Information &Telecommunication Systems
Business Strategy
Hitachi IR Day 2013

June 13, 2013

Yutaka Saito
Senior Vice President and Executive Officer
President & CEO
Information & Telecommunication Systems Company
Information & Telecommunication Systems Group
Hitachi, Ltd.
© Hitachi, Ltd. 2013. All rights reserved.

Information & Telecommunication Systems
Business Strategy

Contents
1. Performance Review of 2012 Mid-term Management Plan
2. 2015 Mid-term Management Plan
3. Hitachi’s Comprehensive Capabilities in the Social Innovation Business4. Transforming a Business Portfolio with Growth Potential
5. Developing the Global Business Structure
6. Business Targets
7. Conclusion© Hitachi, Ltd. 2013. All rights reserved.

1-1. FY2012 Results
Revenues: Slightly higher revenues from steady sales inservices in Japan and storage solutions and ATMs
overseas.
Operating income: Earnings increased despite lower
profitability due to some unprofitable projects.
This mainly reflected solid earnings from storage solutions
and ATMs overseas.
Year over yearchangeFY2012
Revenues
Operating income(Operating income ratio)

1,786.5 billion yen

101%

104.6 billion yen +2.9 billion yen(5.9%)© Hitachi, Ltd. 2013. All rights reserved.

31-2. Performance Overview of2012 Mid-term Management Plan (1) Revenues: Continuing to grow since FY2010, CAGR 4.0% (Japan: 2.8%, overseas: 7.9%)
 Operating income: impacted by changes in the external environment, including
the Great East Japan Earthquake, and unprofitable projects

FY2010FY2011FY2012FY2012
Targets*

Revenues

1,652.0
billion yen

1,764.2
billion yen

1,786.5billion yen

1,750.0
billion yen

Operating income(EBIT) ratio

6.0%(5.8%)

5.8%(5.5%)

5.9%(5.8%)

7.0%(-)

Overseas revenue
ratio

24%

25%

26%

25%

Services revenue
ratio

58%

60%

60%

60%

86 yen/U.S. dollar

79 yen/U.S. dollar
109 yen/euro

83 yen/U.S. dollar
107 yen/euro

80 yen/U.S.dollar
110 yen/euro

Exchange rate

113 yen/euro* As of June 16, 2011, assumed exchange rate.
EBIT: Earnings Before Interest and Tax© Hitachi, Ltd. 2013. All rights reserved.

4

1-2. Performance Overview of2012 Mid-term Management Plan (2)Dec. 2012

Business GrowthDec. 2010

Acquired Sierra Atlantic in the U.S.
(Consulting/ERP)
Jan. 2011

Acquired Aptivo Consultingin Spain (Consulting)May 2012

Acquired Celerant Consulting in the U.K.
(Consulting in the social infrastructure )Acquired eBworx in Malaysia (Financial IT solutions)Feb. 2012

Acquired Shoden Data Systems in South Africa(Storage solutions)Sep. 2011

Acquired BlueArc
in the U.S.
(Storage solutions)Apr. 2012

Acquired PRIZIM in the U.S. (Environmental consulting)Oct. 2013 (Plan)

Enhancing
Business Structure

Integrate manufacturing facilities

Oct. 2010

Established Hitachi Solutions

Apr. 2012• Reformed IT platform related business• Established dedicated Big Data market team

Oct. 2011

Established Hitachi Systems

FY2010
CIS: Car Information Systems

FY2011FY2012

Apr. 2013• Established Hitachi Information &Communication Engineering• CIS business transferred from
Hitachi Automotive Systems

FY2013© Hitachi, Ltd. 2013. All rights reserved.

5

Information & Telecommunication Systems
Business Strategy

Contents
1. Performance Review of 2012 Mid-term Management Plan
2. 2015 Mid-term Management Plan
3. Hitachi’s Comprehensive Capabilities in the Social Innovation Business4. Transforming a Business Portfolio with Growth Potential
5. Developing the Global Business Structure
6. Business Targets
7. Conclusion© Hitachi, Ltd. 2013. All rights reserved.

2-1. Future Mega-Trends
Changes in society around 2020
 Shifting from a society centered on “concentration, ownership and consumption” to“distribution, sharing and recycling”
 Expansion of free trade zones
 Global market growth led by emerging countries
 Energy shift drive to reorganize industry and market change(Growing presence of the U.S., Sub-Saharan Africa, South America, etc.)

Growing social issues●

Resource and food shortages●

Urbanization and environmental destruction●

Lack of social infrastructure (emerging countries), aging social infrastructure (developed countries)●

Aging populations and shrinking worker pools

Build social infrastructure globally, achieve a sustainable society© Hitachi, Ltd. 2013. All rights reserved.

7

2-2. Vision (1) Innovate businesses and value chains with “human,” “IT” and“social infrastructure”
 Realize a sustainable society by solving social issues globally“Human,” “IT” and“social infrastructure”

Social innovation“Human” and “social infrastructure”“Human” and “human”“Social infrastructure” and“social infrastructure”“Optimize through IT”“Economic efficiency” vs. the“environment friendliness”
Stakeholder relations
System efficiency

Innovate business andvalue chains withcustomers
Solve society andcustomer issues bycreating new value

Realize a sustainable society

Issues society and customers are facing“Connect with IT”

As can only be done by Hitachi withits knowledge of both “IT” and“social infrastructure”© Hitachi, Ltd. 2013. All rights reserved.

8

2-2. Vision (2)Drive social innovation with “IT”
Further enhance abilities to “understand social issues,”“propose solutions” and “deliver solutions”
Main solutions for solving social issues
More sophisticatedsocial infrastructure

Major countries and regions
for global development

Businessinnovation

Manufacturing

Finance

Agriculture

Healthcare

Logistics

Transport

MiningEnergyNational andlocal government

Europe
China
India
ASEAN
Sub-SaharanAfrica

Japan

North
America

BrazilAustralia

IT (Big Data, Cloud)© Hitachi, Ltd. 2013. All rights reserved.

92-3. Growing Markets to Target
Enhancing profitability to become
a global major player

IT Market Trends

Low growth in Japan, but
solid growth in the global market

IBM
Japan

WW

100

2012

20

106
2010

CAGR
WW 4%
Japan 1%

Accenture

CY2015

Source: IDC, “Worldwide Black Book Query Tool, Version1, 2013”, May 2013
(Based on data excluding Client Systems, Feature Phones, Smartphones)

Social infrastructure investment
Increasing particularlyin emerging countries

CAGR 5%
WWInfrastructure
Investment

Operating income ratio

CY2010

4,356

(％)

122

(％)

2010 2012
HP*

10

2015

80

NTT Data
2010

5

2012

CAGR: Compound Annual Growth Rate
ITSC: Information and Telecommunications Systems Company

100

120

(B$)

2012
2010

2012

Fujitsu
2010

NEC

1

Source: Calculated by the Hitachi Research Institute using data from the Global Insight

10

2012

Hitachi ITSC

(B$)

CY2010

2010

15

8,848
CY2025

15

2

2010

2012

3

4

5 (Trillion yen)

Revenues
Source: Each company’s announcements* Results of HP was calculated eliminating the booking of impairment loss
© Hitachi, Ltd. 2013. All rights reserved.

102-4. Management Policy
Become a global major player by 3Gs (Growth, Global and Group)
1. Hitachi’s Comprehensive Capabilities in the Social Innovation Business Enhance Group collaboration for displaying “One Hitachi” strengths
 Strengthen upstream approaches using frontline expertise Utilize IT for supporting global business operations
2. Transforming a business portfolio with growth potential
 Strengthen priority fields
 Expand global businesses Strengthen services businesses
3. Developing the global business structure Strengthen global operations and human resources Promote the Hitachi Smart Transformation Project Strengthen cash flow management© Hitachi, Ltd. 2013. All rights reserved.

112-5. Performance Targets (Summary)

FY2012FY2015 (Targets)

1,786.5 billion yen

2,100.0 billion yen

EBIT (Operating income) ratio

5.8% (5.9%)

9.8% (10.0%)

Overseas revenue ratio

26%

35%

Service revenue ratio

60%

over 65%

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

122-6. New Organizational Structure
Information & Telecommunication Systems Group
Information & Telecommunication
Systems Company
170 companies (Japan: 42, overseas: 128)
As of April 1, 2013

● System Solutions Division● Service Division(newly established in April 2013)● Platform Division

Hitachi Systems
Hitachi Solutions
Hitachi Consulting
Hitachi Data Systems
Hitachi Transport System●●●© Hitachi, Ltd. 2013. All rights reserved.

13

Information & Telecommunication Systems
Business Strategy

Contents
1. Performance Review of 2012 Mid-term Management Plan
2. 2015 Mid-term Management Plan
3. Hitachi’s Comprehensive Capabilities in the Social Innovation Business4. Transforming a Business Portfolio with Growth Potential
5. Developing the Global Business Structure
6. Business Targets
7. Conclusion© Hitachi, Ltd. 2013. All rights reserved.

3-1. Measures for the Social Innovation Business

Innovate businesses and value chains utilizing IT

Information & Telecommunication Systems Company leads
One Hitachi to cover the entire customer value chain Change to a solutions-based approach to solve social issues,
eyeing entire customer value chains from the upstream level Develop the Social Innovation Business from the frontline
where to identify the elements of issues to be solved© Hitachi, Ltd. 2013. All rights reserved.

15

3-2. IT’s Role Create new business models centered on “human”
 Optimize business processes based on actual business knowhow

Front areas“Human”

Enterprise social network
SNS, mobile
Datacollection

Analysis

Management andmarketingCommunication

Visualization

Information utilization
M2M

Analytics
andforecasting

Feedback“OT”
Operational knowhow
Control technologies

Back areas

Total engineering“IT”

Socialinfrastructureenhancement

Safe andsecure life

Businessreform“IT” x “OT” = O&M Cloud
M2M：Machine to Machine OT: Operation Technology
O&M: Operation & Maintenance© Hitachi, Ltd. 2013. All rights reserved.

16

3-3. Stepped-up Measures for Creating Customer Value
Approach from the upstream level to survey the entire value chain
and identify real issues existing in frontlines

Consulting

 Consulting capabilities in the social infrastructure field:
Acquired Celerant Consulting (December 2012)
 Upstream design based on “frontline” and “human”:
Strengthen Experience Oriented Approach (Ex Approach) Partner collaboration: Established Market Intelligence Lab. with Hakuhodo(April 2013)

Data analytics for creating value that helps solve problems

Solutions Centralization of knowledge and expertise across regions and fields:
Establishment (June 2013) and enhancement of Hitachi Global Center
for Innovative Analytics

Utilize IT for supporting global business operations

Services Cutting-edge IT utilization: Big Data, Cloud computing services, Security© Hitachi, Ltd. 2013. All rights reserved.

17

3-4. Main Domains in Social Infrastructure
EnergyMiningTransport

Logistics

Healthcare

Agriculture

Active collaborative creation with customers
Approaches utilizing the Hitachi Group’s business and knowhow

Provide enhanced social infrastructure systems:
smart information
Related revenues

FY2012: approx. 10.0 billion yen

FY2015: 100.0 billion yen© Hitachi, Ltd. 2013. All rights reserved.

18

3-5. Solutions Example (1) Healthcare
Realize a healthy, safe and secure society
Customer trends/needs

Example of solution

Reductions in social security expenses
at the national level Launched demonstration of disease
prevention jointly with the U.K. NHSEnhance pre- and post-medical careutilizing IT:- Utilization of health and medical caredataSupport to development of new
medicine and health food
NHS: National Health Service
API: Application Programming Interface

Data accumulation

Services of health management anddisease prevention

Data utilization

Hitachi’s initiatives

ServicesIncreasing pre- (preventive and early
discover) and post-medical(home medical treatment and care)
needs

Drug
makersInsured

Disease-prevention
services, etc.

Foodbusiness

Marketing, productdevelopment, etc.

Common analysis libraries, and API(knowledge extraction, privacy protection, etc.)

Medical care andanalysis structural
database

Medical careguidelines

Contents
warehouse

Medicalinstitutions

Extract medical
metadata

Medical caredata

© Hitachi, Ltd. 2013. All rights reserved.

19

3-5. Solutions Example (2) Logistics
Create optimized logistics services utilizing IT
Customer trends/needs

Example of solution

 Rapid growth of emerging market
mainly in Asia (CAGR: 18%)
 Establish global network, respond toincreasing logistics volume, comply
with SLA, reduce transportation costand environmental burden
 Enhance and globalize 3PL

 Demonstration of new logistics
services (joint cargo and car pick-up
system) in emerging countries
Joint cargo and car pick-up system

Cargo and car pick-up management
Conditions Adjustment ofcar allocation, route directions andloading direction

Hitachi’s initiatives
 Enhancement of logistics with IT inemerging countries:- Smart logistics balancing economic
efficiency and environment friendliness Optimization of logistics services
utilizing production plan and car
allocation data
SLA: Service Level Agreement
3PL：3rd-Party Logistics

Cargo
owner

Cargo ownermanagement
荷主管理
Shipmentplanning

Transport operator

management
運送業者管理Car allocation andloading plan

Transportationcompany

Production plan,inventory status

Big Data
utilization

IT (Big Data, Cloud)© Hitachi, Ltd. 2013. All rights reserved.

20

Information & Telecommunication Systems
Business Strategy

Contents
1. Performance Review of 2012 Mid-term Management Plan
2. 2015 Mid-term Management Plan
3. Hitachi’s Comprehensive Capabilities in the Social Innovation Business4. Transforming a Business Portfolio with Growth Potential
5. Developing the Global Business Structure
6. Business Targets
7. Conclusion© Hitachi, Ltd. 2013. All rights reserved.

4-1. Business Growth Strategies

Key fields to lead growth
1. Strengthen priority fields● Smart information (introduced in Chapter 3)● Big Data ● Highly reliable cloud computing ● Security

2. Expand global businesses● Overseas revenue ratio: 26% (FY2012)  35% (FY2015)

3. Strengthen services businesses● Service revenue ratio: 60% (FY2012)  over 65% (FY2015)© Hitachi, Ltd. 2013. All rights reserved.

22

4-2. Strengthen Priority Fields (1) Big Data
Create new customer value and business opportunities using Big Data
 Promote business utilizing end users’ Big Data:e.g. Telematics field: “Nissan Motor” x “Sompo Japan Insurance”
 Strengthen global business with
“Hitachi Global Center for Innovative Analytics”
MachineBig Data

Human
Big Data

Operating informationof machine, system,etc.

Body temperatureand pulseBehavioral log
Communication log

Smart infrastructure
Big Data

Location
Big Data

FY2012Created opportunities for collaborative
creation with customers, developed
solutions, built business models

Electricity and water
volumesPosition information ofWeatherpeople, vehicle, etc.
Public data ofMap and other spatial
Marketing lifestyle and society
data

Big Data
SNS text information/images
Surveillance camera images

FY2013-2015
Expand service coverage globally
Expand use of world-leading best practices

5 key fields for promoting Big Data use
Related revenues

FY2012: approx. 10.0 billion yen

FY2015: 150.0 billion yen© Hitachi, Ltd. 2013. All rights reserved.

23

4-2. Strengthen Priority Fields(2) Highly reliable cloud computing Provide second-generation cloud computing services to address more diverse andsophisticated customer needs in response to expanding use of cloud computing
services (linking different cloud computing services) Provide cloud computing services globallyMore sophisticatedsocial infrastructure

Manufacturing

National andlocal government

Finance

Agriculture

Healthcare

Logistics

Transport

MiningEnergyPlatform linking different
cloud computing services
Private

FY2012Businessinnovation

PublicHitachi’s highly reliablecloud computing services

Other
companies’
cloud services
VMware, AWS,
Microsoft,,
Salesforce.com etc.

Harmonious Cloud
Related revenues

 Created highly reliable, flexible, scalable
cloud computing services with a hybrid
response

FY2013-2015
 Started providing global cloud computing
services
Hitachi Cloud Services (May 2013)
 Global expansion of cloud computing
services by extending the support
coverage of different clouds
 Provide O&M cloud computing services for
the Social Innovation Business

FY2012: approx. 200.0 billion yen

O&M：Operation & Maintenance

FY2015: 500.0 billion yen© Hitachi, Ltd. 2013. All rights reserved.

24

4-2. Strengthen Priority Fields (3) Security
Provide security services covering entire social infrastructure and corporate activities

Changing customer needs

Strengthen social infrastructure security

 Ensuring safety and availability ofsocial infrastructure Fuse IT and social infrastructure
security based on actual businessknow-how(Launched Social Infrastructure Security
Promotion Project) Support continuous security operations

 Comprehensive measures(human, goods, information)
 Response to emerging threats

Overall plan
formulation

Professional services- Security evaluation, consulting, education

Operation

Security monitoring services- Managed securitySupport for establishing IRT organizations

System integration
Related revenues

Secureplaza solution and services

FY2012: approx. 30.0 billion yen

IRT: Incident Response TeamFY2015: 50.0 billion yen© Hitachi, Ltd. 2013. All rights reserved.

25

4-3. Expand Global Businesses (1) Revenues, Personnel
Overseas Revenue Ratio(Revenues by Region)
Asia, etc.
China

[5]

Europe

China

[5]

[5]

[10]

[ ]: % ratio[8]

Europe[6]
North
America

Asia, etc.

[9]Overseasrevenue
ratio
26%

North
America

[13]

Japan

[74]

(FY2012)
56,10015,400 [22%]71,500Overseasrevenue
ratio
35%

Japan

[65]

(FY2015)Japan
headcount
Overseas
headcount

20,000Total headcount75,00055,000[27%]© Hitachi, Ltd. 2013. All rights reserved.

26

4-3. Expand Global Businesses (2) Platform
Accelerate growth in global markets centered on Hitachi Data Systems

Results Through FY2012
Strengthened sales system
to expand revenues- Revenues: CAGR 10%(FY2006  FY2012)- Acquired Shoden Data Systems(Feb. 2012)

Business Added greater value
by expanding software
portfolioand services
expansion-FY2006: 40%  FY2012: 50%

Initiatives Towards FY2015

Expand business domains
to integrated platforms- Contents cloud- Information cloudProvide cutting-edge
solutions- Healthcare, video surveillance,
finance, etc.

Strengthened high-growth fileExpand managed service*
and contents management
solutions businessbusiness-Acquired Archivas (Feb. 2007)-Acquired BlueArc (Sept. 2011)* O/S services of operation management© Hitachi, Ltd. 2013. All rights reserved.

27

4-3. Expand Global Businesses (3) Consulting
Hitachi Consulting drives global business by the approach from upstream level

Results Through FY2012
Built a highly profitable
service portfolio- Upstream consulting- Technology solutions- Managed services

Business
portfolio
expansionExpanded business scaleusing M&As
- Acquired PRIZIM (Apr. 2012)- Acquired Celerant Consulting(Dec. 2012)

Strengthened global
business structure- Acquired Sierra Atlantic (Dec. 2010)

Initiatives Towards FY2015
Establish Tier 1 position
early- Expand regional coverage on Europe
and Asia-PacificReinforce the consulting
business for driving theSocial Innovation Business- Strengthen collaboration with
Infrastructure Systems Company andPower Systems Company, etc.

Focus on the fieldcustomers need most
- Big Data
- ERP
- ITO, BPO

ERP: Enterprise Resource Planning ITO: Information Technology Outsourcing
BPO: Business Process Outsourcing© Hitachi, Ltd. 2013. All rights reserved.

28

4-3. Expand Global Businesses(4) Solutions Delivery System

 Strengthen global solutions delivery as One Hitachi
 Establish a support system in close contact with customers
More sophisticatedsocial infrastructure
Electricity, railways, water, etc.

Corporate globalization
Manufacturing, distribution,
finance, etc.

Provide total solutions extending from consulting tosystem development and operation
Expand regional coverage andstrengthen growth markets(developing businesses in approx. 100 countries
and regions at present)

Information & Telecommunication Systems Company
Hitachi Data Systems

Hitachi Consulting

Hitachi-Omron Terminal Solutions

Hitachi eBworx

Hitachi Sunway Information Systems

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

29

4-4. Strengthen Services Businesses
Service revenue ratio: 60%(FY2012)  over 65%（FY2015）
Market trends/needs

Strong services businesses Accelerated shift“from ownership to access”
 Expansion of outsourcing overcustomers’ core businesses
 Utilization of services to expand
business

Provide high-value added services with thestrength of track records and know-how in thefields of finance, government & public andmanufacturing fields

Business layer

Management

Strengthen upstream- Management/operation consulting- Big Data
FY2012

Management
support services
Operation services

IT Consulting
BPO

SystemSystemSI, O/S
integration/operation
Products andMaintenanceservices

O/S： Outsourcing

FY2015

 SI: Steady progress of big
projects in the financial
field and national security
Expandnumber program
comprehensive
 Expand regional coverage
services:and services lineup by- Comprehensive
partnering and M&A
O/S- Managed service  Strengthen recurrence- Second
prevention of low
generation cloudprofitability projects
Range and style of service providing© Hitachi, Ltd. 2013. All rights reserved.

30

Information & Telecommunication Systems
Business Strategy

Contents
1. Performance Review of 2012 Mid-term Management Plan
2. 2015 Mid-term Management Plan
3. Hitachi’s Comprehensive Capabilities in the Social Innovation Business4. Transforming a Business Portfolio with Growth Potential
5. Developing the Global Business Structure
6. Business Targets
7. Conclusion© Hitachi, Ltd. 2013. All rights reserved.

5-1. Transformation
Shift focus from consolidated management andbusiness structure reforms to development of a global business structure

Consolidated management and business structure reforms

2012
Mid-term
Management
Plan Group company integration, conversion of subsidiaries into
wholly owned subsidiaries (Hitachi Systems , Hitachi Solutions) Discontinued the manufacture of semiconductors for IT hardware
products

 Hitachi Smart Transformation Project (started in FY2011)- Consolidate the manufacture facilities of IT platform products- Consolidate the indirect operations (Education unit, etc.)
 Cost reduction effect: FY2012: 12.0 billion yen (from FY 2010)2015
Mid-term
Management
Plan

Develop the Global Business Structure Strengthen global operations
 Strengthen global human resources Hitachi Smart Transformation Project Strengthen cash flow management© Hitachi, Ltd. 2013. All rights reserved.

32

5-2. Strengthen Global Operations and Human Resources

Strengthen global operations
Enhance global and group consolidated management system:- Strengthen integration of business value chain- Hold top management conference globally
Strategic increase in R&D investment(Ratio to revenue: 4.6%(FY2012)  6%(FY2015))- Utilize global R&D resources by collaborating with the Research and Development
Group- Create innovation by market-in style R&D
Strategic utilization of IT:- Real-time visualization of management and global integration of systems
Strengthen sales capabilities- Optimize sales under group consolidation

Strengthen global human resourcesGlobal leader appointments: participation in management
Reinforce development of global and services human resources© Hitachi, Ltd. 2013. All rights reserved.

33

5-3. Hitachi Smart Transformation Project
Cost reduction through Hitachi Smart Transformation Project

Earnings Structure (%)

30.3
4.6

Operatingincome29

SG&A
expenses

6

R&D
expenditures

61

Costs

Costs

10

SG&A
expenses

5.9

63.8

FY2012FY2015 Target

 Optimize split of work/process within HitachiGroup Consolidate and restructure group companies
 Integrate IT within Hitachi Group Expand global shared services of indirect
operations (accounting, general affairs,
procurement, etc.)
 Reduce software development cost by
expanding use of offshore Reduce manufacturing cost by consolidating
manufacture facilities Reduce direct material cost by expanding
global sourcing and standardizing materials

Cost
reductioneffect

FY2013: 16.0 billion yen (fromFY2012)
FY2015: 53.0 billion yen (from FY2012)
FY2011~2015 total： 65.0 billion yen＋
Establish highly-profitable business portfolio
Strategic increase in R&D investment© Hitachi, Ltd. 2013. All rights reserved.

34

5-4. Strengthen Cash Flow Management
Challenges
Increase cash flows fromoperating activities

Increase businessprofitabilityImprove turnover periodof working capitalReduce assets

Optimize cash
flows from investing
activities

Optimize return on
investments /Recoup investments early

MeasuresIncrease profitability by shifting
to services businesses andexpanding global businesses
Reduce inventories by
consolidating manufacturing
facilities and establishing global
supply chain management
Continue to examine investments
to generate synergies among
other business units

Execute strategic
investments and M&A to
maximize synergies© Hitachi, Ltd. 2013. All rights reserved.

35

Information & Telecommunication Systems
Business Strategy

Contents
1. Performance Review of 2012 Mid-term Management Plan
2. 2015 Mid-term Management Plan
3. Hitachi’s Comprehensive Capabilities in the Social Innovation Business4. Transforming a Business Portfolio with Growth Potential
5. Developing the Global Business Structure
6. Business Targets
7. Conclusion© Hitachi, Ltd. 2013. All rights reserved.

6-1. FY2013 Forecasts
Amount of orders
received (billion yen)Overseasrevenue
ratio
Revenue(billion yen)

1,787.5

５.８％

1,899.0
35%
29%

26%

25%

24%

1,838.3

９.８％

５.８％

５.５％

ＥＢＩＴ
ratio

６.０％

EBIT
(billion yen)

2,100.0
３００.０

2,000.0
1,652.0

1,764.2

1.786.5

1,820.0

205.0
２００.０
1,000.0
96.0

0FY201096.2

FY2011

104.2

110.0
１００.０

FY2012FY2013

FY2015© Hitachi, Ltd. 2013. All rights reserved.

37

6-2. FY2015 Business Targets

FY2015 Targets
Revenues: 2,100.0 billion yen(overseas revenue ratio: 35%)
EBIT (Operating income) ratio: 9.8% (10%)
Gross margin:
2.8 point improvement (from FY2012)
SG&A expense ratio:
1.3 point improvement (from FY2012)© Hitachi, Ltd. 2013. All rights reserved.

38

Information & Telecommunication Systems
Business Strategy

Contents
1. Performance Review of 2012 Mid-term Management Plan
2. 2015 Mid-term Management Plan
3. Hitachi’s Comprehensive Capabilities in the Social Innovation Business4. Transforming a Business Portfolio with Growth Potential
5. Developing the Global Business Structure
6. Business Targets
7. Conclusion© Hitachi, Ltd. 2013. All rights reserved.

7. Conclusion

Become a global major player by 3Gs(Growth, Global and Group)© Hitachi, Ltd. 2013. All rights reserved.

40

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.

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