FOR IMMEDIATE RELEASE

Hitachi Announces “2018 Mid-term Management Plan”

Tokyo, May 18, 2016 --- Hitachi, Ltd. (TSE:6501) today announced that it has
formulated a management plan “2018 Mid-term Management Plan” to aim to become an
Innovation Partner for the IoT Era by Social Innovation Business. Summary of “2018Mid-term Management Plan” are below.
1. FY2018 Target(1) Management Target
FY2018 Target*1,2

FY2015 Results

10,000.0 billion yen

10,034.3 billion yen

Adjusted operating income*3 ratio

Over 8%

6.3%

EBIT*4 ratio

Over 8%

5.3%

Over 400.0 billion yen172.1 billion yen

40%

36%

Overseas revenue ratio

Over 55%

48%

Operating Cash Flow Margin*5

Over 9%

8.6%

ROA*5,6

Over 5%

2.6%

Revenues

Net income attributable toHitachi, Ltd. stockholders
Front revenue ratio*1 Foreign exchange rate assumption: 110 yen / dollar, 120 yen / euro
*2 Figures for FY2018 reflect the conversion of Hitachi Transport System, Ltd. and Hitachi Capital Corporation
into equity-method associates and joint ventures.
*3 [Adjusted operating income] = [Revenues] – [Cost of sales] – [Selling, general and administrative expenses]*4 EBIT (Earnings Before Interest and Taxes) is presented as income from continuing operations, before income
taxes less interest income plus interest charges.
*5 Manufacturing, Services and Others*6 ROA(Return on Asset) = [Net income] / [Total Asset (Average between the end of current fiscal year and theend of previous fiscal year)] x 100- more --2-

2. What to Achieve in the 2018 Mid-term Management Plan
(1) Social Innovation Business ahead of the Times
Deliver innovations to customers and society through fusion of OT*7, IT, andproducts/systems*7 Operational Technology: Technology to control the operation of industrial components, plants, social
infrastructure equipment, etc. A word used in contrast to "IT".

(2)Expanding Opportunities for Social Innovation Business
Digitalization has accelerated the reorganization of industries and social
infrastructures(3)Evolution of Social Innovation Business①Industry and Distribution: Innovate the whole industry and distribution structure②Urban: Realize more convenient, comfortable and eco-friendly lifestyles(4)Hitachi in 2018
An Innovation Partner for the IoT Era
Accelerate collaborative creation with customers through the advanced Social
Innovation Business3. Strengthening the Social Innovation Business(1)Advancing the Social Innovation Business to Next Stage
Strengthen products/material business, SI and EPC, and growth using digitaltechnology
Drive Hitachi’s overall growth with digitalized Social Innovation- more --3-(2)Accelerating the Social Innovation Business
The front delivers Hitachi’s technologies and expertise to customers as services(3)IoT Platform “Lumada”
Core of Social Innovation
Means for customers to enjoy digitalized innovation quickly and easily(4)Strengthening the Front
Increase front manpower by 20,000:
FY2015 110,000 people → FY2018 130,000 people(5)R&D that Supports Strengthening the Front
Promoting R&D close to the customers(6)Strengthening Products
Expanding digitalized products that support innovation
Focusing on investing in globally competitive products(7)Global Rollout of the Social Innovation BusinessBest response to innovation in industry and social infrastructure in each region
4. Strengthening the Management Base
(1)Management Acceleration for Growth and Profits: Reform Hitachi’s
management baseSpeed up management - Rapid decision-making and quick execution
Expand global business - Expand global partners and customers
Increase business profitability - Judgment on low-profitability businesses
Invest in growth businesses - Investments totaling 1 trillion yen over three years(2)Strengthening Capability to Generate Cash: Evolution of Hitachi Smart
Transformation
Re-examine cost structures - Design target costs and reduce procurement costs /fixed costs
Increase efficiency of operating capital - Use IT to reduce production lead times anddecrease inventory
Increase efficiency of investments and assets - Share production facilities amongplants(3)Investment Policy
Speedily increasing profit through investment in products businessConcentrating investment in front to accelerate the Social Innovation- more --4-

5. Moving Forward to 2018
(1)Hitachi Group’s Position in FY2018①Front develops and provides services to drive expansion of revenues andprofits
billion yen

FY2018 Target*1,2

Revenues
Front(Front revenue ratio)
Power / Energy

FY2015 Results

4,000.0
(40%)
550.0

3,596.9
(36%)
519.5

840.0

790.7

Urban

1,400.0

1,056.5

Finance / Public / Healthcare

1,380.0

1,230.2

Platform

330.0

278.6

Products

6,820.0

7,389.3

Industry / Distribution / Water

FY2018 Target*1,2

Adjusted operating income ratio
Front
Platform

8%11%

Products7%②Strengthening focused areas for expansion of the Social Innovation BusinessBusiness Domains
Power / Energy

Approach・Transition to distributed power supply utilizing IT－Microgrid, Regional energy management－Renewable energy

Industry /・Use “Lumada” IoT platform to optimize value-chain for industry andDistribution / Water

distribution

Urban

・Improvement of Quality of Life in communities
・From Rail as a Service to Outcome Delivery

Finance / Public /・FinTech / My-number

Healthcare・Healthcare Service (Platform)- more --5-③Railway business grows substantially in Europe; Businesses in North America
also continues to grow
Growth by services and products utilizing digital technologies
trillion yenRevenues

FY2018 Target*1,2

FY2015 Results

Asia*8

1.22

1.05

China

1.10

1.05

North America

1.46

1.28

Europe1.15

0.95

Other Areas （including Japan）

5.07

5.69

Overseas revenues ratio

55%

48%

*8 not including China④THE FUTURE IS OPEN TO SUGGESTIONS
Delivering new value to society through collaborative creation with ourcustomers and partners

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 andinclude 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.” Suchstatements are based on currently available information and are subject to various risks anduncertainties 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” arebased 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 ofthe 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 inHitachi’s major markets, particularly Japan, Asia, the United States and Europe, as well as levelsof demand in the major industrial sectors Hitachi serves, including, without limitation, theinformation, 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;•uncertainty as to Hitachi’s ability to continue to develop and market products that incorporate new- more --6-technologies on a timely and cost-effective basis and to achieve market acceptance for suchproducts;•

the possibility of cost fluctuations during the lifetime of, or cancellation of, long-term contracts forwhich Hitachi uses the percentage-of-completion method to recognize revenue from sales;•credit conditions of Hitachi’s customers and suppliers;•

fluctuations in the price of raw materials including, without limitation, petroleum and othermaterials, such as copper, steel, aluminum, synthetic resins, rare metals and rare-earth minerals,
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 impactof fluctuations in product demand, exchange rates and/or price of raw materials or shortages ofmaterials, parts and components;•

increased commoditization of and intensifying price competition for products;•

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 bydivesting 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 ofcountries where Hitachi conducts business, particularly Japan, Asia, the United States andEurope, including, without limitation, direct or indirect restrictions by other nations on imports anddifferences 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 proceedingsof which the Company, its subsidiaries or its equity-method associates and joint ventures havebecome or may become parties;•the possibility of incurring expenses resulting from any defects in products or services of Hitachi;•

the potential for significant losses on Hitachi’s investments in equity-method associates and jointventures;•the possibility of disruption of Hitachi’s operations by natural disasters such as earthquakes andtsunamis, 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;•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 othermaterials published by Hitachi.

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About Hitachi, Ltd.
Hitachi, Ltd. (TSE: 6501), headquartered in Tokyo, Japan, delivers innovations thatanswer society’s challenges. The company’s consolidated revenues for fiscal 2015
(ended March 31, 2016) totaled 10,034.3 billion yen ($88.7 billion). The Hitachi Group isa global leader in the Social Innovation Business, and it has approximately 335,000
employees worldwide. Through collaborative creation, Hitachi is providing solutions tocustomers in a broad range of sectors, including Power / Energy, Industry / Distribution /Water, Urban Development, and Finance / Government & Public / Healthcare. For more
information on Hitachi, please visit the company's website at http://www.hitachi.com.
###-------------------------------------------------------------------------------------------------------------------Information contained in this news release is current asof the date of the press announcement, but may be subject
to change without prior notice.
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