Power Systems Business
Strategy
Hitachi IR Day 2012

June 14, 2012

Tatsuro Ishizuka
Vice President and Executive Officer,
President & CEO
Power Systems Group,
President & CEO
Power Systems Company,
Hitachi, Ltd.
© Hitachi, Ltd. 2012. All rights reserved.

Power Systems Business Strategy

Contents
1. Business Overview and Market Environment
2. Business Policy and Growth Strategy
3. Thermal Power Business
4. Nuclear Power Business5. Transmission & Distribution, Renewable Energy and Other Businesses
6. Business Performance Trends and Targets
7. Conclusion© Hitachi, Ltd. 2012. All rights reserved.

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

Gas turbines

Nuclear Power Business
Boiling water reactor nuclear power plants (ABWR, ESBWR)
Preventive maintenance,
nuclear fuel cycle, etc.

Major equipment of nuclear power plants
Major equipment of coal-fired
thermal power plants
Steam turbines

Reactor pressure
vessel20%
FY2011
Consolidated
60% revenues
832.4 billion 20%
yen

Main Control
Room Panel

Transmission & Distribution,
Renewable Energy and Other Businesses

Transmission& distribution
systems

Boilers

Reactorcomponent

Wind power
Generation
systems

Photovoltaic power
generation systems

Proton beam
therapy systems

AQCS

Hydroelectric power generation systems, drive systems, smart grids,
power semiconductor, etc.
ABWR ： Advanced Boiling Water Reactor
AQCS ： Air Quality Control System

ESBWR ： Economic and Simplified Boiling Water Reactor© Hitachi, Ltd. 2012. All rights reserved.

3

1-2 Market Trends
World Electricity Generation by energy source

World electricity generation is expected to
grow by approx. 1.7 times(from 2008 to 2030)
Market trends• Steady growth in coal-fired thermal power plants• Increasing demand for AQCS due to national
regulation• Many countries going ahead with nuclear power plans• Accelerated adoption of renewable energy• Expansion of power transmission and distribution
marketMarket trends by region
EuropeShift in demand for new
coal-fired thermal power
plants from Western toEastern Europe (Including
rehabilitation demand)
GTCC ： Gas Turbine Combined Cycle

Japan/Asia
Increased planning of new
supercritical coal-fired thermal
power plants
Stricter environmental regulationsin China, increasing demand forgas turbine (GT) systems for
distributed power sources

Americas
GTCC market expansion due
to increase shale gas
productionMore stringent
environmental regulations in
the U.S.
© Hitachi, Ltd. 2012. All rights reserved.

4

1-3 FY2011 Results
FY2010-FY2011 Results
FY2010 (Actual)(Billion yen)

FY2011 (Actual)

YoY

Revenues

813.2

832.4

102%

Operating income (loss)

22.0

△33.9

△56.0

Revenues

Slight increase in revenues mainly due to steady growth in thethermal power generation systems business in Japan, despite adecline in nuclear power generation systems due sales to theimpact of the Great East Japan Earthquake.

OperatingincomeDeterioration primarily reflected additional expenses and delays
related to difficulties experienced with some boiler materials in
European thermal power generation systems projects.

© Hitachi, Ltd. 2012. All rights reserved.

5

1-4 Acceleration of Global Business Development
事業化協議進展ﾘﾄｱﾆｱ 原子力新設
Lithuania
nuclear power plant
Signed Concession Agreement for new

U.S.

No. 1 proton beam therapy (PBT) systems
order share (FY2011)

Received order for No. 9 and No. 10
units at the Taean Thermal Power
Plant
Two 1,050 MW-class systems, the largest thermal power
generation equipment in terms of power generation capacity
in South Korea

South Korea

China

Began operations
at new DeNOx catalyst factory

India

Received order for super critical coal-fired
thermal power projects

3 systems
ordered in
FY2011
Americas

Received order for H-25 gas turbines

PBT ： Proton Beam Therapy© Hitachi, Ltd. 2012. All rights reserved.

6

1-5 Target
20%
20%
Company E

15%
15%

Company D

Operating income ratio

Company C

10%
10%Company B
Company A

5%
5%
0%
0%
-5%
-5%

Revenues(1 trillion yen)

-10%
-10%

Target

2010

2011

2012

2015

Establishment of the stable profit baseAcceleration of the global management© Hitachi, Ltd. 2012. All rights reserved.

7

Power Systems Business Strategy

Contents
1. Business Overview and Market Environment
2. Business Policy and Growth Strategy
3. Thermal Power Business
4. Nuclear Power Business5. Transmission & Distribution, Renewable Energy and Other Businesses
6. Business Performance Trends and Targets
7. Conclusion© Hitachi, Ltd. 2012. All rights reserved.

8

2-1 Key Policies
Move from recovery to growth
Strengthen business base

Build optimal business structure

Expand in strategic businessfieldsBolster global R&D

Establish high-profit structure

Grow in global markets

Gas turbines, renewable energy,
AQCS, etc.

Accelerate development of
next-generation products© Hitachi, Ltd. 2012. All rights reserved.

92-2 Strengthen Business Base
Fundamentally review cost structure
Powerfully execute “Hitachi Smart Transformation Project”
Expand overseas procurement
Directmaterials and engineering

Double global procurement ratio at FY2015(to over 70% in the thermal power business)

Production

Globalize value chain

IndirectEliminate overlapping, distributed common tasks

Increase utilization of overseas production bases (China, India, etc.)

Restore trust, strengthen project management
Bolster MONOZUKURI (manufacturing)capabilities and enhance training forengineering by developing and utilizing
human resources
Enforce risk management by using
people with experience in EPC
EPC ： Engineering, Procurement and Construction

Quick resolution on boiler material issues
Identified cause of welding cracks in boiler
materials developed on a German national project;
Completed tests on improvement methods(currently implementing improvements in actual
plants)© Hitachi, Ltd. 2012. All rights reserved.

102-3 Build Optimal Global Business Structure
Provide solutions to target markets by expanding and enhancing global bases
Expand and enhance sales functions of overseas bases(India, South Africa, Dubai, etc.)

Make integrated proposals from power generation to transmission & distribution
Expand and enhance overseas procurement,
overseas production and overseas engineering
Hitachi Power Systems Canada (Established April 2012)
Hitachi Power Systems
America

Power Systems Company
Babcock-Hitachi K.K.
Hitachi Power
Europe GmbHBGR Turbines Company
Private Ltd.
BGR Boilers
Private Ltd.

Hitachi-GE Nuclear Energy
Babcock-Hitachi (Hangzhou)
Environmental Equipment Co., Ltd.
(Established June 2011)
GE-Hitachi
Nuclear Energy
Core Group companies
Sales bases

Manufacturing andengineering bases
Procurement bases

Service bases© Hitachi, Ltd. 2012. All rights reserved.

11

Power Systems Business Strategy

Contents
1. Business Overview and Market Environment
2. Business Policy and Growth Strategy
3. Thermal Power Business
4. Nuclear Power Business5. Transmission & Distribution, Renewable Energy and Other Businesses
6. Business Performance Trends and Targets
7. Conclusion© Hitachi, Ltd. 2012. All rights reserved.

3-1 Thermal Power Business Basic Policy
Revenues FY2011: 490 billion yen

FY2015: 500 billion yen

Accelerate global business development
Focus on coal-fired thermal powerin Asia and Eastern Europe
Expand gas turbine sales globally
Expand service maintenance business globally

Expand businesses with strategic products
Gas turbines
Air Quality Control Systems, DeNOx catalysts
Development of coal-fired, IGCC and
CCS technologies
IGCC ： Integrated Gasification Combined Cycle

CCS ： Carbon Dioxide Capture and Storage© Hitachi, Ltd. 2012. All rights reserved.

13

3-2 Accelerate Global Business Development (1)New markets

Service Maintenance Market

Expand in emerging markets,particularly in Asia
Coal-fired systems expand in emerging
markets, and gas-fired systems in all regions

Renewal of aging thermal power systems
and increasing demand for large-scale
refurbishment, especially in Europe andthe U.S.

Estimation on Thermal Power
Generation Capacity
Unit : GW
6,000

Aging Status of Thermal Power Plants
Unit : GW

Asia

Europe

5,628

15%

5,142
5,000
4,000

47% 511

4,401
Other areas
Non-OECD

3,310

3,000

ASEAN etc.
India
China
OECD

2,000
1,000

North
America

53%

56%

1,367

900
44%

85%

38%

25 years or older
Under 25 years

3,607
62%
Source : Hitachi estimation based on UDI data

0
2009

2020

Source : IEA WEO 2011

2030

2035

Worldwide total(25 years or older: 38%)
© Hitachi, Ltd. 2012. All rights reserved.

14

3-3 Accelerate Global Business Development (2)Expand business through three core bases (Japan, Europe and the Americas) and India
Constructing highly efficient coal-fired thermal power plants: 30 plants (26.4 GW)* under construction
Europe,South Africa• Neurath• Moorburg(Under commissioning) (Under construction)
B
B[1100MW×2][820MW×2]

Asia

Americas• TEPCO/Hitachinaka No. 2 unit
Recent orders(Under construction)
BTG[1,000MW]• South Korea/ Taean

Thermal Power Plant,
Units No. 9 andNo. 10 units[1,050MW×2]BTG• Wilhelmshaven(Under construction)
BTG[790MW]• Rotterdam(Under construction)
BTG[790MW]• South Korea/Yonghung
Thermal Power Plant No.5
and No.6 unit
(Under construction)
TG[870MW×2]• Duke Energy(Under commissioning)
B[900MW]• India/ NTPC
[660MW×6]B• India/ NTPC
[800MW×4](First refusal right)TG

Recent orders• U.S./ KCP&L
AQCS×2• Medupi-1〜6(Under construction)
B[800MW×6]• Kusile-1〜6(Under construction)
B[800MW×6]<H-25 gas turbines>• South Korea/Dangjin
6 orders from China, India, etc.
Thermal Power Plant
No. 9 and No.10 unit
(Preparing for construction)
B[1,000MW×2]<H-25 gas turbines>
4 orders from Canada, etc.

B: Boilers, TG: Steam Turbine and Generator AQCS: Air Quality Control System *: Including plants preparing for construction or under commissioning© Hitachi, Ltd. 2012. All rights reserved.

15

3-4 Accelerate Global Business Development (3)Expand and enhance global production bases
Dalian Hitachi Machinery & Equipment Co., Ltd.
n Bolster gas turbine production basen Begin operations at a casting shop
(Scheduled for July 2012)
Image of new plant

Babcock-Hitachi (Hangzhou) Environmental
Equipment Co., Ltd.
n Cope with market expansion for DeNOx
catalysts in Chinan Constructed local production facility (Start ofproduction in June 2012)

India/ BGR-T and BGR-Bn Bolster production basesn Strengthen business in Indian market

Strengthen plant business

Strengthen service maintenancebusiness globally

Cooperate with local partners
Strengthen overseas engineeringfunctions

Strengthen service maintenancebusiness in North America
Expand business through M&As

BGR-T : BGR Turbines Company Private Ltd.

BGR-B : BGR Boilers Private Ltd.
© Hitachi, Ltd. 2012. All rights reserved.

16

3-5 Expand Businesses with Strategic Products (1)Gas turbines

AQCS, DeNOx catalysts

H-25 gas turbine order track record:
151 units

AQCS

n Fuel diversification (Develop fuelcombustors)
n Strengthen business on distributed powersource market*

Market2010:
approx.
5 trillion yen
size

DeNOx
BoilerDeSOxElectrical
Precipitator

Stack

2015:
approx. 11 trillion yen*Hitachi estimation (Including renewable energy)

H-80 gas turbine

DeNOxsystemn Develop new markets in Japann Actively develop overseas markets(Start of order-winning activities)

DeNOx
catalyst*2011 order share: 18%(Hitachi estimation)

AQCS
n Cope with stricter environmental regulationsin the U.S. and Europe

DeNOx catalysts (No. 1 world share*)n Cope with stricter NOx emission regulationsin China© Hitachi, Ltd. 2012. All rights reserved.

17

3-6 Expand Businesses with Strategic Products (2)IGCC (Oxygen-blown IGCC)
Early commercialization with accelerated demonstration test
2012

2015

2020

IGCC (Oxygen-blown)
Carbon capture
IGCC (Oxygen-blown)/IGFC+Carbon capture2025
Osaki CoolGen Project(Ministry of Economy,
Trade and Industry Subsidy
Project)

Gasifier

1,100
tons/day

Combinedcycle

170
MW class

Scheduled to begin
construction in March 2013

IGCC (Oxygen-blown) commercial system
IGCC (Oxygen-blown)+CCS commercial system(Currently conducting
environmental assessment)

CCS (Carbon Dioxide Separation・Capture)
Accelerate Commercializationn Signed an agreement with Canada’s
Saskatchewan Power Corporation to
jointly construct a Carbon Capture Test
Facility (March 2012)[Chemical scrubbing; amount of carbon to be
captured: 120 tons/day]

Signing ceremony

IGCC： Integrated Gasification Combined Cycle CCS ： Carbon Dioxide Capture and Storage
IGFC ： Integrated Coal Gasification Fuel Cell Combined Cycle

Image of CCTF

© Hitachi, Ltd. 2012. All rights reserved.

18

Power Systems Business Strategy

Contents
1. Business Overview and Market Environment
2. Business Policy and Growth Strategy
3. Thermal Power Business
4. Nuclear Power Business5. Transmission & Distribution, Renewable Energy and Other Businesses
6. Business Performance Trends and Targets
7. Conclusion© Hitachi, Ltd. 2012. All rights reserved.

4-1 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 FY2011: 160 billion yen

FY2020: 360 billion yen

Lend support for medium- to long-term countermeasures related to
the Fukushima Nuclear Power Station

Remove fuel from spent fuel storage pool in Unit No. 4
Offer interim storage, eventual reactor decommissioning
Offer services for the nuclear power sector in Japan and develop next-generation reactors

Promote enhanced safety (existing and new power plants), offer interim storage facilities
Develop even safer ABWR, next-generation reactor technologies

Step up development of overseas businessWork on Lithuania Visaginas Nuclear Power Plant contract
Focus on expanding sales to countries moving forward with plans to construct new nuclear
power station
ABWR ： Advanced Boiling Water Reactor© Hitachi, Ltd. 2012. All rights reserved.

20

Lend Support for Medium- to Long-term Countermeasures
4-2 Related
to the Fukushima Nuclear Power Station

Offer interim storage, eventual reactor decommissioning
Survey rubble and remove fuel in Unit No. 4 spent fuel storage pool
Cover

Pool survey image

CameraUnderwater
exploration robot

Overhead crane

RubbleFuel handle

Fuel handling machine
Unit No. 4 nuclear reactor building

Promote development of technologies for removing damaged fuel(Participate in national project)n Remote decontamination inside buildingn Identification of leaks, repair and internal survey in primarycontainment vessel
n Evaluate soundness of reactor pressure vessel andprimary containment vessel

Monitoring in decontamination and measurement of radiationdose distributionn Development for gamma radiation distribution measuring system

Screen showing measured
gamma radiation distribution© Hitachi, Ltd. 2012. All rights reserved.

21

Services for the Nuclear Power Sector in Japan and4-3 Offer
Develop Next-generation Reactors
Propose safety-enhancement countermeasures

Emergency safety countermeasures(Medium to long term)
Severe accident countermeasures
Air-cooled emergency diesel power generator,
filter vent system, upgrade cooling
function, instrumentation system, etc.

Develop safety technologies
Safety meets regulation requirements ofinternational marketplace
Reflect proven latest ABWR and
Fukushima countermeasures in development

World-class safety (Next-generation ABWR)
Strengthen ability to handle external events

Interim storage
Produce casks* for spent fuel storage* 50 casks have been delivered to
Recyclable-Fuel Storage Company

Hybrid safety
Dome withstanding
aircraft crash

Safe systemseparate layout

Seismic isolation
systemSpent fuel storage pool located underground© Hitachi, Ltd. 2012. All rights reserved.

22

4-4 Step Up Development of Overseas BusinessAccelerate overseas development of the nuclear power systems businessunder the “One Team” framework with GE

Lithuania Visaginas Nuclear Power Plant
Signed Concession Agreement for
constructing the plantn Enhanced-safety ABWR
n Scheduled to commercial operation in 2021

(2012年3月)

Focus on countries pushing ahead
with the construction of new nuclear
power plants
FinlandLithuania

Ｕ.Ｓ.

Hitachi-GE Nuclear Energy,Ltd.
■HPSA
■
■
GE-Hitachi Nuclear Energy, Inc.
Vietnam

PolandPromote global maintenanceand service business
Jointly develop small reactors
with thermal use with Canada’s
Saskatchewan Province

India

HPSA ： Hitachi Power Systems America.Ltd.
© Hitachi, Ltd. 2012. All rights reserved.

23

Power Systems Business Strategy

Contents
1. Business Overview and Market Environment
2. Business Policy and Growth Strategy
3. Thermal Power Business
4. Nuclear Power Business5. Transmission & Distribution, Renewable Energy and Other Businesses
6. Business Performance Trends and Targets
7. Conclusion© Hitachi, Ltd. 2012. All rights reserved.

5-1Transmission & Distribution, Renewable Energy andOther Businesses Basic Policy

Revenues FY2011: 180 billion yen

FY2015: 270 billion yen

Transmission & Distribution Business
Offer everything from components to systems
Expand systems integration business

Renewable energy business
Expand orders for wind and photovoltaic power generation systems
Develop power grid connection and output power stabilization
technologies

Particle beam therapy business
Expand business through leading edge technologies such as spot
scanning technology*, and outstanding operational track records inJapan and the U.S.
* Compatible with beam scanning system© Hitachi, Ltd. 2012. All rights reserved.

25

5-2 Transmission & Distribution Business (1)Market trends
World market size (Trillion yen)

15
10
5
0

6
2010

8
2015

12
2020

Hitachi estimation

Increased construction of grids in emerging markets and renewal of
aging systems in industrialized nations
Long-distance power transmission and HVDC
(High-voltage direct current) due to enhanced wide-area grids
Needs to strengthen power grids due to the increased introduction ofrenewable energy
Acceleration in use of smart grids

Business strategy
Established Transmission & Distribution Systems
Division to spearhead systems integration businessexpansion
Strengthen and accelerate ultra-high voltage,
HVDC and smart grid businesses
Established Transmission & Distribution Division at
Hitachi Research Laboratory to strengthen
technology and product development
HVDC ： High Voltage Direct Current

High voltage and high power laboratory(Resumed experiments in May 2012)
HITACHI High Power Laboratory© Hitachi, Ltd. 2012. All rights reserved.

26

5-3 Transmission & Distribution Business (2)Develop from a power transmission &transforming equipment business to a systems business

Wide-area
grid powertransmission

Existing
business

Renewableenergy grid

Fuse power transmission & transforming systems and IT
Create strong and smart grids
Power plant Wind power

Optimal control
of power grids
Solar power

EMS

Power transmission
Ultra-high & Transforming-voltage

Power stationtransformer

Power receiving& transforming STATCOM

Frequency
conversion
systems

Transformer
substation
Storagebatteries

DMS

Distribution
grid

AMI
BEMS/HEMS

Smart

Intelligent protection
and control systems

Photovoltaic
power plant

Transmission
grid

StrongＵＨＶ

HVDC systems
EV charging
management
system

UHV ： Ultra High Voltage STATCOM ： A static synchronous compensator
HVDC : High Voltage Direct Current
DMS : Distribution Management System
AMI ： Advanced Metering Infrastructure EV ： Electric Vehicle
BEMS ： Building Environment and Energy Management System HEMS ： Home Energy Management system

User services
EMS : Energy Management System© Hitachi, Ltd. 2012. All rights reserved.

27

5-4 Transmission & Distribution Business (3)800 kV GCB for the U.S.

Transformers for Saudi Arabia

UHV (1,100 kV) GCB for China

Comprehensive agreement signedwith Russia’s Federal Grid Company

Promote demonstration trials relating
to power transmission & distributionn Improve energy efficiency at EMS and load
dispatch centern Remote monitoring and diagnosis oftransformer substations and improvementof safety and reliability of large power grids
GCB ： Gas Circuit Breaker
UHV ： Ultra High Voltage
EMS ： Energy Management System

GIS ： Gas Insulated Switch© Hitachi, Ltd. 2012. All rights reserved.

28

5-5 Renewable Energy BusinessWind power systems

Characteristic ofthe downwind-type wind turbines

Business transfer from Fuji Heavy Industries
Integrated business from EPC to maintenance
Development next-generation systems and step up
sales expansion
n 2 MW system for low wind speeds,
large system for offshore use(vs. upwind-type wind turbines)

Target : No. 1 share in Japan(100 units/year) at FY2015

n 8% increasein electricity generation(Updraft)direction of the windn Reduction
in foundation construction

Photovoltaic power systems
Integrate systems in step with needs

Japan’s largest class mega-solar systems(13 MW-class)n Large-project coordinationn Highly efficient, highly profitable systems
n Mega solar grid interconnection technology

Output stabilization systems for system promotion
Output power stabilization technologies(Storage battery system)

Ogishima Solar Power Plant,
TEPCO

EPC : Engineering, Procurement and Construction(Turn-key solution for system construction)© Hitachi, Ltd. 2012. All rights reserved.

29

5-6 Particle Beam Therapy System Business
Market trends
Number of patients treated by particle beam therapy
increasing around the world

Business policy
Promote the advanced particle beam technology
in global markets
Achieve high system availability through long term
maintenance contracts.
Targets: 3 system orders per year, 30% market share

Nagoya City: Treatment room

Increase new orders
High system availability in Japan and the U.S.
Hitachi leading edge technologies including spot scanningtechnology are highly appreciated by prominent universities
and hospitals
n University of Tsukuba n The University of Texas: M.D. Anderson Cancer
Centern Nagoya Cityn Mayo Clinic, U.S.

n Hokkaido University

n Prominent child cancer treatment center in U.S.

Hokkaido University: Building construction© Hitachi, Ltd. 2012. All rights reserved.

30

Power Systems Business Strategy

Contents
1. Business Overview and Market Environment
2. Business Policy and Growth Strategy
3. Thermal Power Business
4. Nuclear Power Business5. Transmission & Distribution, Renewable Energy and Other Businesses
6. Business Performance Trends and Targets
7. Conclusion© Hitachi, Ltd. 2012. All rights reserved.

6-1 Business Performance50%*[ ]：Previous forecasts or targets announced on June 16, 2011
Revenues(Billion yen)Overseasrevenue ratio

1,200
12,000

40%

[50%]

39%
39%

34%

[45%]

[41%]

1,000
10,000

882.1

800
8,000

813.2

Operatingincome ratio (%)

950.0

832.4

840.0

[810.0][870.0]8.0
7.9[1,100.0]

6.0
5.9
6.0%
[6.0%]

600
6,000

4.0
3.9

400
4,000
200
2,000

2.5%

2.7%

[1.2%]

2.6%

△4.1%

[3.5%]

2.0
1.900
FY2009FY2010FY2011

Thermal powerbusiness revenues

Nuclear powerbusiness revenues

FY2012
Forecast

Transmission & Distribution,
renewable energy andother business revenues

FY2015
Target0.0-0.1

Operating income ratio© Hitachi, Ltd. 2012. All rights reserved.

32

6-2 Differences From Previous Forecast
FY2011(Actual) ・FY2012(Forecast)・FY2015(Target)
Previous forecast

Revenues
Actual and revised forecast(Billion yen)

FY2011(Actual)

FY2012(Forecast)

FY2015(Target)

810.0

870.0

1,100.0

832.4

840.0

950.0

1.2%

3.5%

6.0%

△4.1%

2.6%

6.0%

Operatingincome ratio

Previous forecast

Overseasrevenue ratio

Previous forecast

41%

45%

50%

Actual and revised forecast

34%

39%

50%

Actual and revised forecast

Main differences
FY2012(Forecast)

Revenues
Operatingincome ratio

FY2015(Target)

Revised targets due to change in overseas thermal power systems
markets such as Europe
Lower revenues, etc.

Same as previous forecast by
establishing a stable earnings
structure© Hitachi, Ltd. 2012. All rights reserved.

33

6-3 FY2012 Forecast
FY2011 Results and FY2012 Forecast
FY2011(Actual)(Billion yen)

FY2012(Forecast)

YoY

Revenues

832.4

840.0

101%

Operating income (loss)

△33.9

22.0

+55.9

Revenues

Forecasting a 1% YoY increase in revenues, with lower sales from nuclear power
generation systems, and thermal power generation systems in Japan offset byrobust growth for thermal power generation systems,
especially in emerging countries, in addition to high sales from the renewableenergy business, etc.

OperatingincomeExpect to see a return to pre-disaster-level earnings due to the absence of
one-time expenses incurred in FY2011, stronger project management, andcost-cutting programs.

© Hitachi, Ltd. 2012. All rights reserved.

34

Power Systems Business Strategy

Contents
1. Business Overview and Market Environment
2. Business Policy and Growth Strategy
3. Thermal Power Business
4. Nuclear Power Business5. Transmission & Distribution, Renewable Energy and Other Businesses
6. Business Performance Trends and Targets
7. Conclusion© Hitachi, Ltd. 2012. All rights reserved.

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

Establish a stable earnings structure

FY2015 targets
Revenues: 950 billion yen
Overseas revenue ratio: 50%
Operating income ratio: 6%© Hitachi, Ltd. 2012. All rights reserved.

36

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 notdirectly relate to any historical or current fact. Words such as “anticipate,” “believe,” “expect,” “estimate,” “forecast,” “intend,” “plan,” “project” and similar expressions whichindicate 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 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 “forwardlooking 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 notlimited to:neconomic 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;
nexchange 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;
nuncertainty as to Hitachi’s ability to access, or access on favorable terms, liquidity or long-term financing;nuncertainty as to general market price levels for equity securities, declines in which may require Hitachi to write down equity securities that it holds;
nthe potential for significant losses on Hitachi’s investments in equity method affiliates;
nincreased 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;
nuncertainty 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 acceptancefor such products;
nrapid technological innovation;nthe 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;
nfluctuations 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,
or shortages of materials, parts and components;
nfluctuations in product demand and industry capacity;
nuncertainty 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;
nuncertainty as to Hitachi’s ability to achieve the anticipated benefits of its strategy to strengthen its Social Innovation Business;nuncertainty as to the success of restructuring efforts to improve management efficiency by divesting or otherwise exiting underperforming businesses and to strengthen competitivenessand other cost reduction measures;
ngeneral socioeconomic and political conditions and the regulatory and trade environment of countries 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
terms and conditions and labor relations;nuncertainty 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;
nuncertainty as to Hitachi’s access to, or ability to protect, certain intellectual property rights, particularly those related to electronics and data processing technologies;
nuncertainty 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;
nthe possibility of incurring expenses resulting from any defects in products or services of Hitachi;nthe possibility of disruption of Hitachi’s operations by earthquakes, tsunamis or other natural disasters;
nuncertainty 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;
nuncertainty as to the accuracy of key assumptions Hitachi uses to evaluate its significant employee benefit-related costs; andnuncertainty 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. 2012. All rights reserved.

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