Information & Telecommunication Systems Strategy Briefing

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1 Information & Telecommunication Systems Strategy Briefing June 15, 2005 Kazuo Furukawa Senior Vice President and Executive Officer President & Chief Executive Officer, Information & Telecommunication Systems Copyright Hitachi, Ltd All rights reserved.

2 Contents 1. Fiscal 2004 Overview of Operating Results 2. Fiscal 2005 Business Plan and Initiatives to Achieve its Goals 3. Setting the Stage for More Growth Copyright Hitachi, Ltd All rights reserved.

4 1-1 Fiscal 2004 Overview of Operating Results (1) Net Sales Overseas businesses sales ratio ( billion) 2,000 1,000 14% 1, Sales Trend 30% 30% 30% 13% 16% [2,400.0] 2, ,268.3 (457.4) 1, , % (494.0) (453.6) 1, , , New businesses sales ratio* HDD (included in hardware) Hardware Software & services Overview Hardware and Software & services both fell short of plan due to declining sales prices. The launch of outsourcing, RFID and other new businesses went as planned. Major differences vs. plan Hardware (97.2) billion Declining sales prices Software & services Declining sales prices (34.5) billion (plan) 2004 (actual) *Based on sales excluding HDD sales Copyright Hitachi, Ltd All rights reserved. 4

5 1-1 Fiscal 2004 Overview of Operating Results (2) Operating Income Operating Income Trend Overview 5.8% 3.0% 4..8% 3.0% Operating income fell short of plan due to weakness in the HDD business and large, unprofitable projects in the Software & services business. ( billion) ( 10.9) [114.0] (20.0) ( 5.6) Operating margin HDD (included in hardware) Hardware Software & services Major differences vs. plan Hardware (24.9) billion Declining HDD prices Delay in improving HDD yields Software & services (21.4) billion Large, unprofitable projects (plan) 2004 (actual) Copyright Hitachi, Ltd All rights reserved. 5

6 1-2 Actions for Key Issues (1) Systems Integration Business Market Issues Fiscal 2004 Actions Self-Evaluation Public and social systems Expand businesses related to e-japan Strategy II Strengthen services for the local government market Family Register Procedure On-Line Solution e-document Solution Financial information systems Enhance next-generation solutions Introduce cutting-edge applications from Europe and the U.S. FREIA21+ next-generation integrated channel solution NEXTBASE joint outsourcing service Industrial and distribution systems Strengthen ability to serve midium-sized and regional companies Support globalization of Japanese companies Created family of GEMPLANET products Established General Market Business Headquarters All market sectors Consulting (proposal skills) Outsourcing (increase fee-based businesses) Improving productivity and cut costs of solutions Basic agreement with Sankyo for comprehensive outsourcing service Secure Client Solution Foster development of project managers Expand Chinese IP *Self-Evaluations: Benefits of initiatives relative to the initial plan. Copyright Hitachi, Ltd All rights reserved. 6

7 1-2 Actions for Key Issues (2) Platform Business Products Issues Fiscal 2004 Actions Self-Evaluation Servers Early market launch of EBS (Enterprise Blade System) BladeSymphony Storage RAID HDD Expand market share in mid-range disk array subsystems Launch DLCM (Data Life Cycle Management) Make HDD operation profitable Brake into and expand non-it fields SANRISE USP SANRISE9500V Series DLCM Solution 400GB HDD, initially the world s highest-capacity HDD Support center for consumer electronics manufacturers Networks Bolster router/switch operations Promote fusion of communications and computing Established ALAXALA Networks CommuniMax IP telephony solution Software Strengthen integrated middleware, centered on JP1 Respond needs for open source software Upgraded JP1 functions *Self-Evaluations: Benefits of initiatives relative to the initial plan. Copyright Hitachi, Ltd All rights reserved. 7

8 1-3 Progress in Business Structural Reforms Policy Actions Self-Evaluation Merged Hitachi Information Systems and Hitachi netbusiness. Focus on strategic fields Established ALAXALA Networks with NEC Transferred all share of Hitachi Printing Solutions to Ricoh Established Hitachi-Omron Terminal Solutions with Omron Rigorously cut costs Reduced workforce, mainly in administrative sections Cut cost of purchasing materials Increase group operating efficiency Reinforced governance by holding an Information & Telecommunication Systems Group Summit Raise efficiency of business activities by reviewing each division s responsibilities Copyright Hitachi, Ltd All rights reserved. 8

9 1-4 Lessons Learned From Fiscal 2004 The need to deal with rapid changes in the operating environment (external factors) Increasingly heated competition for new orders due to slumping volume of IT investments in Japan More intense price-based competition due to entry of new competitors in small form factor HDD market Steep drop in prices as IT becomes a commodity Inadequate ability to deal with risks (internal factors) Occurrence of unprofitable large-scale projects Delay in improving HDD yields Inadequate competitive strengths of platform business Copyright Hitachi, Ltd All rights reserved. 9

2 Fiscal 2005 Business Plan and Initiatives to Achieve

11 2-1 Information & Telecommunication Systems Business Policies for Achieving i.e.hitachi Plan II (Fiscal 2003-Fiscal 2005) Fiscal 2005 Targets for Information & Telecommunication Systems Operating Margin New Businesses* Overseas Businesses At least 7% overall 30% of net sales At least 40% of net sales Nurture global businesses and capture leading market positions Make base businesses more competitive Create and expand highly profitable new businesses Establish a strong consolidated group management base Become the best solutions partner for the ubiquitous information society *Based on sales excluding HDD sales Copyright Hitachi, Ltd All rights reserved. 11

12 2-2 Fiscal 2005 Business Policies (1) Operating Targets Net sales Operating income Sales and earnings targets 2,390.0 billion (up 5% Year on Year) 82.0 billion (up 21% Year on Year) Sales from new businesses* 25% Sales from overseas businesses 32% Basic Policies Software & services HDD Platforms Improve quality of software and services supplied to customers - Conduct stringent project management - Improve productivity of development activities - Strengthen the services business Increase operating efficiency to become more competitive on a global scale - Become more cost competitive - Enhance quality management - Strengthen development capabilities Focus on strengthening platforms as the base for all solutions - Make backbone products more competitive - Upgrade product sales capabilities *Based on sales excluding HDD sales Copyright Hitachi, Ltd All rights reserved. 12

13 2-2 Fiscal 2005 Business Policies (2) Differences vs. Medium-Term Targets Issues Metric Medium-term target FY05 plan Difference Reasons for difference Increase profitability Operating margin (%) At least 7% Software & services Software & services Software & services 2.3 Increasing loss in HDD business Inadequate ability of Software & services to generate profits Create and enlarge new businesses New business sales ratio (%) Delay in launching businesses involving the ubiquitous information market Globalization Overseas business sales ratio (%) At least 40% 32 8 Yen s appreciation exceeded forecast ( 120/US$ rate used for medium-term plan) Slowing growth of storage market We will continue to aim for the initial medium-term plan goals for fiscal 2005, even though reaching these goals will be difficult. Copyright Hitachi, Ltd All rights reserved. 13

14 2-3 Software & services (1) Market trends and Basic Strategies Market trends In Japan, competition is heating up as the scale of the market remains flat Growing demand for IT to execute management strategies - Life cycle solutions extending from consultations to system operations ( billion) 0 1,015.5 Higher profit due to sales growth More cost-competitive 4.8% Improving unprofitable projects Lower sales prices , % (Forecast) Net sales Operating margin Operating income Basic Strategies Increase earnings by supplying customers with higher quality software and services Conduct stringent project management to eliminate unprofitable large-scale projects Improve system development productivity across the entire Hitachi Group Enhance consulting capabilities and expand the outsourcing business Copyright Hitachi, Ltd All rights reserved. 14

15 2-3 Software & services (2) Conduct stringent project management to eliminate unprofitable large-scale projects Status of unprofitable large-scale projects in fiscal 2004 Profitability of large-scale projects decreased by 19.7 billion from FY03 to FY04 Almost all of these projects are from orders received in FY03 or earlier All losses from large-scale projects were recognized in FY04 Eliminate unprofitable large-scale projects with stringent project management and measures to become more cost competitive Copyright Hitachi, Ltd All rights reserved. 15

16 2-3 Software & services (2) Conduct stringent project management to eliminate unprofitable large-scale projects Adopt proven initiatives at Hitachi on other group companies Others Inadequate project management 33% Causes of lower earnings Problem when estimate/plan was prepared 44% When preparing estimates Use risk diagnostic meetings to carefully examine whether or not to accept a new order Assign managers as necessary based on the scale of each project Enhance project management skills Systematically foster development of project managers Expand certification/training systems to group companies Establish Hitachi Group PM Task Force Overall process management Use PM Cockpit to enable the total oversight of a project s progress Copyright Hitachi, Ltd All rights reserved. 16

17 2-3 Software & services (2) Conduct stringent project management to eliminate unprofitable large-scale projects A project management system that combined know-how from inside and outside the Hitachi Group Inquiry / Estimate Contract Management of system construction Operation Project checks and controls Risk diagnostic meeting at estimate stage Project diagnostic meeting when order is received Authorization meeting for project plan Special process meeting for projects requiring close supervision Review prior to start of operations Meeting for submission of reports on completed projects Support using tools and systems Estimate support system Contract know-how Risk judgment tools Tool for using Earned Value Management (EVM) Supervision of progress at each project Project Management Headquarters Copyright Hitachi, Ltd All rights reserved. 17

18 2-3 Software & services (3) Become more cost competitive and enhance quality Become more cost competitive by sharing Hitachi Group knowledge, using more systematized processes and improving quality Other tasks, customer support, etc. (about 40%) Program development (about 35%) Raise efficiency by quickly verifying the status of each system engineering process and taking appropriate actions Support tools for each system engineering task Make the same knowledge available to all projects Raise system engineering productivity 20% (FY06 vs. FY04) FY04 system development costs Raise efficiency and quality of system design and other tasks Strengthen and expand best practice suites Reuse system know-how by using Solution-HIPACE Raise productivity of program development work System design, etc. (about 25%) Establish organization exclusively for this task Establish base for industry-specific applications Increased use of IP (2,700 people/month in FY05) Copyright Hitachi, Ltd All rights reserved. 18

19 2-3 Software & services (4) Strengthen consulting services and the outsourcing business System integration is becoming a commodity Hitachi s response Enhance consulting skills Strengthen management consulting Big increase in use of consulting company EXSURGE Deepen ties with U.S.-based Hitachi Consulting Form alliances with specialist consulting firms Expand and strengthen business process and IT consulting Enhance training and certification systems - Target is 1,000 people in FY05 Strengthen outsourcing business Offer total support by combining business and IT strategies Total business support that includes BPO, BTO and finance Add global sourcing capability Deepen ties with India companies Make greater use of China for software development Provide offshore and onsite support Invest aggressively, including for alliances and M&As, to achieve growth Copyright Hitachi, Ltd All rights reserved. 19

20 2-3 Software & services (4) Strengthen consulting services and the outsourcing business Outsourcing business Fiscal 2005 sales target is billion Net Sales Customers 1,180 companies 1,100 companies 1,300 companies Hitachi s Strengths A broad array of services backed by the Hitachi Group s knowledge, extending from consulting through development, operation and maintenance ( billion) Strengthening BPO services for administrative tasks (payroll, employee benefits, accounting, property management, logistics, others) Hitachi Triple Win, Hitachi Transport System,others Total partnerships that make use of financing (forecast) Reputation for reliability due to extensive experience in building systems and stability of system operations Hitachi systems now operating at more than 1,000 companies Expertise in disaster and security issues Copyright Hitachi, Ltd All rights reserved. 20

21 2-4 HDD Business (1) Market trends and Basic Strategies Product strategy to respond to growth in demand for IT and consumer electronics applications Average sales price index Units shipment (millions) CAGR IT growth: 10% CE growth: 37% Total growth: 16% * IDC 05/4 (calendar year) For IT For CE Market trends Intense price-based competition, mainly for 2.5-inch and smaller HDDs, but market is growing steadily, chiefly for CE (consumer electronics) applications CAGR * 1.0-inch HDD: 48% * 1.8-inch HDD: 33% * 2.5-inch HDD: 27% * 3.5-inch HDD for desktop PCs: 5% * Server HDDs: 10% Strategic use of a broad product portfolio 1.0-inch: Drive into cell phones and portable media players 1.8-inch: Leverage growth as strategic product 2.5-inch: Preserve the top market share 3.5-inch: Reap economies of scale through more growth Server HDDs: Recapture market share Copyright Hitachi, Ltd All rights reserved. 21

22 2-4 HDD Business (2) Fiscal 2004 Overview (M$) Net sales 3,974 4,700 4,198 Major causes of difference vs. plan (190) Operating income Lower prices and shipment volume of products for mobile due to intensifying competition Delay in start of shipments of new products for servers 0 Delay in improvement of production yields of heads and media (plan) (actual) (calendar year) Copyright Hitachi, Ltd All rights reserved. 22

23 2-4 HDD Business (3) Business Plan (M$) 0 Net sales 4, , (Forecast) 300 Increasingly heated competition Lower prices (annual decline of 20%) of products for mobile devices due to new competitors and intensifying competition Intense price-based competition for products used in consumer electronics Cost reductions Operating loss Use of low-cost designs + More efficient production processes + Workforce reduction - Delay in development of some new products - Slow improvement of head and disk process yields Lower sales prices Higher earnings due to sales growth Benefits of growth in sales volume (46 M in 2004 to over 60 M in 2005) Strong position in CE market Increase share of 3.5-inch desktop HDD market (target is share of at least 10% in 4Q of 2005) Cost reductions Total year-on-year difference of US$247 million (calendar year) Copyright Hitachi, Ltd All rights reserved. 23

24 2-4 HDD Business (4) Initiatives to Achieve Improvements Actions Use modules to raise efficiency of new product development ~ (calendar year) Time to Market Integrate head and disk manufacturing processes Accelerate customer qualifications of server HDDs Redeploy Japan R&D resources on high-growth fields Supply and production Commitment Use the same manufacturing equipment to increase flexibility Upgrade and expand production bases in Thailand, Philippine and China Begin using a new supply chain management system Transfer some administrative tasks to Singapore Manufacturing disks in China Cost reductions Assembling HDDs in China Minimize the San Jose site Increase output capacity (more than 30%) by using the femto slider Improve quality Improve production yield by using new head materials Adopt new inspection standards Raise product quality through total quality control campaign Copyright Hitachi, Ltd All rights reserved. 24

25 2-5 Platform Business (1) Market trends and Basic Strategies Market trends Market in Japan is contracting, except for networks. Outside Japan, there is growth in moves to strengthen IT infrastructures, such as by cutting TCO through server integration, but price-based competition is fierce. ( billion) Basic Strategies Net sales Reinforce manufacturing efficiency by integrating hardware and software Higher earnings due to sales growth Make backbone products more competitive 0 More competitive products 3.1% Lower sales prices 3.8% (forecast) Operating income Top 3 Storage (SAN/NAS) The challenge Servers Niche top Networks Strengthen ability to sell products Copyright Hitachi, Ltd All rights reserved. 25

26 2-5 Platform Business (2) Strategy for Strengthening Platforms Develop the platform business by using integration and virtualization technology to supply more competitive products Roadmap Servers Networks Middleware Storage Mainframes UNIX servers IA servers IP routers JP1 Cosminexus SAN/NAS Storage solutions Integration Safe and worryfree platforms that use Hitachi s collective strengths Virtualization Utility Assurance of business continuity and reliability Integrated service platform Sample products: BladeSymphony, Tagmastore USP, CommuniMax Radical measures to prevent information leaks in offices Secure client solutions Sample products: Client Blade Security PC Copyright Hitachi, Ltd All rights reserved. 26

27 2-5 Platform Business (3) SAN/NAS Storage Solutions Business Fiscal 2005 targets: Net sales of billion, 8% operating margin Establish leading position in enterprise market by using Tagmastore USP to differentiate services; become more competitive in the mid-range market Maintain and expand top share in enterprise disk array subsystems Expand share in mid-range disk array subsystems Strengthen ability to provide capabilities in storage management software/solutions Disk array subsystems: capacity base Management software: monetary base *Source: Hitachi calculations Worldwide share ( ) 27% (2 nd ) 8% (5 th ) 7% (5 th ) 29% (1 st ) 10% (4 th ) 10% (3 rd ) Aiming to be number-one overall in Disk array subsystems and HDDs Copyright Hitachi, Ltd All rights reserved. 27

29 2-5 Platform Business (4) Server Business Front end Applications Databases Mainframes UNIX servers BladeSymphony PC servers Expansion of targeted markets PC server category (consolidations of application servers) UNIX server category (replacement of backbone database servers) Copyright Hitachi, Ltd All rights reserved. 29

30 ximizunecommication2-5 Platform Business (5) Communication Network Business Optical Access/Mobile Business IP Telephony (CommuniMax) Business Home unit (ONU) Carrier unit (OLT) Compact office building IP telephony sever IP PBX IP network Security Security PC alinks among applicationsmscheduler Video conferencing Business process links Optical Access GE-PON Pico-cell Ultra-compact IP gateway Mobile Wireless IP telephone soutside the office Cell phone Mobile EVDO base station Conventional telephones Optical Access Mobile Initiatives Focus on PON *, use alliances to start operations in China and North America Focus on EVDO base stations, top priority is growth in China *PON:Passive Optical Network Initiatives Collaboration with Hitachi Group Companies and business partners One-stop provision of solutions linked with applications Copyright Hitachi, Ltd All rights reserved. 30

31 BladeSymphony IP Telephony Secure client solutions Platform Business Customers (6) Strengthen Product Sales Capabilities Strengthen product sales capabilities by extending support to raise sales of strategic products Financial services Public Industry/ sector Distribution Partners Platform Solutions Business Division Network Systems Solutions Division General - Market Business Management Division companies Related Hitachi Group Support for increasing sales 2-5 Copyright Hitachi, Ltd All rights reserved. 31

32 2-6 Leveraging the Collective Strengths of the Hitachi Group Measures to Strengthen Consolidated Group Management Hitachi and major group companies Adopted Committee System (June 2003) Established Hitachi Group Headquarters (April 2004) Established Group Summit to create an optimal information and communications systems business (June 2004) Hitachi Information Systems, Ltd. Hitachi Software Engineering Hitachi Systems & Services, Ltd. Hitachi Electronics Services Co., Ltd Hitachi HBM Co., Ltd. Hitachi Communication Technologies, Ltd. Raise consolidated corporate value and pursue business synergies Clarified missions Hitachi: Overall group supervision, large-scale projects, focus on new businesses Hitachi Group companies: Focus on businesses in strongest fields and using competitive technologies Strengthening operations Enhance technological strengths through adoption of common productive technologies Reduce costs through groupwide procurement Copyright Hitachi, Ltd All rights reserved. 32

33 2-7 Information & Telecommunication Systems Fiscal 2005 Business Plan Net Sales Operating Income ( billion) 2,000 2, ,268.3 (453.6) (500.0) 1, ,370.0 HDD (included in hardware) Hardware ( billion) 80 Operating margin 3.0% % 82.0 ( 30.0) 3.0 1,000 1, ,020.0 Software & services 50 ( 5.6) (forecast) (forecast) 0 Copyright Hitachi, Ltd All rights reserved. 33

35 ３-１ Business Portfolio x IT = New Value Business Portfolio IT Consulting/SI/ Consulting/SI/ outsourcing outsourcing Power Power and and industrial industrial systems systems Customers Automotive Urban Automotive Urban development development Business models Human resources Intellectual property Logistics Logistics Ubiquitous Ubiquitous Financial Financial services services Ubiquitous Ubiquitous technology technology devices devices Software Software Applied Applied technologies technologies System System technologies technologies (integration, (integration, virtualization) virtualization) Basic Basic technologies technologies Storage Storage Networks Networks Servers Servers Copyright Hitachi, Ltd All rights reserved. 35

3-2 Using True Collective Strengths for the Joint Creation of Value Creating value with customers Business Living Communities Vertically integrated solutions Secure platforms Traceability Eco & PLM

36 3-2 Using True Collective Strengths for the Joint Creation of Value Creating value with customers Business Living Communities Vertically integrated solutions Secure platforms Traceability Eco & PLM e-documents Security Others Business service platforms Common business services for logistics, financial services, purchasing and other functions IT service platforms using Harmonious Computing -Secureplaza SANRISE BladeSymphony JP1 ー R&D involving leading-edge technologies Copyright Hitachi, Ltd All rights reserved. 36

37 3-3 Creating New Ways to Use IT The secure ubiquitous office Value from providing information security that facilitates freed work stile in people s work places Advanced automotive functions Value from businesses that link automobiles with communities Disaster risk management Value from easing public fears about disasters by efficient risk management for various contingencies Business traceability Value from real-time monitoring all aspects of business operations Hospitality, living spaces Value from facilitating lifestyles that are healthy and free of worries Pleasant communities Value from creating public and commercial spaces filled with vitality Copyright Hitachi, Ltd All rights reserved. 37

38 3-3 Creating New Ways to Use IT (1) The Secure Ubiquitous Office Secure Client Solution Rated No. 1 as a next-generation client Source: NIKKEI COMPUTER magazine, June 13 Hitachi s Strengths Expertise in leading-edge R&D Bio-authentication, encryption, digital watermarking, etc. Security technology for e-japan concept Security PC Client Blade Provision of total solutions leveraging Hitachi Group s collective strengths Security solutions Secureplaza Solutions that combine physical and cyber security Finger Vein Authentication Solution PC log-in Room access management ATM Develops markets by being the first user employ knowledge gained through in-house use of new technologies Electronic authentication, information leak prevention, integrated operation and management Copyright Hitachi, Ltd All rights reserved. 38

39 3-3 Creating New Ways to Use IT (2) Traceability Solutions Meat Traceability Hitachi s Strengths µ-chip (wireless IC tag) and many other sophisticated ID management technologies and their application Transportation Factory Retail store Warehouse Supplier Testing 検査機関 institution Search for specific Consumerproduction area µ-chip, etc. (wireless IC tag) Recycling/ disposal Inter-system integration and linking technology gained through operation of TWX-21, Japan s largest e- marketplace As a manufacturer, Hitachi has knowledge in IT device attachment and operations gained through its own operations Ability to offer total solutions covering the entire product life cycle, including warehouse management and distribution Copyright Hitachi, Ltd All rights reserved. 39

40 3-3 Creating New Ways to Use IT (3) Advanced Automotive Functions Car Information Systems Efficient and environmentally response VRM Comfortable and convenient Hitachi s Strengths Ability to realize synergies from automotive equipment, car navigation, and data system businesses within the Hitachi Group (Xanavi Informatics Corporation, etc.) Sophisticated traffic data forecasting technology made possible by business system expertise in the field of transportation Safe and worry-free ivdr Ability to create new auto information infrastructures by using ivdr, automotive HDDs and other components A broad range of diagnostic technologies (noise, vibrations, etc.) using Hitachi Group products *VRM:Vehicle Relationship Management *ivdr:information Versatile Disk for Removable usage Copyright Hitachi, Ltd All rights reserved. 40

41 3-4 Alliance partners Others What We Aspire to Be in 2010 A Focus on Strategic Fields That Leverage the Hitachi Group s True Collective Strengths Power and industrial systems Hitachi Transport System, Ltd. Provision of solutions as services, mainly in the form of consulting and outsourcing System Solution Business uvalue Integrated solutions Urban development Automotive Secure Platform Creation and enlargement of new businesses Information and telecommunications Ubiquitous Hitachi Capital Corporation Alliance partners Others Globalization centered on storage and HDD products Platform Business Speed up business structural reforms Copyright Hitachi, Ltd All rights reserved. 41

42 This document contains forward-looking statements which reflect management s current views with respect to certain future events and financial performance. Words such as anticipate, believe, expect, estimate, intend, plan, project and similar expressions which indicate future events and trends are used to assist readers in identifying these 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 on 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: rapid technological change, particularly in the Information & Telecommunication Systems segment and Electronic Devices segment; uncertainty as to Hitachi s ability to continue to develop and market products that incorporate new technology on a timely and cost-effective basis and to achieve market acceptance for such products; fluctuations in product demand and industry capacity, particularly in the Information & Telecommunication Systems segment, Electronic Devices segment and Digital Media & Consumer Products segment; increasing commoditization of information technology products, and intensifying price competition in the market for such products; fluctuations in rates of exchange for the yen and other currencies in which Hitachi makes significant sales or in which Hitachi s assets and liabilities are denominated, particularly between the yen and the U.S. dollar; uncertainty as to Hitachi s ability to access, or access on favorable terms, liquidity or long-term financing, particularly in the context of limited credit availability currently prevailing in Japan; uncertainty as to Hitachi s ability to implement measures to reduce the potential negative impact of fluctuations in product demand and/or exchange rates; general economic conditions and the regulatory and trade environment of Hitachi s major markets, particularly, the United States, Japan and elsewhere in Asia, including, without limitation, continued stagnation or deterioration of the Japanese economy, or direct or indirect restriction by other nations on imports; uncertainty as to Hitachi s access to, and ability to protect, certain intellectual property rights, particularly those related to electronics and data processing technologies; 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; and uncertainty as to general market price levels for equity securities in Japan, declines in which may require Hitachi to write-down equity securities it holds. 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 other materials published by Hitachi. Copyright Hitachi, Ltd All rights reserved.

Hitachi Announces 2018 Mid-term Management Plan

Hitachi Announces 2018 Mid-term Management Plan FOR IMMEDIATE RELEASE Contacts: Japan: Mickey Takeuchi U.K.: Yuki Maeda Hitachi, Ltd. Hitachi Europe Ltd. +81-3-5208-9324 +44-1628-585714 masayuki.takeuchi.cc@hitachi.com yuki.maeda@hitachi-eu.com Hitachi