2018 Mid-term Management Plan
Progress and Prospects
April 27, 2018

Toshiaki Higashihara
President & CEO
Hitachi, Ltd.

© Hitachi, Ltd. 2018. All rights reserved.

Contents

1.
2.
3.
4.
5.

2018 Mid-term Management Plan and Achievement
Progress in FY2017
Further Growth in Social Innovation Business
Management Base for Growth
Looking ahead to FY2021© Hitachi, Ltd. 2018. All rights reserved.

2

1. 2018 Mid-term Management Plan and Achievement© Hitachi, Ltd. 2018. All rights reserved.

3

1.1 2018 Mid-term Management Plan

An Innovation Partner for the IoT Era
Accelerate collaborative creation with customers
through advanced Social Innovation Business

Four Focus Business Domains

Ｐｏｗｅｒ・Ｅｎｅｒｇｙ

Ｉｎｄｕｓｔｒｙ・Ｄｉｓｔｒｉｂｕｔｉｏｎ・
Ｗａｔｅｒ

Ｕｒｂａｎ

Ｆｉｎａｎｃｅ・Ｓｏｃｉａｌ・Ｈｅａｌｔｈｃａｒｅ© Hitachi, Ltd. 2018. All rights reserved.

4

1.2 Business Performance
FY2016(Results)

FY2017(Forecast*)

FY2018(Results)(Initial target)(Forecast)

9,162.2
billion yen

9,300.0
billion yen

9,368.6
billion yen

10,000.0
billion yen

9,400.0
billion yen

6.4％

7.1％

7.6％

Over 8％

8.0％

587.3
billion yen

660.0
billion yen

714.6
billion yen

Over 800.0
billion yen

750.0
billion yen

5.2％

6.2％

6.9％

Over 8％

8.0％

EBIT

475.1
billion yen

580.0
billion yen

644.2
billion yen

Over 800.0
billion yen

750.0
billion yen

Net income
attributable
to Hitachi, Ltd.
stockholders

231.2
billion yen

300.0
billion yen

362.9
billion yen

Over 400.0
billion yen

400.0
billion yen

U.S. Dollar

108 yen

111 yen

111 yen

110 yen105 yenEuro

119 yen

126 yen

130 yen

120 yen

130 yen

Revenues
ratio

Adjusted
operating income
ratio

FX rate(Average)* As of Jan., 2018

© Hitachi, Ltd. 2018. All rights reserved.

5

1.3 Business Performance(Change Gears toward Growth)

Improved business performance by global businessexpansion and continuous structural reforms
CCC

Revenues
9.2 trillion yen

9.4 trillion yen

106%*1(8.8 trillion yen*1)

FY201669.7 days
FY2016FY20176.4%(714.6 billion yen)

(587.3 billion yen)

FY2016FY2017+1.2%(122%)

improvement

FY2017

ROA*3

Adjusted operating income ratio (amount)
7.6%

2.5 days

72.2 days*2

5.0%

+1.7%

3.3%*2FY2016FY2017*1 Figures reflecting adjustments based on currently existing businesses. (Revenues of Hitachi Transport System, Hitachi Capital and Hitachi Koki were
excluded from the actual result in FY2016) YoY is calculated using adjusted figures.
*2 Manufacturing, Services and Others*3 ROA(Return on Asset) = [Net income] / [Total Asset (Average between the end of current fiscal year and the end of previous fiscal year)] x 100© Hitachi, Ltd. 2018. All rights reserved.

6

1.4 To Achieve the 2018 Mid-term Management Plan
Change gears toward growth to become a globally integrated enterprise
FY

Activities

Adjusted operating
income ratio
6.6％
6.3％

• Prepare for growth2016

 3-level structure (Front, Platform, Products)
 Introduced Business Unit system
 Improved low profit businesses andexecuted structural reforms
 Activated Lumada• Change gears toward growth2017 Expanded global business through M&As
 Enhanced Lumada
 Expanded collaborative creation

6.3％

6.4％

8.0%
7.0％

6.0％

Revenues
9.7
tril. yen

9.8
tril. yen10

tril. yen6

7.9
tril. yen

(Forecast*2)

9.2

9.4
tril. yen

9.2
8.2
tril. yen

8.6

9.4
tril. yentril. yen

8
7

(Target)(Forecast*1)(Tril. yen)
 Impact of business reorganization*3
10

9

8.0％

7.6％

8.6

tril. yentril. yen

FY2015FY2016

tril. yen

9.4
tril. yen

5

2018

• Achieve mid-term plan
• To be a globally integrated enterprise4

 Expand global business Expand digital business using Lumada

1

3
2
0

FY2013(Results)

FY2014(Results)(Results)(Results)

FY2017FY2018(Results)(Forecast)*1 As of May, 2016 *2 As of May, 2017
*3 Impact of business reorganization: Figures reflecting adjustments excluding revenues of reorganized businesses.
(Results of Hitachi Transport System, Hitachi Capital, Hitachi Koki, Hitachi Kokusai Electric, Hitachi Maxell, thermal power business and air conditioning business were
excluded from the actual result. The elimination among inter-company transactions are not reflected.)© Hitachi, Ltd. 2018. All rights reserved.

7

2. Progress in FY2017© Hitachi, Ltd. 2018. All rights reserved.

8

2.1 Global Business Expansion (1)Global growth through core businesses in each region
China Automotive  Construction
machinery
products
 High functional Elevators/
materials &Escalatorscomponents

Europe Railway

N. America

FY2016 Revenues* FY2017 Revenues
 Construction
machinery High functional
materials &components

FY2016 Revenues* FY2017 Revenues

0.85 trillion yen 0.96 trillion yen
YoY: 113%

0.91 trillion yen 1.04 trillion yen
YoY : 114%

 Construction
 Railway
machinery
 Industrial
functional
equipment/  Highmaterials &solutionscomponents
 IT products
FY2016 Revenues* FY2017 Revenues
1.09 trillion yen 1.18 trillion yen

YoY: 108%Asia
 Elevators/  Construction
machinery
Escalators
 Automotive
products
FY2016 Revenues* FY2017 Revenues

0.91 trillion yen 1.04 trillion yen

Overall global revenues
YoY : 113%

YoY : 114%
Regions except for those which are listed above (including Japan): FY2016 5.04 trillion yen → FY2017 5.15 trillion yen* Figures reflecting adjustments based on currently existing businesses.
(Revenues of Hitachi Transport System, Hitachi Capital and Hitachi Koki were excluded from the actual result in FY2016)© Hitachi, Ltd. 2018. All rights reserved.

9

2.2 Global Business Expansion (2)Expanded global business in each region

Railway

Europe : Sales expansion by IEP* in the U.K., etc.
North America : Sales expansion through Hitachi Rail Italy
and Ansaldo STS- Began delivering rolling stocks for Miami Dade metro- Received order for rolling stocks and signaling system
for Baltimore metro (approx. 45.0 billion yen)

Industrial
Equipment

North America : Acquisition of Sullair. Through the Sullair
sales channel, began selling air compressorsof Hitachi Industrial Equipment Systems

IT Products North America : Strong sales for flash storage products
Construction
Machinery China : Sales expansion in response to the market recovery* IEP: Intercity Express Programme, started commercial operation in Oct. 2017
© Hitachi, Ltd. 2018. All rights reserved.

10

2.3 Growth through Digital Technologies
Established a base for growth using digital technologies
by enhancement of the front-line and Lumada
 Building global promotional structures and enhancement of the front-line- To promote global digital business, launched
Hitachi Vantara (Sep., 2017)
Hitachi Global Digital Holdings (Apr., 2018)- CCOs*1 appointed in North America, Europe and Asia
to enhance customer access Enhancement of Lumada and accumulating
customer cases- Prepared a series of Lumada software for the fast andeasy startup of systems- Accumulated over 500 customer cases*2(over 300 customer cases added since the end of Mar., 2017)

 Inquiries increased, and collaborative creation withcustomers and new orders expanded- Number of inquiries:
Over 1,000 in Europe, U.S., China and APAC
- Collaborative creation:
Penske Corporation, Yamato Transport, Vietnam Post, etc.
*1 CCO: Chief Commercial Officer*2 As of Mar. 31, 2018

Lumada customer cases
Improvequality

In training, use veteranengineers’ skills standardized
through digital technologies

Sales
Risk expansion
reduction
Over
500

Cost
optimization

Costvisualization

Create optimum production
Improveplans by increasing visibility of
production progress and issues productivity© Hitachi, Ltd. 2018. All rights reserved.

11

2.4 Continuous Business Structural Reforms
Improved profitability bycontinuing business structural reforms
Measures forbusinessissues /Structuralreforms

 Improved operating profits by approx. 38.0 billion yen (YoY)
by downsize of and withdrawal from low profitable business- Withdrawal from large-scale industrial EPC* business Continuous structural reforms- Effect in FY2017 : 15.0 billion yen (YoY) Business restructuring in FY2016~FY2017
Revenue impact : approx. 1.5 trillion yen
FY2016

Selection andconcentrationof businesses

FY2017

Logistics service(Hitachi Transport System)

Semiconductor manufacturing equipment, etc.
(Hitachi Kokusai Electric)

Financial service(Hitachi Capital)

Passenger transportation service(Hitachi Dentetsu)

Electric tools(Hitachi Koki)
Others(LCD Panel manufacturing equipment, etc.)

Network device business(ALAXALA Networks)* EPC: Engineering, Procurement and Construction

Forged steel roll business© Hitachi, Ltd. 2018. All rights reserved.

122.5 MONOZUKURI and Quality Assurance
Enhancement of MONOZUKURI* and quality assurance
for business growth
MONOZUKURI Competitive cost structure and improved reliability
by collaboration with alliance partner- Strengthen MONOZUKURI through collaboration with UMC Electronics(Apr., 2018~)

 Progress of MONOZUKURI by utilizing Lumada in Hitachi- Design efficiency improvement, short lead time, etc. : 115 in-house cases

Quality management
 Software reliability in response to progress of digitization- Apply quality control technique of the Systems & Services Business Division
to other Business Units, etc.

 Quality assurance by digital technologies/IT- Automated data-linking without manual work to avoid human error, etc.
* MONOZUKURI: Engineering and manufacturing of products© Hitachi, Ltd. 2018. All rights reserved.

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2.6 Improvement of Asset Profitability
Replacement of assets
by prioritization of investments and reduction of existing assets
Prioritization of investments
 Prioritized investment in high growth andprofitable(ROA) business domains【Direction of assets holdings】- Maxell (Dec., 2017), etc.

Effective use of capitalLow

 Sale of holding shares

ROA- Network devices, overseas industrial EPC
business, etc.

Maintainassets scale

MiddleReduction of existing assets
 Reduction of low-profit assets

Expansionof profitableassetsHigh- Railway turnkey/signaling business, industrial
equipment, etc.

(Prioritizedinvestment)(Investment
within cash flows)

Reductionof assets

Low

MiddleHigh

Growth potential of global market
 Financing by utilizing external capital Hiring investment and funding specialists© Hitachi, Ltd. 2018. All rights reserved.

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2.7 Status of Mid-term Plan KPIs
Achieved the target for ROA ahead of scheduleby proceeding growth plan in FY2016 - FY2017
FY2016(Results)

FY2017(Results)

Front business expansion(Front revenue ratio)

38%

39%

40%

Global business expansion(overseas revenue ratio)

48%

50%

Over 55%

Strengthening
cash-generating capability

7.1%*

7.8%

Over 9%

3.3%*

5.0%

Over 5%(Operating cash flow margin)

Improving asset profitability(ROA)

FY2018(Target)* Manufacturing, Services and Others© Hitachi, Ltd. 2018. All rights reserved.

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3. Further Growth in Social Innovation Business© Hitachi, Ltd. 2018. All rights reserved.

16

3.1 Business Environment Change andSocial Innovation Business

Increasing demands of Social Innovation Business
The United Nations has adopted“Sustainable Development Goals” (SDGs)
Realizing inclusive society and self-growth
became new challenges for
globally integrated enterprises

Resolving the world's social challenges andproviding innovative structures for society
and lives through Social Innovation BusinessＳｏｃｉｅｔｙ ５.０

Ｉｎｄｕｓｔｒｉｅ４.０
ＩｏＴ

SDGs Market; US$12 trillion(Predicted figures by 2030)*1*1 BSDC “Better Business, Better World”*2 (Ref.) IDC https://www.idc.com/getdoc.jsp?containerId=prUS43295217

IoT Market; US$1.1 trillion (2021)(CAGR 14.4%)*2© Hitachi, Ltd. 2018. All rights reserved.

17

3.2 To Achieve the 2018 Mid-term Management Plan
Change gears toward growth to become a globally integrated enterprise
FY

Activities

Adjusted operating
income ratio
6.6％
6.3％

• Prepare for growth2016

 3-level structure (Front, Platform, Products)
 Introduced Business Unit system
 Improved low profit businesses andexecuted structural reforms
 Activated Lumada• Change gears toward growth2017 Expanded global business through M&As
 Enhanced Lumada
 Expanded collaborative creation

6.3％

6.4％

8.0%
7.0％

6.0％

Revenues
9.7
tril. yen

9.8
tril. yen10

tril. yen6

7.9
tril. yen

(Forecast*2)

9.2

9.4
tril. yen

9.2
8.2
tril. yen

8.6

9.4
tril. yentril. yen

8
7

(Target)(Forecast*1)(Tril. yen)
 Impact of business reorganization*3
10

9

8.0％

7.6％

8.6

tril. yentril. yen

FY2015FY2016

tril. yen

9.4
tril. yen

5

2018

• Achieve mid-term plan
• To be a globally integrated enterprise4

 Expand global business Expand digital business using Lumada

1

3
2
0

FY2013(Results)

FY2014(Results)(Results)(Results)

FY2017FY2018(Results)(Forecast)*1 As of May, 2016 *2 As of May, 2017
*3 Impact of business reorganization: Figures reflecting adjustments excluding revenues of reorganized businesses.
(Results of Hitachi Transport System, Hitachi Capital, Hitachi Koki, Hitachi Kokusai Electric, Hitachi Maxell, thermal power business and air conditioning business were
excluded from the actual result. The elimination among inter-company transactions are not reflected.)18© Hitachi, Ltd. 2018. All rights reserved.

3.3.1 Hitachi’s Objective of Social Innovation Business
Using Digital Technologies

To be a No.1 innovation partner
 Top-level IoT platform as a base for digital technology: Lumada
 Collaborative creation with customers using OT x IT x Products- Inquiries increased, and collaborative creation with customers expanded(Accumulated over 500 customer cases in manufacturing, distribution/mobility, finance, etc.)

Building a shared vision
with the customer
Sharing issues

Visualization

Creating new concepts,
developing and demonstrating
prototypes
Designingbusinessmodels

Implemen-tationTesting andsimulations

Collaborative creation methodology“NEXPERIENCE”© Hitachi, Ltd. 2018. All rights reserved.

19

3.3.2 Mobility Solution (1)Safe and comfortable transport through digital technologies
Penske Corporation:
Transportation, Traffic service

Yamato Transport: Home delivery

Solution

Solution

Optimize vehicle management using
vehicle running data

Visualize data collected from cars andanalyze drivers’ behavior, etc.

Outcome

Outcome

Improve the ratio of vehicles in operation

Realize safe delivery
by sophisticated driving training© Hitachi, Ltd. 2018. All rights reserved.

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3.3.3 Mobility Solution (2)Safe and comfortable transport through digital technologies
Copenhagen Metro: Transportation

Nishi-Nippon Railroad: Transportation

Solution

Solution

Optimized train operation
by people flow analysis, through Lumada

Analyze data on bus running records andloading history to optimize operation plans

Outcome

OutcomeCongestion easing, improvement ofcustomer convenience and operational
efficiency

Improvement of operational efficiency
and passengers’ convenience© Hitachi, Ltd. 2018. All rights reserved.

21

3.3.4 Manufacturing Digital Solutions
Transform manufacturing sites and supply chain with Lumada
to respond to various demands from manufacturer clients
Improve productivity in manufacturing●Co-creation example:
Okuma●In-house example:
Omika Works in Hitachi

Reduce lead time inmanufacturing supply chain
Issue
Provide necessary items on time

Solution
Issue

Improve efficiency of small volume, multiple
item production

Solution

Optimize production plan by visualizing andanalyzing production progress andoperational status of facility

Outcome

Improve productivity, reduce lead time

In-plant (manufacturing)

Optimize manufacturing supply
chain using digital technologies

OutcomeReduce lead time
Procurement - manufacturing –distribution© Hitachi, Ltd. 2018. All rights reserved.

22

3.4.1 Global Expansion of Social Innovation BusinessCore Social Innovation Business in each region
Business

RegionNorth
America

Asia

China

EuropeFinancial/Socialsolutions

Industrial
equipment/
solutions

Financial SI

Industrial equipment(strengthen customer
engagement in U.S.)
Manufacturing solutions
Mobility solutions

Elevators/
Escalators

Railway

Railwaysystems/
turnkey

Financial/Social
New installation, maintenancesolutions
Industrial equipment
Digital solutions related building(e-Government,
Manufacturing solutions(Remote monitoring, etc.)
non-cash payment)
New installation, maintenanceDigital solutions related building(Remote monitoring, etc.)
Railwaysystems/
digital solutions

Above businesses (scale of revenues: approx. 3 tril. yen) will drive global growth(FY2018
FY2021: Target CAGR 5-10%)© Hitachi, Ltd. 2018. All rights reserved.

23

3.4.2 Global Rollout of the Financial/Social Infrastructure Solutions Business

Expand global business using know-how in Japan
Financial Vietnam Post:
Digitization of financial services(Jointly with Sumitomo Mitsui Banking
Corporation)- Providing digitized pension payment
system- Planning to expand to non-cash
payment businessSocial Infrastructure Digitization of administration
services in India
Contribution to “Digital India”- Started up Hitachi MGRM Net*to develop and provide solutions
and services* Hitachi MGRM Net: Hitachi India acquired part of the shares in MGRM Net Limited, an Indian IT company, and changed the company name.
© Hitachi, Ltd. 2018. All rights reserved.

24

4. Management Base for Growth© Hitachi, Ltd. 2018. All rights reserved.

25

4.1 Investments in Focused Business Fields
Prioritize investment in core businesses
in four focused domains
Investment Direction
 Expand global business: Enhancement of regional sales channel, etc.
 Expand digital service business: Financial payment system, e-Government, etc.
 Respond to sustainable society: Carbon free (e.g.: renewable energy,
energy management, electric vehicles), etc.
Power/Energy

Industry/
Distribution/Water

Finance/Social/
Healthcare

Urban

Investment fields[Railway]- Turnkey/signaling system- Renewableenergy- Distributed
power solution- Manufacturingsolutions- Industrial
equipment(North America/
Asia)

Japan and global[Elevators/Escalators]- New installations/maintenance(China/other countries & regionsof Asia)[Automotive]- Electric power trains,
autonomous driving products- Mobility as a Service- Financial payment
system (Asia)- e-Government (Asia)© Hitachi, Ltd. 2018. All rights reserved.

26

4.2 Toward Future Global Growth
Using Digital Technology
Front-line flexibly provides solutions suited for customers
Industry/
Distribution/
Water

Power/
EnergyCustomer

Finance/
Social/Healthcare

Urban

Directly provide
platform tocustomer

Front-line
Provide services
by collecting
products

Consulting

Pre-engineering

SI

Engineering

Platform
Directly provide
products tocustomer

In-house useof Lumada
Providecompetitive
products

Products
Powerproducts

Elevators
Escalators

Products
IT
Home
Industrialof other
Railway Automotive…
products
appliance equipment products
companies© Hitachi, Ltd. 2018. All rights reserved.

27

4.3 Human Resources for Growth
Acquire talent leading global growth with digital technologies
Enhancement of global management and front-line
 Management executives:- Assigned three global talents to the top management in BU*1 and group companies
Railway Systems BU, Hitachi Automotive Systems, andHitachi Global Digital Holdings
 Regional Front-line executives/staff:- Hired dedicated four experts as CCO*2 of regional sales representativein North America, Europe, and Asia
- Hired approx. 30 top-class experts in each business fieldfrom global IoT companies, etc.
Enhancement of innovation capabilities by hiring diverse human resources Assignment of officers including more women and non-Japanese personnel- Increase ratio from current*3 2.5% of women and 6.4% of non-Japanese
to 10% each by FY2020*1 BU: Business Unit

*2 CCO: Chief Commercial Officer *3 As of Apr. 1, 2018

© Hitachi, Ltd. 2018. All rights reserved.

28

4.4 R&D and New Business Creation
Investments for creating No.1 products and services
Creation of global No.1 products and technologies by expansion of R&D investment

 Accelerate R&D from highly prioritized technologies
Focus field: Block-chain, autonomous driving, optimized factory, AI, robotics, etc.
(FY2017 R&D investment : 332.9 billion yen)

New business creation by responding to social/business trends

 Create new business in manufacturing and social infrastructure
sector using “edge computing”-

Established a joint venture with FANUC and Preferred Networks (Apr., 2018)
Participated in Edgecross Consortium as a board company and promote
construction of ecosystem

Creation of disruptive technology through open innovation

 Secure access for disruptive technology and new business area
Invested in a fund managed by venture capital Geodesic Capital (Mar., 2018)© Hitachi, Ltd. 2018. All rights reserved.

29

4.5 Accelerate Management Speed,
Improve Operational Efficiency
Improve profitability by reforming organization/rules/operation/IT
Assigned EVP, Mr. Takahashi as CTrO* to promote reform projects
Reduce the costs by more than 100.0 billion yen by FY2021
Reform projects
Management
issuesIncrease
speed

Increase
operational
efficiency

Improvement
themes Simplify organizational
structures

Increase
efficiency of
indirect
operations

Reducenumber ofsubsidiaries●●

 Reorganize system
and rules●

 Reorganize work processes● Enhancement of complianceCentralize management
information* CTrO: Chief Transformation Officer

Increase
visibility ofmanagement
data

●

●
●
© Hitachi, Ltd. 2018. All rights reserved.

30

4.6 Progress of Important Items

Nuclear power business in U.K. (Horizon Project)
 Continue negotiations with U.K. government and related parties Completed GDA* on December, 2017

Thermal Power Project in South Africa
 Taking appropriate measures in the arbitration procedure* Generic Design Assessment© Hitachi, Ltd. 2018. All rights reserved.

31

5. Looking ahead to FY2021© Hitachi, Ltd. 2018. All rights reserved.

32

5.1 Goals Heading into FY2021

Hitachi provides
advanced social infrastructures
globally through digital solutions
for improved Quality of LifeAim for further growth in
the 2021 Mid-term Management Plan
Adjusted operating income ratio: over 10%© Hitachi, Ltd. 2018. All rights reserved.

33

Delivering new value to society throughcollaborative creation with our customers and partners© Hitachi, Ltd. 2018. All rights reserved.

34

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 materiallyfrom those projected or implied in the “forward-looking statements” and from historical trends. Certain “forward-looking statements” are based upon current assumptions of future events which
may not prove to be accurate. Undue reliance should not be placed on “forward-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 levelsof demand in the major industrial sectors Hitachi serves;
 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; 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;
 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;
 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; credit conditions of Hitachi’s customers and suppliers; 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 continue to develop and market products that incorporate new technologies on a timely and cost-effective basis and to achieve market acceptance forsuch products;
 increased commoditization of and intensifying price competition for products;
 uncertainty as to Hitachi’s ability to attract and retain skilled personnel;
 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 acquisitions of other companies, joint ventures and strategic alliances and the possibility of incurring related expenses;
 uncertainty as to the success of restructuring efforts to improve management efficiency by divesting or otherwise exiting underperforming businesses and to strengthen competitiveness; the potential for significant losses on Hitachi’s investments in equity-method associates and joint ventures;
 general 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; uncertainty as to the success of cost structure overhaul; uncertainty as to Hitachi’s access to, or ability to protect, certain intellectual property;
 uncertainty as to the outcome of litigation, regulatory investigations and other legal proceedings of which the Company, its subsidiaries or its equity-method associates and joint ventures
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 natural disasters such as earthquakes and tsunamis, the spread of infectious diseases, and geopolitical and social instability such as
terrorism and conflict; 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; and uncertainty as to the accuracy of key assumptions Hitachi uses to evaluate its employee benefit-related costs.
The factors listed above are not all-inclusive and are in addition to other factors contained in other materials published by Hitachi.

© Hitachi, Ltd. 2018. All rights reserved.

35