New Mid-Term Management Plan

Transcription

1 1 New Mid-Term Management Plan Go Together 2013 Period: 2011~2013 Hitachi Construction Machinery Co., Ltd.

2 Index 2 1. Business and Market Environment 2. Go Together <2020 VISION> and 6 Imperatives 2-2. Hard (Product) Strategy 2-3. Mining Strategy 2-4. Solution (Sales& Service) Strategy 2-5. Regional Strategy 2-6. Enhancing Management base 3. Target Performance

3 Index 3 1. Business and Market Environment 2. Go Together <2020 VISION> and 6 Imperatives 2-2. Hard (Product) Strategy 2-3. Mining Strategy 2-4. Solution (Sales& Service) Strategy 2-5. Regional Strategy 2-6. Enhancing Management base 3. Target Performance

4 -1% -40% Business and Market Environment Real GDP Growth Rate Emerging Total Advanced '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 ' World economy is in steady Recovery 400 Emerging countries are enlarging Demand is correlated with GDP GDP Growth Demand Construction Machinery '90 '93 '96 '99 '02 '05 ' World total 4.4% 4.5% 4.5% Advanced 2.4% 2.6% 2.5% Emerging 6.5% 6.5% 6.5% Dear GDP (FY 2000=100) Scale of economy for China and India is expected to grow by more than 200%, and for Sub-Sahara, M. East, Russia, by 150% approximately. India '00 '02 '04 '06 '08 '10 '12 '14 '16 China IMF World Economic Outlook (Apr.2011) 4 Sub-Sahara M. East Russia Brazil Advanced

5 1. Business and Market Environment 1000Units 千台 Market will increase in double digits. Emerging Countries in main, covering 80%. *Excluding Chinese Maker China N. America W. Europe Japan Worldwide Demand Hyd Excavator *HCM Estimate '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 ' Total Others Asia/ Oceania Asia/ Oceania 14% Emerging 79% Demand Growth Rate Japan W. Europe N. America China Asia/Oceanina Others Total China Others Composition 12% '10 '11 +39% +26% +61% +8% +35% +40% +53% +15% +32% +11% +95% +6% +52% +15% Japan 5% 8% 7% N. America 12% 10% 6% 8% 11% 11% 16% 7% 17% 6% 2010 R 2011 F 49% 2013 F 48% 53% W. Europe R: Result F: Forecast 5

6 Index 6 1. Business and Market Environment 2. Go Together <2020 VISION> and 6 Imperatives 2-2. Hard (Product) Strategy 2-3. Mining Strategy 2-4. Solution (Sales& Service) Strategy 2-5. Regional Strategy 2-6. Enhancing Management base 3. Target Performance

7 2-1. <2020 VISION> & 6 Imperatives New Mid-Term Go Together st Step for the Management Plan coming 10 years Close and Reliable Partner anywhere on 2020 the Earth with Best Solutions through VISION Kenkijin Spirit Sales/ Operating Income (100 Mil Yen) Sales (Bar) Operating Income (Line) 9,405 1,085 7, ,058 7,738 9, st step for Sustainable Growth '07 '08 '09 '10 '11 '12 ' nd Step 3 rd Step Kenkijin Spirit Guiding Principles of HCM Group 20 7

8 2-1. <2020 VISION> & 6 Imperatives Transform to Global Management towards Sustainable Growth 8 Life Cycle Support Solution Customer satisfaction Regions Marketing & Sales Africa/M. East India Asia/ Oceania China Europe/ Russia America Japan Hard (Product) Research & Development Mining Operation Global Management basis Global Production Global Management

9 2-2. Hard (Product) Strategy Establish Global R & D Basic Policy 1. Development for each market needs 2. Unified Quality 3. Standardize, Integrate Telcon (India) 1. Develop specification for Emerging Market with better cost performance 2. Outsource Computer analysis function Share function Made by HITACHI HCMC (China) 1. Development on local requirement in China. 2. Cost Reduction by further localization Japan 1. Control all products cross sectional 2. Develop advanced technology (Saving energy technology) 3. Utilize Human Resources (China, India) 4. Collaboration and alliance with HITACHI Group and suppliers 5. Standardize, Integrate 9

10 2-2. Hard (Product) Strategy 10 Develop Machine & Spare Parts for Emerging Market with overwhelming cost competitiveness Well accepted 3G Series Mini Excavator Larger Production, Lower fuel consumption Simplified function Easy Maintenance Easy obtainable parts + Environment-Friendly Used Machine Distribution Develop a New Brand Service Parts with high price competitiveness More Durable models for China Market Wheel Loader: Develop Emerging Spec Model Series together with KCM Undercarriage, Tooth etc Price Delivery Quality Warranty

11 2-2. Hard (Product) Strategy 11 Establish Technology for Electric and Robot Utilize Strength of Total HITACHI Group Inverter Motor Energy Management Hitachi IES Hitachi IES/Hitachi Ltd Hitachi Institute Battery operated Excavator Hybrid Excavator ASTACO (Advanced System with Twin Arm for Complex Operation) Information AHM Asset Health Management Fault detection Safety Overview Monitor Traffic Control Improve Operation Efficiency Cruise Control 歩行者 車両 障害物 Lower fuel consumption for Energy saving + Improve Safety and Operation efficiency Improve Value for Customer

12 2-3. Mining Strategy Strong in Mining. Establish Solid Business Model 12 * Demand: HCM Estimate Unit 1,600 1,400 1,200 1, Demand Excavator (>100ton) : vs 需要 2.2 販売 '10 '11 '12 '13 ' '18 Unit 1,600 1,400 1,200 1, Demand RDT (>140ton) : vs '10 '11 '12 '13 ' '18 Apply Success Story of Excavator (Reliability) to RDT Sophisticate Most Advanced technology of Hitachi Group (AC Drive, Trolley, AHM etc) Develop Excavator & RDT upon common concept in Japan Deploy Own Service utilizing ICT Fulfill Service Infrastructure (HR, Re-Man) ICT: Information Communication Technology Open Mining School (Australia)

13 2-3. Mining Strategy Package of 1 Excavator with 4 Dump Trucks + Integrated Control & Maintenance through ICT ICT: Information Communication technology Central Control of Information for all Machines at site 13 Dump Area Loading Area Overwhelming Product Fleet Management System Troubleshooting Tool Re-man Parts Service New Unit Full Maintenance Contract (FMC) Enlarge revenue of Service and Parts Win-Win Realize Lowest Cost/Tonnage Customer Achieve High Performance and Low Life Cycle Cost

14 2-4. Solution (Sales & Service ) Strategy 14 Boost up Customer satisfaction and realize higher market share. (Acquire repeat orders) Location Repair History Warning Parts Book Condition Parts Bulletin Enlarge Revenue Utilize Global e-service Parts Rental After Sales Service Finance New Unit Used Resale Re-man Life Cycle Support Operation Evolve support based on the ICT fully utilized data. Customer Satisfaction Location Warning Condition Parts Book

15 2-5. Regional Strategy 15 Enhance Sales & Service Operation for regional market requirement Demand Hyd. Excavator: America North Middle & South Europe/Russia Europe Russia /CIS India Africa/ M. East Africa M. East China Japan Asia/ Oceania Localize Operation, Faster decision, Enhance Strategic function

16 2-5. Regional Strategy - India - Strengthen Dealer Sales & Service Network of Telcon :vs 10 Dealer Own Service (226 outlets) (400 outlets) 2.4 Workshop 5 factories 12 factories Large Projects in India Airport Maintenance Build facilities 1100 Bil Yen (up to 13) Seaport Maintenance Major Seaports 1200 Bil Yen (up to 14) Commercial artery Delhi and Mumbai Freight Railway and Industrial Park, Inland Depot to Seaports 8300 Bil Yen (up to 16) Increase Production Capacity Role of Telcon Develop Product for Emerging Market for Africa, M. East unit 15,000 10,000 5,000 0 Production (3 factories) 2.6 Backhoe Loader Hyd. Excavator '10 '13 16

17 2-5. Regional Strategy Europe/ Russia - Name : Hitachi Construction Machinery Eurasia Manufacturing LLC (HCRM) Location: Tver, Russia Established : 1 st April 2011 Production: Hyd excavator 2,000units/Yr Start Operation: October 2013 St Petersburg Tver Moscow Industry Policy In Russia Competition (Established in Mar 2010) Joint Marketing HCRS+Dealer Build Substantial Russian Operation 1. Competition (Cost, Delivery, Market oriented) 2. Enlarge local procurement (Develop suppliers, Supply items to Europe) 3. Enhance Mining Business Local production of Bucket, Vessel for Dump) 4. Avoid Import Duty Risk 17 ロシア Image 現地生産工場 HCMR Factory 完成イメージ

18 2-5. Regional Strategy Africa/ M. East - HMEC enhance Dealer Support in M. East, E. Africa HCAF enhance Sales & Service Network 18 Country Demand of Hyd Excavator >100 units/yr Morocco HCAF Ghana Office Working at Mozambique/Angola Algeria Tunisia Nigeria Libya Angola Egypt Sudan Mozambique HCAF HMEC Expand Presence Promote Wheel Loaders India Promote in Full line Find/Develop Dealer Maintain Support Organization Emerging Spec Models Demining Machine BM307-V33 S. Africa HCAF Head Office Mining Order Taking

19 2-5. Regional Strategy Asia/ Oceania - 19 Strengthen Home Market (Retail Sales and Service) Secure Presence in Biggest Market HCMM HCMT Outlet Mining Project HMAP Palm Oil Plantation HAP HCMI factory HCA 1. Enlarge Service Revenue Enhance support for Customer Utilizing Global e-service 2. Participate in Big Projects (Coal, Forestry, Infrastructure) CPL Parts/Service Sales 150% Highway Project Forestry Coal Used etc Service Parts '10 '11 '12 '13

20 2-5. Regional Strategy China - 20 Enhance Dealer Network ( by Market size, Growth Ratio) Basic Strategy Analyze per product Bring strategic model Price Management Large and Rapid Small but Rapid Large but Slow Strategy by Province Focus on Specific Province Prioritized machine supply Enhance Dealer Support Establish HCS Branch office Inner Mongolia Chengdu Shenyang Beijing Hefei Support Control Performance Support Dealers through Score Card Nanning Expand to other area Introduce Dealer Training Support System Training through e-learning

21 2-5. Regional Strategy America - 21 Alliance to be Deepened, Enhanced and Developed Sales started in North American Market for new Engine emission models Increase production at Deere-Hitachi Zaxis-5 Promote JD Products in Asia Sales range expansion and synergy expected for Excavator Sales Increase sales volume per dealer Backhoe Loader Motor Grader Forestry Machine Dozer

22 2-5. Regional Strategy Japan - 1 st April 2012 Rental Sales Start HCM Japan Service Satisfy customer needs of Rent, Buy and Repair Start as an comprehensive company who can respond to any requirement in any place in Japan. Reform structure to further strengthen Japanese market that is significant. Japan : Rapid change in volume Promote All-in-One Sales 22 Decreasing Construction Investment Tier 4 emission Decreased Sales to End User Low hour, Long term Decrease Sales to Rental Company Total customers : 31,000 Service Sales 20% Rental Sales to wrapped user is 5 times. Target is to increase ratio to 20%

23 2-6. Enhance Management Base Production - 23 Accelerate Growth by aggressive Production Capacity Expansion Production Capacity Medium Excavator 170% (2010 to 13) USA 160% Russia 140% Europe China 180% Japan 170% Production Capacity Mining (2010 to 13) Ultra Large Excavator (100tup) 160% Rigid Dump (140tup) 180% India 170% Indonesia 300% Investment HCMC (China) (17 30 K units at End FY2011) Increase Capacity for Components (42 60 K Units E/FY2011) Increase Production for Ultra Large Excavator, Rigid Dump Truck

24 2-6. Enhance Management Base Total Cost Reduction - 24 Aim No.1 Cost Competitiveness, Reduction of Total Cost thoroughly 1. Enhance Purchase & Procurement New Partnership Strategy HCM Promote Cost Reduction activity by Top Down 2. Reduce SG&A Project activity of Promoting reduction of Indirect cost of Hitachi Group 3. Enlarge Local Procurement Shorten lead time Reduce cost Secure Volume 4. Reduce Logistic Cost & Loss Cost Strengthen Supply Chain Strategic Partner Preferred Supplier Approved Supplier Introduce Score Score card card of of Supplier Procurement to to Secure Volume required Supplier Periodical Review

25 2-6. Enhance Management Base Human Resource - 25 HR Policy and Foster HR based on Global Operation - Foster and Strengthen Kenkijin - (Share Value) HR Policy Promote Localization of staffs Foster HR Foster TOP Management through Global Core Human Resource Program Promote Diversity Foster and Utilize diversified Resources <Training for Overseas TOP Management> Share Kenkijin Spirit Australia S. Africa Malaysia China

26 2-6. Enhance Management Base Investment - 26 Amount of Investment (Accumulated from2011 to 13) Sales & Service (Outlets etc) IT and others Overseas Group for Production facility 187 Bil. Yen (Excluding Lease Property) Production Facility Components for Excavator (Increase capacity) Production Facility Mining Machines (Including Components) (Increase capacity)

27 Index Business and Market Environment 2. Go Together <2020 VISION> and 6 Imperatives 2-2. Hard (Product) Strategy 2-3. Mining Strategy 2-4. Solution (Sales& Service) Strategy 2-5. Regional Strategy 2-6. Enhancing Management base 3. Target Performance

28 3. Target Performance New Mid-Term Management Plan 2020 VISION Sales/ Operating Income Ratio Over 50 11,000 Sales (Bar) Operating Income (Line) 7, , '10 '11 '12 '13 Go Together st Close and Reliable Partner anywhere on the Earth with Best Solutions through Kenkijin Spirit Over 10% (100 Mil Yen, %) FY2010 FY2013 Profitability Efficiency Soundness Operating Income ROE Net D/E Ratio Payout Ratio 5.4% Over 10% Management Index 3.6% Over 15% Step for the coming 10 years 0.9 Below % Over 20% Stable Dividend Exchange rate: 80 /$, 115 /Euro 28

29 Exert Kenkijin Spirit, and give first priority to customer satisfaction. 29 Go Together 2013 Poster The slogan Go Together is aimed at encouraging efforts in combining the strengths of all employees of the HCM Group as we work to realize the 2020 Vision. Let s take on the challenge of global competition, with all HCM Group employees sharing Kenkijin Spirit and with the concept of Global One under which everyone has a sense of solidarity. HCM Group Attitude of Kenkijin (Value and Guiding Principle) Ideas underpin Kenkijin Spirit Challenge (Spirit of Challenge) Customer (Individual customer orientation) Communication (Open atmosphere)

30 30 End

31 Cautionary Statement 31 Certain statements found in this document may constitute forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 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 products; uncertainty as to Hitachi s ability to continue to develop and market products that incorporate new technologies on a timely and cost-effective basis and to achieve market acceptance for such 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 from sales; 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, parts and components; fluctuations in product demand and industry capacity; uncertainty as to Hitachi s ability to implement measures to reduce the potential negative impact of fluctuations in product demand, exchange rates and/or price of raw materials or 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 competitiveness and 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 and Europe, including, without limitation, direct or indirect restrictions by other nations on imports and differences in commercial and business customs including, without limitation, contract terms 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 other materials published by Hitachi.