Consumer Business Strategy
Hitachi IR Day 2011

June 16, 2011

Shutoku Watanabe
President and Representative Director
Hitachi Consumer Electronics Co., Ltd.

© Hitachi, Ltd. 2011. All rights reserved.

1 Position in Hitachi GroupFY2010 consolidated revenues¥9,315.8 billion*[ ]: Composition ratio (%)
Financial Services [4]Others[7]

Digital Media &Consumer
Products [9]¥951.5 billion
Components &Devices [8]Automotive Systems [7]High
Functional
Materials &Components[13]

Information &Telecommunication
Systems [16]Power
Systems [8]Social Infrastructure &Industrial Systems [11]Electronic Systems &Equipment [10]Sales Composition of
Digital Media & Consumer
Products
Breakdown

Digital media
business-Video related products
and components-Flat-panel TVs

Revenues

Composition ratio¥386.0billion41%¥502.6billion53%

Hitachi Appliances
Consolidated-Home appliances business(Electrical home appliancesand new environment fields)-Air conditioning business(Home and commercial use )Construction Machinery [7]*Total consolidated revenues of ¥9,315.8 billion includes eliminations and corporate items.

© Hitachi, Ltd. 2011. All rights reserved.

2

2 Basic Management Policy for the Consumer Business
Basic Management Strategy
Entire consumer business: Create and expand eco-friendly living infrastructure businesses
Video related products and components business: Create global No.1 businesses in optical storage and LCD projectors
Home appliances and air conditioning: Expand global business
Nurture new environment fields

FY2012 Management Targets
Revenues

Overseasrevenue ratio

Operatingincome ratio

FY2010¥951.5 billion

46%

1.6%

FY2011¥950 billion

48%

0.5%

FY2012¥1,000 billion

50%

2.0%
© Hitachi, Ltd. 2011. All rights reserved.

33 Consumer Business Revenue Composition
Digital media business
OthersOthers¥386.0 billion
FY2010consolidated revenues¥951.5 billion

Others¥340 billion
FY2011
consolidated revenues¥950 billion¥502.6 billion¥360 billion
FY2012
consolidated revenues¥1,000 billion¥540 billion¥560 billion

Hitachi Appliances Consolidated

Digital media business

Hitachi Appliances
Consolidated

Video related products
and components

Create global No. 1 businesses in optical storage and LCD projectors

Flat-panel TVs

Transform business structure in step with rapidly declining demandin Japan

Air conditioning

Expand air conditioning business globally

Home appliances

Nurture new environment fields,
expand home appliances business globally© Hitachi, Ltd. 2011. All rights reserved.

44 Create and Expand Eco-friendly Living Infrastructure Business
Basic Strategies
Develop and sell through energy-saving products
Launch EMS (Energy Management System) businessPowergeneration

Energy-saving products

StorageAll-electric housing
IH cooking
heaters

EcoCuteheat pumpwater heaters

Lighting Air
conditioning
(LED)

S-LED
LCD TVs

・・・

EMS business launch (Commence in FY2011)
For retailers with multiple stores⇒Develop into HEMS (Home Energy
Management System) combining power
generation and storage to secure homeelectricity type HEMS business*eco･pom･pa (ECO Production and Operational Management Partner)

Solar power
generation

Accumulator
batteries＋ EV

rechargers

Connect witheco services for
entire buildings
and towns© Hitachi, Ltd. 2011. All rights reserved.

55 FY2012 Targets

FY2012 Targets
Revenues: ¥1,000 billion
Overseas revenue ratio: 50%
Operating income ratio: 2.0%
■ Entire consumer business: Create and expand eco-friendly living infrastructure businesses■ Video related products and components Business: Create global No.1 businesses in optical storage and LCD projectors■ Home appliances and air conditioning: Expand global business
Nurture new environment fields© Hitachi, Ltd. 2011. All rights reserved.

6

Digital Media Business Strategy
Hitachi IR Day 2011

June 16, 2011

Shutoku Watanabe
President and Representative Director
Hitachi Consumer Electronics Co., Ltd.

© Hitachi, Ltd. 2011. All rights reserved.

Digital Media Business Strategy

Contents
1. Business Overview
2. Business Policy and Growth Strategy
3. Management Targets© Hitachi, Ltd. 2011. All rights reserved.

1-1

Position of Digital Media Business Within Hitachi GroupFY2010 consolidated revenues¥9,315.8 billion*[ ]: Composition ratio (%)
Financial Services [4]Others[7]

Digital Media &Consumer
Products [9]¥951.5 billion
Components &Devices [8]Automotive Systems [7]High
Functional
Materials &Components[13]

Information &Telecommunication
Systems [16]Power
Systems [8]Social Infrastructure &Industrial Systems [11]Electronic Systems &Equipment [10]Sales Composition of
Digital Media & Consumer
Products
Breakdown

Digital media
business-Video related products
and components-Flat-panel TVs

Revenues

Composition ratio¥386.0billion41%¥502.6billion53%

Hitachi Appliances
Consolidated-Home appliances business(Electrical home appliancesand new environment fields)-Air conditioning business(Home use and commercial)

Construction Machinery [7]*Total consolidated revenues of ¥9,315.8 billion includes eliminations and corporate items.

© Hitachi, Ltd. 2011. All rights reserved.

9

1-2 Business Overview
Strengthen key components and products aiming to be the top runnerin video related technology
Flat-panel TVs
20%

Flat-panel TVs
29%
FY2010Consolidated
revenues¥386.0 billion

FY2011
Consolidated
revenues¥340.0billion

FY2012
Consolidated
revenues¥360.0billion

80%

83%

71%
Video related products
and components

Flat-panel TVs
17%

Video related products
and components

Video related products
and components

Flat-panel TVs

Video related products and components

LCD projectors

Optical storage

Optical pickups© Hitachi, Ltd. 2011. All rights reserved.

10Digital Media Business Strategy

Contents
1. Business Overview
2. Business Policy and Growth Strategy
3. Management Targets© Hitachi, Ltd. 2011. All rights reserved.

2-1 FY2010-FY2012 Medium-term Management Plan
Create a continuously profitable structure centeredon the video related products and components business.

Strengthen key components and products aiming to be
the top runner in video related technology

FY2012: Target operating income ratio of 1.0%
LCD projectors

Capture No.1 share worldwide with high-value-added
models

Optical storage

Maintain No. 1 share worldwide by strengthening costcompetitivenessFlat-panel TVs

Structure the business model based on low-riskmanagement and a focus on distinctive technologies© Hitachi, Ltd. 2011. All rights reserved.

122-2 Video related products and components business : LCD Projectors (1)Aim to secure No. 1 share worldwide(Over 16% in FY2012)

TargetProduct
Basis
Share inmonetaryterms

No. 2 share
14%

14%

No. 1 share
16% 16%

5.3
Worldwide
Demand(Millionunits)

4.1

4.6

2009

31%
69%

・High-value-added:
Ultra short throw/highbrightness
Over 3,000 Lumens

Customer
BasisFor
education

3.7

High-value-added
models

47% 53%For
corporations

44%

China
Emerging
economies

Regional
Basis

2010

2011

2012

North America
Western Europe
Japan

44%
56%

(Note) Demand source: Hitachi; excludes home use and SVGA
* Emerging economies: India, Central and Middle
East, Eastern Europe, Russia, Central and South America© Hitachi, Ltd. 2011. All rights reserved.

13

2-3 Video related products and components business : LCD Projectors (2)Business strategy

Capture No. 1 share with product andsales strategy suited to each market

Product portfolio

Capture No. 1 share in ultra short throw⇒Increase high-value-added products (35% in 2011)

Customer basis

Strengthen corporate sales channelin addition to educational

Regional basis

Strengthen China andemerging economy sales route

Sales strategy© Hitachi, Ltd. 2011. All rights reserved.

14

2-4 Video related products and components business : LCD Projectors (3)Increase high-value-added products

Capture No. 1 share in ultra short throw (35% in 2011)

Ultra short throw: World’s smallest and lightest(Launched in Europe in Oct. 2010)

Built-in interactive functions(Launched in Europe and U.S. in Mar. 2011)[Toolbox]
Equippedwithdiagram anddrawing
capability

80-inch wide screen 23 cm from wall

Hitachi proprietary technologies

Hitachi Group collaboration

・Develop new panels and lenses etc.

・Simple operation(cooperation with Hitachi Solutions, Ltd.)© Hitachi, Ltd. 2011. All rights reserved.

15

2-5 Video related products and components business : LCD Projectors (4)Strengthen sales strategy
by customer

Strengthen corporate sales channel in addition to educational

Americas:Strengthen relationships with major SIs
Germany:
Build sales network in e-Sourcing for
major corporations
Enhance sales strategy
by region

Hitachi Sales and Sales Composition
640 (Thousand units)
For education
540
450
410
35% For

28%

28%

30%

FY2009FY2010FY2011 FY2012

corporations

Strengthen China and emerging economy sales route

China, India, Indonesia, etc.: Cooperate with major local companies
Central and Middle East: Station specialists (Develop customer relationships)
Hitachi Sales and Share
26%
24%
21%
170
140
110

26%

(Thousand units)

200

8%

10%
70

China

12%

12%

80

100

(Thousand units)
Middle East,
etc.

50

Indonesia
India

FY2009FY2010FY2011 FY2012

FY2009FY2010FY2011FY2012© Hitachi, Ltd. 2011. All rights reserved.

16

2-6 Video related products and components business : Optical Storage (1)Target

Maintain No. 1 share, ensure earnings by bolstering cost competitivenessNo. 1 share
Sharein units

34%

34%

Figures in square brackets [ ]are previous plan figures[300](as of FY2010)

Worldwide
demand

290

305

35%

[310]

316

35%
[315]

331

(Million units)

Other
DVD Slim
Blu-ray

Unit price
index

2009

2010

2011

2012

100

93

88

84

(Note) Demand source: Hitachi estimates© Hitachi, Ltd. 2011. All rights reserved.

17

2-7 Video related products and components business : Optical Storage (2)Business strategy

・ Increase optical storage (ODD) share・ Quickly create competitive storage products for new fields

Strengthen product competitiveness・ Strengthen cost competitiveness (Reduce cost of partsand components, lower manufacturing costs, etc.)
・ Improve product quality, bolster customer support

New storage product fields
・Optical archive storage(Blu-ray changer)

・Hybrid drives
・NAS
For corporations (ODD+HDD) (Integrated (SSD + ODD ))For homes (ODD+HDD)

SSD

NAS ： Network Attached Storage

ODD： Optical Disc Drive

SSD： Solid State Drive© Hitachi, Ltd. 2011. All rights reserved.

18

2-8 Flat-panel TV Business (1)Targets

Rigorously practice low-risk management in stepwith rapidly declining demand in Japan・ Mar. 2011 Eco-points program finished・ Jul. 2011 Analog broadcasting ends in Japan
Figures in square brackets [ ]are previous plan figures(as of 2010)

Sharein units

6.0%

[6.7]

[7.5]

5.5%

5.5%

[16.0]

25.7
Japan
demand15.9
11.0

FY2009FY2010FY20117.0 (Million units)
FY2012(Note) Demand source: Hitachi estimates© Hitachi, Ltd. 2011. All rights reserved.

19

2-9 Flat-panel TV Business (2)Business strategy

Structure the business model based on low-risk management
and a focus on distinctive technologies

・Take a low-risk management
approach by utilizing procurement
・Focus development on distinctiveenergy-saving and high image
quality technologies
・Strengthen alliances for providing
distinctive technologies
112.4

112.7

Hitachi Sales

FY2009FY201070.0

60.0 (Billion yen)

FY2011FY2012© Hitachi, Ltd. 2011. All rights reserved.

20

Growth Fields
2-10 Targeting: Eco-friendly living Infrastructure Business
Launch HEMS business applying network technology toenvironmental needs

TargetFor retailers with multiple stores(From July 2011)

Launch secure home electricity
type HEMS business

Power consumption (Visualization)
Demand reduction (Peak-time power reduction)
ASP services

・ Effectively utilize power in the home
(Total control: generation, storage)
・ Energy-saving diagnostic service

Overview
Lighting

Air conditioning equipment

Demand reduction
Distribution
boardPower sensors

Multiple storesand offices

Customer(Headquarters)

Temperature
sensors

ASP service

Visualization
Displays

EMS terminals

LAN

RouterWAN

Eco pom pa server© Hitachi, Ltd. 2011. All rights reserved.

21

Digital Media Business Strategy

Contents
1. Business Overview
2. Business Policy and Growth Strategy
3. Management Targets© Hitachi, Ltd. 2011. All rights reserved.

3-1 Revenues and Operating Income Ratio
Operating income ratio
Figures in square brackets [ ]are previous plan figures(as of FY2010)[1.6%][1.8%][0.5%]

1.0%(0.2%)(figures excluding natural
disaster s impact 0.1%)(1.7%)(2.9%)

Revenues

Index

418.9
Flat-panel
TVs*
Video related
products andcomponents

100[385.0]386.0[380.0]340.0

360.0 (Billion yen)
54
114

100

FY2009[380.0]FY2010FY2011FY2012* Flat-panel TVs include the TVs which Hitachi Living Systems procures.
© Hitachi, Ltd. 2011. All rights reserved.

23

3-2 FY2010 Performance (Actual)(Billion yen)

FY2009 (Actual)

FY2010 (Actual)

418.9

386.0

92％

Video related products
and components

262.5

272.3

104％

Flat-panel TVs

112.4

112.7

100％

(2.9％)(0.2％)+2.7%

Revenues

Operating income ratio(YoY)

LCD projectors:

Revenues

Maintain revenue on growing demand in China and other emerging markets, despite softdemand in Europe and the U.S.

Video related
products andcomponents

Optical storage:

Flat-panel TVs

Maintained growth in Japan due to the benefits ofthe eco-points program, although revenues declined overseas.

Operating income

Maintain unit sales on growth in China and other emerging markets, even though demandworsens in Europe .

Had projected profits due to the end of analog broadcasting andthe benefits of the eco-points program, but instead a loss wasrecorded due to lower prices and the impact of the Great East Japan Earthquake.
© Hitachi, Ltd. 2011. All rights reserved.

24

3-3 FY2011 and FY2012 Results (Plan)(Billion yen)

FY2011
RevenuesYoY

FY2012

YoY

340

88%

360

106%

Video related products
and components

270

100%

300

109%

Flat-panel TVs

70

62%

600

86%

(1.7%)

-1.5%

1.0%

+2.7%

Operating income ratio

Revenues

Video related
products andcomponents

LCD projectors:

Flat-panel TVs

Lower revenues due to falling demand in Japan and lower prices

Operating income

Expand by boosting sales to corporations, as well as China and other emerging markets.

Optical storage:
Sharpen cost competitiveness to maintain No. 1 worldwide share in terms of sales

Rigorously practice low-risk management in flat-panel TVs (since FY2009),
achieve FY2012 operating income ratio of 1.0%.

© Hitachi, Ltd. 2011. All rights reserved.

25

3-4 FY2012 Management Targets
Revenues

Overseasrevenue ratio

Operatingincome ratio

FY2010¥386.0 billion

67%(0.2%)FY2012¥360 billion

78%

1.0%

■ Video related products and components business
Create global No.1 businesses in optical storage and LCD projectors■ Flat-panel TVs
Structure the business model basedon low-risk management and a focus on distinctive technologies© Hitachi, Ltd. 2011. All rights reserved.

26

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 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-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 and 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 in Japan, 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 Components & Devices and 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 for such 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 other materials, such as copper, steel, aluminum and synthetic resins 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, partsand 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 and other 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 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 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 in Japan by earthquakes, tsunamis or other natural disasters, including the possibility of continuing adverse effects on Hitachi’s operations as a result of theearthquake and tsunami that struck northeastern Japan on March 11, 2011;■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 Hitachi’s periodic filings with the U.S. Securities and Exchange Commission and in othermaterials published by Hitachi.

© Hitachi, Ltd. 2011. All rights reserved.

27

Hitachi Appliances
Business Strategy
Hitachi IR Day 2011

June 16, 2011

Haruki Yamamoto
President and Director
Hitachi Appliances, Inc.

© Hitachi, Ltd. 2011. All rights reserved.

Hitachi Appliances Business Strategy

Contents
1. Business Overview
2. Market Trends and Growth Strategy
3. Business Performance Trends© Hitachi, Ltd. 2011. All rights reserved.

1-1 Position of Hitachi Appliances Within Hitachi GroupFY2010 consolidated revenues¥9,315.8 billion*[ ]: Composition ratio (%)
Financial Services [4]Others[7]

Digital Media &Consumer
Products [9]¥951.5 billion
Components &Devices [8]Automotive Systems [7]High
Functional
Materials &Components[13]

Information &Telecommunication
Systems [16]Power
Systems [8]Social Infrastructure &Industrial Systems [11]Electronic Systems &Equipment [10]Sales Composition of
Digital Media & Consumer
Products
Breakdown

Digital media
business-Video related products
and components-Flat-panel TVs

Revenues

Composition ratio¥386.0billion41%¥502.6billion53%

Hitachi Appliances
Consolidated-Home appliances business(Electrical home appliancesand new environment fields)-Air conditioning business(Home use and commercial)

Construction Machinery [7]*Total consolidated revenues of ¥9,315.8 billion includes eliminations and corporate items.

© Hitachi, Ltd. 2011. All rights reserved.

31

1-2 Business Overview
New environment fields

Home use

FY2010Consolidated
revenues¥502.6 billion
Electrical home
appliances

Hitachi Appliances is the corporations ofHome appliances and Air conditioning
Responsible for social andliving infrastructure in Hitachi Group
Market environment
Growing market of
Emerging economies

Increased interest inenergy conservation

Commercial use

VisionHome Appliancesbusiness(47%)

Air conditioning
Grow up to the corporations to contributebusinessto the global environment(53%)© Hitachi, Ltd. 2011. All rights reserved.

32

1-3 Air Conditioning Business Product Lineup
Support comfortable air-conditioned environments in a broad range of fields,from home use to commercial use
Industrial use
Commercial use (Shops, buildings, etc.)
Home use

Room air conditioners

Packaged air
conditioning systems

Room airconditioners

Packaged air conditioners

Absorption &centrifugal chillers

Absorption
chillers

air conditioners Ceiling cassettewith powerfultypeheating

Multi-split air
conditioners

Air conditioning
management
systemCentrifugal
chillers© Hitachi, Ltd. 2011. All rights reserved.

33

1-4 Home Appliances Business Product Lineup
Support safe, comfortable living with a variety of energy-saving home appliances

Electrical home appliances

New environment fields
Lighting business(Merged in October 2010)

Refrigerators

Washing machines

Vacuum cleaners

IH cooking heaters

LED lamps

Microwave ovens

Rice cookers

Air cleaners

EcoCute heat pumpwater heaters

LED lighting© Hitachi, Ltd. 2011. All rights reserved.

34

Hitachi Appliances Business Strategy

Contents
1. Business Overview
2. Market Trends and Growth Strategy
3. Business Performance Trends© Hitachi, Ltd. 2011. All rights reserved.

2-1 Market Trends
Air Conditioning

Global Market

Data for: Japan, Asia, Middle East, Europe, Russia
Africa, North America, Central and(Trillion yen)South America, Oceania*Packaged air conditioning systems+ room air conditioners*Circled numbers are 2010-2015 CAGR

5.1%

7.3

5.7

2010
Electrical Home
Appliances

6.3

2012

2010

Emerging
economies

2015

Hitachi estimate

Global Market
Data for: Japan, Asia, Middle East, North Africa(Trillion yen)*Refrigerators + washing machines+ vacuum cleaners*Circled numbers are 2010-2015 CAGR

3.5

8.4%

3.7

2012

Market Growth by Area Hitachi estimate
2010-2015 CAGR
Area
Japan
0.6%
Europe
3.5%
China
8.8%
6.7%
Emerging Southeast Asia
economies
India
16.6%
Brazil10.4%

Market Growth by Area
Area
Japan

2.8%

4.0

China

4.3%

Emerging
economies

2015

Hitachi estimate

Emerging Southeast Asia
economies
MiddleEast/North Africa

Hitachi estimate

2010-2015 CAGR

-1.4%
4.0%
4.1%
4.4%

© Hitachi, Ltd. 2011. All rights reserved.

36

2-2 Hitachi Appliances Target Growth Strategy for 2015
Consolidated
revenues(Billion yen)

650

VisionA corporation that contributes
to the global environment

655
[45%]

600

560
[35%]

550

500

502.6
[32%]

Overseasrevenues
Consolidated revenues[Overseas revenue ratio]
Domestic
revenues

FY2010FY2012FY2015© Hitachi, Ltd. 2011. All rights reserved.

37

2-3 Hitachi Appliances Target Growth Areas
Business
expansion

Basic policies
Develop newenvironment fields

New fields

All-electric housing
LED lighting
Solar power generation

Promote local production
for local consumption
Execute premium strategy(Cooperation with Hitachi Consumer Marketing)

Existing fields

Present situation
Air conditioning
business
Electrical home
appliances businessJapan

Global businessexpansion
China, India, Brazil, Europe,
Southeast Asia, Middle East

Overseas

Geographicalexpansion© Hitachi, Ltd. 2011. All rights reserved.

38

2-4 Global Business Expansion (1) Locations
China
Qingdao, Shanghai, Wuhu,
Guangzhou, Hong Kong
(Manufacturing, sales)
France(Sales)* The Qingdao manufacturing company is an equity-method affiliate

China(Manufacturing, sales)

India(Manufacturing,sales)
Middle East
(Sales)Taiwan(Manufacturing,sales)
India(Sales)Philippines(Manufacturing)

Spain(Manufacturing)Taiwan(Sales)Thailand(Manufacturing, sales)
Thailand(Manufacturing,sales)

Air conditioning
manufacturing companies

U.S.A.
(Sales)Malaysia(Manufacturing,sales)
Singapore(Sales)Singapore, Malaysia,
Indonesia(Sales)Brazil(Manufacturing,sales)

Home appliancemanufacturing companies

29 bases worldwide<Air conditioning: 20; home appliances: 9>© Hitachi, Ltd. 2011. All rights reserved.

39

Business Expansion (2)2-5 Global
Background to global business development

India

BrazilThailand

Hitachi Home & Life
Solutions (India) Ltd.

Hitachi Air Conditioning
Products Brazil, Ltd.

Hitachi Consumer Products(Thailand), Ltd.

1999 Acquired
equity interest

1972 Acquired
equity interest

12 years■Expansion led by home use air
conditioning■Developed nationwide sales
and service network(Approx. 2,500 stores)

Brand-building in high-end
home use air conditioners

39 years

1970 established

41 years■ Expansion led by commercial
use packaged air conditioners■Developed nationwide sales
and service network■Only Japanese company with aproduction subsidiary■Increased production ofrefrigerators, washingmachines, vacuum cleaners,
etc.
■Ships to Southeast Asian
countries, the Middle East

Chillers and separated
air conditioners
for facilities

No. 1* share

Top-class share**Hitachi estimate 2010 result (share in termsof refrigeration tons )(in Thailand)in refrigeratorswith 2 or more doors*Hitachi estimate 2010 result (share inmonetary terms)

Entered emerging markets from an early stage and built a business foundation© Hitachi, Ltd. 2011. All rights reserved.

40

2-6 Global Business Expansion (3) Basic Strategy

MarketHitachiAppliances’
strengths

Basicstrategy

Expanding demand centered on emerging economies

Air
conditioning

Entered markets from an early stage andhave manufacturing and sales offices
in India, Brazil, and China

HomeappliancesHome appliances have manufacturing basein Thailand and sales network in Southeast Asiaand the Middle East

Achieve global business expansion through aggressive
expansion in growing market of emerging economies© Hitachi, Ltd. 2011. All rights reserved.

41

Business Expansion (4)2-7 Global
Air conditioning business strategy(1) Expand business leveraging existing base infrastructure
India: home use +commercial use

Brazil: commercial use +home use

China: home use + commercial use + absorption and centrifugal chillers(2) Expand business leveraging home appliances sales infrastructureSoutheast Asia: Electrical home appliances + Home use air conditioners(3) Enhancing in core markets
Increase products that comply with environmental regulations in
EuropePlan to invest ¥24 billion in production and sales over 5 years© Hitachi, Ltd. 2011. All rights reserved.

42

Business Expansion (5)2-8 Global
Home appliance business strategy(1) Expand business mainly using manufacturing base in Thailand

Aggressively expand business in Southeast Asia, theMiddle East, and North Africa(2) Increase premium home appliances made in Japan

Expand sales in major cities of China and Asia
(3) Expand key components business

Increase production of compressors to support
refrigerator business expansion

Plan to invest ¥17 billion in production and sales over 5 years© Hitachi, Ltd. 2011. All rights reserved.

43

2-9 Develop New Environment Fields
Hitachi Appliances New Environment Fields¥75 billion¥50 billion

Expand solar power generation business■Strengthen alliance with Solar Frontier
Revenues*

Expand LED lighting business¥34 billion■Expand business by enhancing productappeal and product lineup

Work
with HitachiGroupcompanies

Expand all-electric housing business■Increase market share for EcoCute heat pump water heaters
and IH cooking heaters
FY2010FY2012FY2015* Revenues include revenues of Hitachi Consumer Marketing (solar power generation systems, etc.)© Hitachi, Ltd. 2011. All rights reserved.

44

Initiatives in Japanese Home Appliance Market
2-10 Key—5 Main Products*
Hitachi share*Electrical home appliances (5 main products)(Refrigerators, washing machines, vacuum cleaners, microwave ovens,
rice cookers)
Source: JEMA (Terms of monetary shipping amounts)

23

27

24

28

21

(%)

17
Demand

16

17

840

+7 points
over 4 years

Company establishedin 2006

900

900.0

18

920

980
920

910

870

860

850

FY2011FY2012800.0(Billion yen)
FY2004

FY2005

FY2006

FY2007

FY2008FY2009FY2010Company
forecast

Company
forecast

Try to raise share further by proposing productswith greater energy-saving performance and ease-of-use© Hitachi, Ltd. 2011. All rights reserved.

45

Hitachi Appliances Business Strategy

Contents
1. Business Overview
2. Market Trends and Growth Strategy
3. Business Performance Trends© Hitachi, Ltd. 2011. All rights reserved.

3-1 Business Performance Trends
Operating income ratio

2.2

Figures in square brackets [ ] areprevious plan figures (as of FY2010)

[2.7]

0.9

(%)

1.9

2.7

[1.9]
[1.0]

(0.8)
502.6

Revenues

483.8(Billion yen)[490.0]

540
[510]

560
[540]

445.7
Air
conditioningHomeappliances

FY2008FY2009FY2010FY2011FY2012

Hitachi Appliances achieved its plan for FY2010,and makes plan to achieve revenues of ¥540 billion in FY2011, one year earlier than planned.
© Hitachi, Ltd. 2011. All rights reserved.

47

3-2 FY2010 Business Performance (Actual)
FY 2010 Business Performance(Billion yen)

FY2009 (Actual)

FY2010 (Actual)

445.7
234.0
211.7

502.6
266.6
236.0

+13%
+14%
+11%

Overseas revenue ratio

33%

32%

-1%

Operating income ratio

0.9%

2.2%

+1.3%

Revenues
Air conditioning business
Home appliances business

Revenues

YoY

Japan:
Revenues grew on the eco-points program and a record hot summerAir
conditioning Overseas:
Revenues grew in China, India, Brazil, etc.

Homeappliances

Operating income
Other

Japan:
Revenues grew on the eco-points program
Overseas:
Revenues grew in Southeast Asia, the Middle East, and other areas
Operating income increased due to revenue growth
Production was halted temporarily at the Taga Works (Ibaraki Pref.) following
the earthquake of March 11, 2011, but operations restarted on March 22.
© Hitachi, Ltd. 2011. All rights reserved.

48

3-3 FY2011 Business Performance Plan
FY2011 Business Performance Plan
Previous plan (as of FY 2010)
Revenues
510
Air conditioning business
270
Home appliances business
240
Overseas revenue ratio
33%
Operating income ratio
1.9%

Issues
Initially
Envisaged
issuesIssuesarising
fromtheearthquake(Billion yen)

Current plan
540
290
250
35%
1.9%

Current status

Negative effect of absence of previous year’s
eco points program and hot summer

No significant negative effect observed. Continue tomonitor situation going forward.

Increased competition in emerging economies

Ongoing challenge

High cost of materials

Ongoing challenge

Parts procurement

Electricity shortage

Uncertain demand+ Increase in energy-saving
products- Deal with production
during peak demand times+ Demand for restoration andrebuilding- Decreased consumer confidence

Respond to three different challenges,
and fulfill social responsibility to aid in restoration and rebuilding.
© Hitachi, Ltd. 2011. All rights reserved.

49

3-4 Targets for FY2012 and FY2015

FY2012 Targets

FY2015 Targets

Revenues: ¥560 billion
Overseas revenue ratio:
35%
Operating income ratio:
2.7%

Growing market of
emerging economies

Revenues: ¥655 billion
Overseas revenue ratio: 45%
Operating income ratio: 5.0%

A corporation that
contributes to theglobal environment

Increased interestin energy conservation© Hitachi, Ltd. 2011. All rights reserved.

50

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 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-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 and 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 in Japan, 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 Components & Devices and 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 for such 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 other materials, such as copper, steel, aluminum and synthetic resins 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, partsand 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 and other 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 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 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 in Japan by earthquakes, tsunamis or other natural disasters, including the possibility of continuing adverse effects on Hitachi’s operations as a result of theearthquake and tsunami that struck northeastern Japan on March 11, 2011;■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 Hitachi’s periodic filings with the U.S. Securities and Exchange Commission and in othermaterials published by Hitachi.

© Hitachi, Ltd. 2011. All rights reserved.

51