2012 Mid-term Management Plan
Progress and Prospects

June 9, 2011

Hiroaki Nakanishi
President
Hitachi, Ltd.
© Hitachi, Ltd. 2011. All rights reserved.

2012 Mid-term Management Plan
Progress and Prospects

Contents

1. Opening
2. Progress Overview
3. Global Growth Strategy for Social Innovation Business4. Focusing Business Resources and Strengthening
the Business Structure

5. FY2012 Targets Update© Hitachi, Ltd. 2011. All rights reserved.

2

2012 Mid-term Management Plan
Progress and Prospects

Contents

1. Opening
2. Progress Overview
3. Global Growth Strategy for Social Innovation Business4. Focusing Business Resources and Strengthening
the Business Structure

5. FY2012 Targets Update© Hitachi, Ltd. 2011. All rights reserved.

3

Assistance and Responses
1-1. for Recovery from the Great East Japan Earthquake
Support fordisaster-affected areas
Restoration of infrastructure
Production resumption
and electricity saving

Supplying materials and equipment to support relief and recovery efforts
in the affected areas
Restoring damaged power systems, telecommunications systems,
and water and sewage facilities
Providing assistance at the Fukushima Daiichi nuclear power plant
Resumed production at affected Hitachi Group bases
Implementing group-wide measures to reduce electricity consumption

Establish a risk-resilient infrastructure to ensure business continuity
Leverage our own disaster experience to strengthen business continuity
and fulfill our responsibility to the global supply chain
Strengthen global production framework
Secure facilities from seismic activity, production capacity andensure energy for production
Diversify risk and ensure multiple supply sources for components andmaterials
Build a framework for increasing production to meet demandassociated with relief and recovery efforts in Japan

Invest approx.
¥100 billion© Hitachi, Ltd. 2011. All rights reserved.

4

Assistance and Responses
1-2. for Recovery from the Great East Japan Earthquake

Hitachi is doing its utmost to provide equipment and systems
to help restore lifelines as well as regional communities and industries
Ensuring power supplies
Gas turbines
Generators

Dispersed power source
system• Solar power generation and battery systems for homes• Power supply facilities for factories, buildings
and public facilities• Large-scale distributed power sources (solar/wind)

Recovering living environment
and industrial facilities
Water purification andwastewater treatment
facilities
Pumps andpower distribution equipment
Industrial compressors andconstruction machinery

Securing information andtelecommunication infrastructure
Cloud computing services
Data center solutions
Remote operation solutions
BCM* solutions

From recovery and restoration
to new urban development
suited for respective areas

Disaster recovery solutions* Business Continuity Management© Hitachi, Ltd. 2011. All rights reserved.

5

Assistance and Responses
1-3. for Recovery from the Great East Japan Earthquake

Values and needs changed by the earthquake
Safe, secure and active regional communities
Ensure urban functions and lifelines that are resilient to disasters
Establish strong IT systems and telecommunications networks
Ensure power and accelerate diversification of power sources

Contribute to creation of sustainable social infrastructure
Accelerate Social Innovation Business strategy execution

GlobalFusionEnvironment

Leverage Hitachi’s strengths to promote a global growth strategy

Focus business resources on the Social Innovation Business

Adhere to
Basic Policy

Strengthen the business structure to stabilize profitability© Hitachi, Ltd. 2011. All rights reserved.

6

2012 Mid-term Management Plan
Progress and Prospects

Contents

1. Opening
2. Progress Overview
3. Global Growth Strategy for Social Innovation Business4. Focusing Business Resources and Strengthening
the Business Structure

5. FY 2012 Targets Update© Hitachi, Ltd. 2011. All rights reserved.

72-1. Progress Overview [Financial Results]
FY2009FY2010

Revenues¥8,968.5 billion¥9,315.8 billion

Operating income (ratio)(2.3%)¥202.1 billion(4.8%)¥444.5 billion

Net income (loss)
attributable to Hitachi, Ltd.

(¥106.9 billion)¥238.8 billion

D/E ratio*

1.38 times

1.03 times

Total Hitachi, Ltd.
Stockholders’ equity

14.3%

15.7%

* Including noncontrolling interests, and also including liabilities associated with the consolidation of securitized entities.
© Hitachi, Ltd. 2011. All rights reserved.

8

2-2. Progress Overview [FY2011 Forecasts]
FY2011 Forecasts*
Revenues
Operating income (ratio)

Net income attributable
to Hitachi, Ltd.

¥9,500 billion(4.2%)¥400 billion¥200 billion

Earthquake effects
Difficulties procuring
electronic components andother materials
Condition of power utilities
and automotive-related
customers
Restoration expenses forsome production facilities
and other restoration* Includes impact of HDD business transfer.

Expect to see an impact from shortages of components and power supply
in the first half
Expect to see a full-scale recovery in part due to demand related
to relief and recovery efforts in Japan in the second half
© Hitachi, Ltd. 2011. All rights reserved.

92-3. Progress Overview [FY2011 Forecasts by Business Segment](Billion yen)
Revenues
Information & Telecommunication Systems

OperatingincomeYoY

YoY

1,700.0

103%

110.0

+11.3

810.0

100%

10.0

(12.0)

Social Infrastructure & Industrial Systems

1,170.0

101%

46.0

+6.0

Electronic Systems & Equipment

1,160.0

107%

52.0

+14.7

870.0

116%

64.0

+14.8

1,460.0

104%

86.0

+1.4

Automotive Systems

800.0

103%

20.0

+1.5

Components & Devices

630.0

82%

23.0

(31.7)

Digital Media & Consumer Products

950.0

100%

5.0

(9.9)

Financial Services

360.0

97%

23.0

+8.7

Others

930.0

121%

29.0

0.0

Eliminations & Corporate Items(1,340.0)-(68.0)-

Total

9,500.0

102%

400.0

(44.5)

Power Systems

Construction Machinery
High Functional Materials & Components© Hitachi, Ltd. 2011. All rights reserved.

102-4. Progress Overview [FY2012 Financial Targets]Achieve mid-term plan targets
FY2012 Targets*1
Revenues¥10,000 billion

Operating income (ratio)

Over 5%

Net income attributable
to Hitachi, Ltd.

Consistently generate at least ¥200 billion

D/E ratio*2

0.8 times or below

Total Hitachi, Ltd.
stockholders’ equity

20%*1 Includes impact of HDD business transfer.
*2 Including noncontrolling interests, and also including liabilities associated with the consolidationof securitized entities.

© Hitachi, Ltd. 2011. All rights reserved.

112-5. Progress Overview [Outlook for Overseas Revenue Ratio]
Aim to achieve an overseas revenue ratio of more than 50% in FY2012
Revenues by Region
Asia and Others

Asia and Others

[14]

Japan

China

[13]

[16]

[57]
revenue ratio

[8]

43%

Overseas[13]

revenue ratio*
46%

Over 50%

EuropeNorth
America

[9]

[8]

North
America[8][ ]: % ratio
Headcount

[54]

China

Overseas

EuropeJapan

FY2010216k (215k*)
145k (107k*) [33%]362k (322k*)* Includes impact of
HDD business transfer

FY2012

Japan
Overseas
Total

215k*
[36%] 120k*
335k*© Hitachi, Ltd. 2011. All rights reserved.

12

2012 Mid-term Management Plan
Progress and Prospects

Contents

1. Opening
2. Progress Overview
3. Global Growth Strategy for Social Innovation Business4. Focusing Business Resources and Strengthening
the Business Structure

5. FY2012 Targets Update© Hitachi, Ltd. 2011. All rights reserved.

13

3-1. Social Innovation Business [Target Value]
Value created and shared with customers and partners
Develop products and services in demand from regional communities and markets
Combine intellectual capital to contribute to society through businesses

Value that lasts for future generations
Offer products, services and system management that contribute to customers' growth
Refine systems to meet changing needs

Value based on our role and mission as a manufacturer
Advanced technologies and MONOZUKURI (manufacturing) capabilities
based on high ideals and vision
Trustworthiness and reliability of Hitachi© Hitachi, Ltd. 2011. All rights reserved.

143-2. Social Innovation Business [Focused Business Areas]

Social Innovation BusinessIndustrial,
Transportation and
Urban Development Systems
Eco-cities

Water treatment
Elevators and escalators

Construction
Cloud computing machineryGreen mobility
Consulting
Healthcare
Data centers
Smart grids
Storage

Information andTelecommunication Systems＋

Energy(Thermal, nuclear, renewable)

Power Systems

Materials & Key Devices© Hitachi, Ltd. 2011. All rights reserved.

15

3-3. Social Innovation Business [Group Value Chain]
Hitachi’s Social Innovation BusinessIndustrial, Transportation and
Urban Development Systems
supported by materials and key devices
Information andPower Systems
Telecommunication Systems• Simulation designing technologies• MONOZUKURI platforms• Business cooperation

Collaboration with laboratories

Key Devices Business
MotorsInverters

BatteriesPower
devicesMaterials Business
MetalsCablesChemicals• Materials for power generation and distribution (Amorphous)• Motor materials for public and industrial use (Rare-earth magnet)• Cables for high-speed trains and next-generation automobiles• Antennas for next-generation mobile communications networks• Materials for Lithium-ion batteries• Materials for optical and wireless communications© Hitachi, Ltd. 2011. All rights reserved.

16

3-4. Global Growth Strategy(1) Promote and expand glocalization
Strengthen project control center via local leadership
Rigorously develop a more market-centric approach through leadershipby local companies
Grasp local values, standards and risks under local leadership(2) Expand business opportunities in collaboration with partners(3) Expand new businesses leveraging Hitachi’s strengths© Hitachi, Ltd. 2011. All rights reserved.

17

3-5. Promote and Expand Glocalization
New Globalization Plan
Designate 11 key regions andstrengthen local project control centers
Cultivate and expand markets in regions
where Hitachi has already established a presencein power systems, construction machinery, airconditioning, etc.
Apply ¥1 trillion growth model from China businessin other regions

Americas

Develop the global frameworkcomprised of 6 regions including Japan
Americas, Europe, India, Southeast Asia, China, Japan

Local leadership and coordination
Planning, government relations andengineering functions

Europe

China

Japan

11 key regions• Indonesia• Vietnam• China• India• Saudi Arabia

Revenues• Brazil• Turkey• Central andEastern Europe• Russia• South Africa• Egypt

FY2010FY20121.9

2.5(Trillion yen)

India

Southeast Asia

Expand and enhance corporate functions
Strengthen project finance
Enhance risk management functions
Promote partnerships and alliances© Hitachi, Ltd. 2011. All rights reserved.

18

3-6. Promote and Expand Glocalization
Market-centric approach through leadership by local companies
Elevator and escalator business

Strengthen local R&D functions

Expand business in growing markets("Asian belt" zone)

Conduct R&D closely tied to markets

Shanghai elevator
research tower[Completed in Dec. 2010]

Japan
China
China: Expand fromcoastal regions toinland areas

Toward Turkey
and North Africa)

India: Expand from northern
region to southern coastal
regionSoutheast Asia, India,
Middle East

Promote market-oriented technology development
China: Smart grids, Internet of Things, collaboration with Tsinghua University

Development
collaboration

U.S.: Storage systems, wireless communications, automotive systems
Europe: Advanced physics, power and railway systems

Asia: Software, water treatment,
collaboration with Indian Institute of Technology and others

Regional HQ in Asia
[Made a regional HQ in Oct. 2010]

Develop best products for the market
based on collaborative development
Strengthen regional HQ functions (China and Asia)

Automotive systems businessBusinesses closely tied to regions,
speedy management[Regional HQs have been established in succession
since Jan. 2011 and began full operations in April]© Hitachi, Ltd. 2011. All rights reserved.

193-7. Promote and Expand Glocalization
Grasp local values, standards and risks under local leadership
Thermal power turbines and boilers India

Railway infrastructure

Established business bases for thermal power
generating equipment

Move rolling stock manufacturing andmaintenance business in U.K. into full gear

Joint ventures withBGR Energy Systems Limited

Boilers[Aug. 2010]

Turbines [Sept. 2010]

Respond to demand in India

U.K.

Leverage IEP* to promote local manufacturing,
strengthen materials procurement andbuild supply chains

Coal-fired Thermal Power Market

China
10-Year Demand Forecast
70 GW/year

OthersIndia

Source: Hitachi estimate

Generators
Factory

10GW/year

Turbines Factory

Pressure
vesselfabrication

Rendering of base (Northeast England)[Planned to commence operations in 2015]

Construction machinery–– Expand and enhance bases in growing markets ––Russia [Established manufacturing company in Apr. 2011]
Middle East,
Northeast Africa[Established local company in Apr. 2011]

Rendering of turbine factory* Intercity Express ProgrammeSoutheast Asia
[Invest to increase production]

Rendering of Russian factory© Hitachi, Ltd. 2011. All rights reserved.

20

3-8. Expand Business Opportunities in Collaboration with Partners
Smart city businessHydroelectric power generation business[Government organizations, electric transformation and distribution companies][Mitsubishi Electric and Mitsubishi Heavy Industries]

Sino-Singapore Tianjin Eco-City
Began receiving orders(HEMS* and storage batteries)

Aim to establish a world-leading positionin adjustable speed pumped hydroBusiness integration ofhydroelectric powersystems[Commence operationsin Oct. 2011]

Rendering of Sino-Singapore Tianjin Eco-City

Industrial systems business[Mayekawa Mfg. etc.]

Dalian City (China)
Areas of recycling resources and low-carbon economy

Waste water and reused water treatment,
and home appliance recycling

Guangzhou Knowledge City (China)
Developing IT services businesscentered on a cloud-based IT platform

Smart grid project in Hawaii* Home Energy Management System

Adjustable speed pumped
storage runner

Strategic partner cooperation
to meet growing development of oil and gas
Life cycle support (including maintenance)
for compressor
Brazil[Agreement with
Mayekawa Mfg. in Mar. 2011]Middle East
[Plan to establish a business base in
FY2011]

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

21

3-9. Expand New Businesses Leveraging Hitachi’s Strengths
Business growth by fusing of information and control technologies– Create safe, reliable and comfortable social infrastructure –Growth of storage solutions business
Financial
Next-generation Government institutions
Green mobility
transportation
High-performance,systems
next-generation city services
Intelligent
Water Systems
Smart factories

Smarthospitals

RenewableenergyProvide advanced
IT platforms
Highly reliable cloudcomputing services

Storage and high data
volume processing

Security

Green IT

Record revenue in FY2010(18% up YoY, US$ basis)

Expand content management field

Strengthen consulting business
U.S.: Acquired Sierra Atlantic, Inc.

Strengthen global framework(China, India, Spain, etc.)

Expand highly reliablecloud computing services
Apply to mission-critical enterprise systems

Fusion of information andcontrol technologies

Cloud services for engineering calculations

Promote smart city projects© Hitachi, Ltd. 2011. All rights reserved.

22

3-10. Expand New Businesses Leveraging Hitachi’s Strengths
Contribute to environmental and resource needs through business
Water environment solutions business
Become the leading water business company
Active participation in water supply and sewage
system construction project in Middle-East
Introduce Intelligent Water Systems
in the Republic of Maldives
Maldives/Male Island

Industrial systems businessHighly efficient LNG plants to meetglobal fuel demand
Hitachi's strengths in machineryand control technologies(Collaboration with Toyo Engineering Corporation)

Basic design of medium-sized LNG plantin Australia [Received order in Mar. 2011]

Water business operation• Facility managementin Male Island• Operational support
for outlying islands

Battery businessLong-lasting battery systems → Industrial use
Large-capacity and highly reliable Lithium-ion
batteries→ Automobiles, Smartphones

Enter water treatment market through cooperation
 Chengdu Xingrong Group[Collaboration agreement in Nov. 2010]

 Dongda Group, Dalian[Collaboration agreement in May 2011]

Response to rare-earth shortage
Develop rare-earth free motors
Commercialize collection, dismantling andrecycling technologies© Hitachi, Ltd. 2011. All rights reserved.

23

3-11. Expand New Businesses Leveraging Hitachi’s Strengths
Healthcare business that supports a healthy and safe society
Rendering of Hitachi Medical Systems (Suzhou)
Corporation’s new plant

MD Anderson Cancer Center, U.S.

Begin construction in Oct. 2011
Complete construction (planned) in Aug. 2012

Hitachi Medical Corporation:

Treatment

Diagnosis  Made Aloka Co., Ltd. a subsidiary Construction of new plant in Suzhou, China

Hitachi High-Technologies Corporation:
 Clinical chemistry, immunodiagnostic,
genetic analysis
 Deepen and develop SCB*1 businesswith reagent manufacturers
Strengthen global competitivenessProton beam therapy system:
U.S.: MD Anderson Cancer Centerand others
Japan: Hokkaido University

Contribute to advanced
medical treatment

FusionCorporate Healthcare Group [Established in June 2011]
Expand and diversify PET*2 support services business
Strengthen services business, nurture new business*1: System Collaboration Business*2: Positron Emission Tomography

Information, service and drug development© Hitachi, Ltd. 2011. All rights reserved.

24

2012 Mid-term Management Plan
Progress and Prospects

Contents

1. Opening
2. Progress Overview
3. Global Growth Strategy for Social Innovation Business4. Focusing Business Resources and Strengthening
the Business Structure

5. FY2012 Targets Update© Hitachi, Ltd. 2011. All rights reserved.

25

4-1. Focusing Business Resources [Portfolio Realignment]
Continue consolidation and M&A strategy
Strengthening initiatives

2011/102010/12
Hitachi Consulting made Sierra
Atlantic a subsidiary

2010/102010/12

Hitachi Software
Hitachi Medical
Engineering andCorporation madeHitachi Systems &Aloka a subsidiary
Services merged(Formation of Hitachi Solutions)

Actively promote
Agreement tointegrate hydroelectric
M&As to expand
power generation
business with thebusiness.
Mitsubishi Group

2011/4

2011/10Planned merger ofHitachi Transport
Hitachi Electronics Services andSystem madeVantec a subsidiary Hitachi Information Systems

Enhance management
2011/4

Rebuilding initiatives

2010/6Integrated mobile phone business with NEC

efficiency.

Restructured home
appliance sales business

Strengthen group
governance.

2010/4Integrated business operations at Renesas
Technology and NEC Electronics
2010/6
Transfer of IPS Alpha Technology

Selection and2011/3
Agreed to transfer HDD business toWestern Digitalconcentration.
Ongoing portfolio
realignment.

FY2010FY2011© Hitachi, Ltd. 2011. All rights reserved.

26

4-2. Focusing Business Resources [Capex and Strategic Investments]
Continue to concentrate investment on the Social Innovation Business(1) Concentrate investmentsfrom FY2010 to FY2012

Investment on
the Social Innovation Business(Billion yen)

Total amount, including investment for rebuilding
and recovery assistance following earthquake: ¥1.6 trillion

480.0
400.0

Allocate approximately 70% to the Social Innovation Business

220.0

Promote M&As

n Investment Examples:

FY2010Results

FY2011
Forecast

FY2012Plan

Major Investments
Information &Telecommunication
Systems
Power Systems
Social Infrastructure& Industrial Systems
Disaster recovery
and BCP** Business Continuity Plan

Strengthen consulting business and storage solution business
Established Indian joint venture, increase and strengthen overseas service bases,
increase production of power semiconductors
U.K. rolling stock plant, water business investment, strengthen healthcare business,
ramping up production of elevators and escalators and construction machinery
Restored production bases, increase and strengthen ability to meet demand associatedwith restoration and rebuilding efforts in Japan
Bolster IT network, including data centers, enhance earthquake-resistance© Hitachi, Ltd. 2011. All rights reserved.

27

4-3. Focusing Business Resources [R&D Investments]
Continue to concentrate investment on the Social Innovation Business(2) Strategically allocate R&D investment

Investment on
the Social Innovation Business(Billion yen)

Total amount: ¥1.2 trillion
Allocate approx. 60% of total amounton the Social Innovation Business
Achievements in Green Research(IT, mobility, smart grids, etc.)
Reorganized Japan labs,
conduct R&D closely tied to markets

n Examples of main R&D activities:

230.0

240.0

FY2011
Forecast

FY2012Plan

200.0

FY2010Results

Regional R&D forSocial Innovation BusinessNorth America: Storage systems

FusionInformation platforms forsocial infrastructure

Large capacity, real time, highly reliable,
knowledge extraction

Environment

New electronics researchCore and platform

Efficient design based on
analysis technology

GlobalChina: Smart grids and medical imaging

Green mobility (Railways, electric drive systems)
Energy conservation (Eco data centers)
Utilization of super computers, strengtheningof analysis technologies© Hitachi, Ltd. 2011. All rights reserved.

28

4-4. Focusing Business Resources [Summary of Investment Plan]
Investment on the Social Innovation Business, Over ¥1.7 trillion
Capex and Strategic Investments

R&D Investment¥1.1 trillion (FY2010–FY2012)¥670 billion (FY2010–FY2012)

Billionyen

Expand and upgrade overseas bases
Increase production to respond to demandassociated with recovery and restoration,
strengthen business continuity

500

480.0

Billionyen

Conduct regional R&D closely tied to markets
Information platforms for social infrastructure
Materials and electronics platforms

300

120%
400

218%

Information &Telecommunication
Systems
Power Systems

300

220.0

100

Platforms

200

200.0
Information &Telecommunication
Systems

Social Infrastructure& Industrial Systems
Construction
Machinery

200

240.0

Power Systems
Social Infrastructure& Industrial Systems
Construction
MachineryHigh Functional
Materials& Components

100

High Functional
Materials &Components

00FY2010FY2012FY2010FY2012© Hitachi, Ltd. 2011. All rights reserved.

29

4-5. Strengthening the Business Structure [Cost Structure Reform]
Transform cost structure to be cost competitive globally
Conduct company-wide project, while strengthening individual businessby promoting the in-house company system

Launched “Hitachi Smart Transformation Project”(Appointed CTrO*, established Smart Transformation Office) [Apr. 2011]
Optimally locate and consolidate production bases, re-evaluate in-house vs.
external production
Expand centralized purchasing and global procurement, replace materials
FY2009FY2010FY2012 Target

Centralized purchasing ratio

23%

28%

35%

Global procurement ratio

28%

36%

50%

Improve operational efficiency, reduce indirect material costs andIT standardization* Chief Transformation Officer© Hitachi, Ltd. 2011. All rights reserved.

30

4-6. Strengthening the Business Structure [Reinforce Financial Position]
Improve profitability
Expand strong products
to improve operating income ratio
Strengthen cost competitivenessvia “Hitachi Smart Transformation Project”

Consistently generate
net income attributable to
Hitachi, Ltd. of at least
200 billion yen

Strengthen financial position
Raise net income attributable to Hitachi, Ltd.
to strengthen total Hitachi, Ltd. stockholders’ equity
Reduce total assets,
improve asset efficiency

D/E ratio*: 0.8 times or below
Total Hitachi, Ltd. stockholders’

Reduce interest-bearing debt
equity ratio: 20%
by pooling funds
Continuously generate positive free cash flows*Including noncontrolling interests© Hitachi, Ltd. 2011. All rights reserved.

31

4-7. Strengthening the Business Structure [Global Human Capital]
Talent management to realize Hitachi’s targeted value－ Realize global growth as “One Hitachi” －Recruitment
Assignment
Compensation
Education
Recruit human capital
to compete globally

Optimize assignment of
human capitalon a global basis

Recruit employees who will be
involved in global projects[60% of new employees]*Provide young employeeswith overseas experiences[2,000 people over 2 years]

Create global career paths

Strengthen recruiting in
11 target regions

Accelerate appointment oflocal employees to top
positionsEvaluation using a global job
grading system

Establish global
compensation andevaluation standards

Continuously educate
global human capitalComprehensive revision ofmanagement development
program[3,600 partcipants (2 times YoY)]Implement development
programs for senior managers
in strategic regions(Singapore and China)

Rebuild Hitachi Group’s entire human capital platform
Establish “Global Human Capital Division” [July 2011]
Create a human capital database covering all Hitachi Group employees [By March 2012]
Establish a global grading system for evaluating the job size and responsibility of managers
and above [By March 2012]* University and technical college graduates employed by Hitachi, Ltd.

© Hitachi, Ltd. 2011. All rights reserved.

32

4-8. Strengthening the Business Structure [Value Creation and CSR]
Realize Hitachi Target Value
Value created and shared with customers and partners
Value that lasts for future generations
Value based on our role and mission as a manufacturer

Create both social and economic value at the same time.
Contribute to the creation of a sustainable society.
Contribution to Environment (Targets by FY2025)

Contribute to regional communities

Help reduce annual CO2 emissions by 100 million tons

Develop young leaders in Asia

Make all Hitachi Group products Eco-Products *Greenification, environmental conservation
activities, etc.

Help preserve the ecosystem (Biodiversity)

Science education, IT education, environmental
education* Products that meet certain standards under the Assessment for DfE (Design for Environment) system© Hitachi, Ltd. 2011. All rights reserved.

33

2012 Mid-term Management Plan
Progress and Prospects

Contents

1. Opening
2. Progress Overview
3. Global Growth Strategy for Social Innovation Business4. Focusing Business Resources and Strengthening
the Business Structure

5. FY2012 Targets Update© Hitachi, Ltd. 2011. All rights reserved.

34

5-1. FY2012 Targets Update [Business Prospects: Power Systems]
Market Trends
Business fieldJapan

Overseas

Needs

Nuclear PowerLow visibility• With some exceptions, maintaining
nuclear power• Healthy demand over the medium andlong term

EnhancesafetyThermal Power

Strong demand

Healthy demand

Low
Environmental impact

Renewable Energy• Expanding demand• Needs for dispersed powersourceHealthy demandPower stabilization

Nuclear power
Support countermeasures at Fukushima, ensure safety measures
Respond to nuclear power needs in Japan, promote overseas business

Thermal power
Quickly restore damaged or idle thermal power plants in Japan, support resumption ofoperations, supply emergency power
Accelerate global business(Super critical thermal power generation, gas turbines, environmental systems, services)

Stabilize power grid with renewable energy
Provide total solutions from electricity generation to stable power supply systems(Wind, solar, hydroelectric, power distribution, storage, micro grids, etc.)© Hitachi, Ltd. 2011. All rights reserved.

35

5-2. FY2012 Targets Update [Business Prospects: By Businesses]
Power Systems - Business Plan

Overseas revenue ratio
39%

Information & Telecommunication

Social, Industrial and Transportation

Systems - Business Plan

Systems - Business Plan

50%

45%

35%
24%

Revenues(Billion yen)

Revenues(Billion yen)

1,100.0
1,000

813.2

Overseas revenue ratio

Overseas revenue ratio

870.0

2,000

22%

25%

2,300.0

1,750.0
1,652.0

46%

29%

Revenues(Billion yen)

1,150.0

1,000

800.0
676.4

1,000

500

0

500

0
FY2010 FY2012 FY2015
Results Target
Plan0
FY2010 FY2012 FY2015
Results Target
Plan

Total of• Industrial & Social
Infrastructure Systems
Company• Rail Systems Company• Hitachi Plant Technologies• Hitachi Industrial Equipment
Systems

FY2010 FY2012 FY2015
Results Target
Plan© Hitachi, Ltd. 2011. All rights reserved.

36

5-3. FY2012 Targets Update [Position Chart by Segment]
FY2010 Actual
Operating income[Operating income ratio]

Circle size indicates revenue size

(Billion yen)

100

Target of 7%

Social Infrastructure &Industrial Systems

Digital Media &Consumer Products

All segments
becomeprofitable% Social Innovation Business10

Information &Telecommunication
Systems
High Functional
Materials &Financial Components
Services
Construction
Machinery
Components & Devices

Power
Systems

Electronics Systems
Automotive Systems

5.0 Operating income ratio (%)

5

Target of

２.３

４.８
over 5%Company-wide
total

～
～

0

FY2009 FY2010 FY2012& Equipment

FY2012 Target
Information &Telecommunication
Systems

Arrows point to FY2015 targets

100High Functional
Materials &Components

Automotive Systems
Digital Media &Consumer Products

Power
Systems

Social Infrastructure &Industrial Systems
Electronics Systems& Equipment

Construction
Machinery

Financial Services

5.0

Operating income ratio (%)© Hitachi, Ltd. 2011. All rights reserved.

37

5-4. FY2012 Targets Update

Achieve Mid-term plan Targets
Revenues
Operating income (ratio)

Net income
attributable to Hitachi, Ltd.

FY2011 Forecasts*1

FY2012 Targets*1¥9,500 billion¥10,000 billion(4.2%)¥400 billion

Over 5%¥200 billion

Consistently generate
at least ¥200 billion

D/E ratio*2

0.8 times or below

Total Hitachi, Ltd.
stockholders’ equity ratio

20%*1 Includes impact of HDD business transfer.
*2 Including noncontrolling interests, and also including liabilities associated with the consolidation of securitized entities.
© Hitachi, Ltd. 2011. All rights reserved.

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5-5. FY2012 Targets Update

Toward Next Targets
Deepen global growth strategy
Focus business resources on the Social Innovation BusinessConduct continuous portfolio realignment
Strengthen financial baseUpgrade global human capital
GlobalFusionEnvironment

Challenge to move forward into the new era.
Respond to society’s needs through the Social Innovation Business.
© Hitachi, Ltd. 2011. All rights reserved.

39

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 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 forsuch 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 fromsales;• 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, partsand 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, 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 competitivenessand 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 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 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 the earthquake 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.

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© Hitachi, Ltd. 2011. All rights reserved.