecasts)*2: ( ) Figures announced on June 14, 2012 excluding the thermal power business© Hitachi, Ltd. 2013. All rights reserved.

31

6-3. Differences from Previous Forecast
FY2012(Results)・FY2015(Target)(Billion yen)
FY2012(Results)

FY2015(Target)

840.0(450.0)
950.0

904.6

500.0

12.0

58.0

Results and revised forecast

30.0

58.0

Revenues

39%

(30%)
50%

Results and revised forecast

36%

28%

Previous forecast

Revenues
Results and revised forecast
Calculated based on previous forecast

EBIT

Overseasrevenue ratio( )Figures exclude the thermal power business

Main differences
FY2012(Results)

FY2015(Target)

Revenues

Saw higher revenues in the thermal
power systems business, etc.

Targeting expansion in growth and service business,
etc., despite delays with the construction of new
nuclear power plants

EBIT

Reflects increased revenues, etc.

Maintaining previous target© Hitachi, Ltd. 2013. All rights reserved.

32

6-4. FY 2013 Forecast
FY2012 Results and FY2013 Forecast(Billion yen)

FY2012(Results)

FY2013(Forecast)

YoY

Revenues

904.6

750.0

83%

EBIT

30.0

14.0

△16.0

Revenues

Forecasting decrease in revenues, due to lower sales from preventive maintenanceservices for nuclear power generation systems in Japan, and the establishment of a joint
venture in thermal power systems with Mitsubishi Heavy Industries, Ltd. scheduled forJanuary 2014.
Projecting solid growth in revenues in the T&D, renewable energy and other businesses

EBIT

Forecasting decrease in EBIT, in line with the projected decrease
in revenues.

© Hitachi, Ltd. 2013. All rights reserved.

33

Power Systems Business Strategy

Contents
1. Business Overview and Market Environment
2. Business Policy and Growth Strategy
3. Base Businesses
4. Growth Businesses
5. Service Businesses
6. Business Performance Trends and Targets
7. Conclusion© Hitachi, Ltd. 2013. All rights reserved.

7.

Conclusion

The World Market Leader Advancing the Future Global Society with Evolutionary Energy Technologies

Accelerate promotion of global growth strategy
Capture synergies with the integrated thermal
power business

FY2015 Targets
Revenues: 500 billion yen (overseas revenue ratio: 28%)
EBIT ratio: 11.6%
Gross margin: 3 point improvement (Vs. FY2012)
SG&A expense ratio: Hold steady (Vs. FY2012)© Hitachi, Ltd. 2013. All rights reserved.

35

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 thoseprojected 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 notprove to be accurate. Undue reliance should not be placed on “forward-looking statements,” 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 in Hitachi’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, the information, 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 Digital Media &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 for suchproducts;
 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, synthetic resins, rare metals and rare-earth minerals, orshortages 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 shortagesof materials, parts and components;
 uncertainty as to Hitachi’s ability to achieve the anticipated benefits of its strategy to strengthen its Social Innovation Business;
 uncertainty as to the success of restructuring efforts to improve management efficiency by divesting 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 of countries where Hitachi conducts business, particularly Japan, Asia, the United States and Europe,
including, without limitation, direct or indirect restrictions by other nations on imports and differences in commercial and business customs including, without limitation, contract terms andconditions 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 by earthquakes, tsunamis 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 or that of its customers;
 uncertainty as to the accuracy of key assumptions Hitachi uses to evaluate 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 other materials published by Hitachi.

© Hitachi, Ltd. 2013. All rights reserved.

36