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Hitachi

Hitachi High-Technologies GLOBAL

In Japan, even after the introduction of negative interest, share prices continue to be low and the yen continues to be high, giving a sense of uncertainty about its economic future, despite signs of gradual economic recovery, such as strong consumer spending due to improved employment situation and increase in capital investment by corporations.
In the US, with improved employment, consumer spending continues to grow and the US economy is expected to make a mild recovery. Meanwhile, due to financial uncertainty in Europe, continuous geopolitical risks, the slowdown of Chinese economy, financial deterioration of resource rich countries and materialization of other risks, deteriorating economic conditions at a global scale is also a growing concern, making the situation unpredictable.
Under such circumstances, the Group has established the following basic policies: "transform to more customer-centric organization" which provides advanced solutions that precisely respond to every individual customer's needs; and "transform to autonomous and decentralized organization" in which employees on the site think, make decisions and act on their own from the perspective of total optimization. Based on these policies, the Company intends to "Challenge to Change" and implement operational measures to realize a further growth of the Group.
To this end, the Group shall address the following challenges while enforcing "Ethics and Integrity"
and consistently maintaining an awareness of CSR in order to become an enterprise group trusted by the general public and its shareholders.

The Group established policies on how to execute business in the three business domains of "Biotechnology and healthcare," "Social and industrial infrastructure" and "Advanced industrial systems" based on the "Long-term Management Strategy" and has reinforced its business portfolio by shifting its resources to the business growth areas.
The Group recently developed specific strategies and measures based on the Business Portfolio Strategy, and set "Medium-term Management Strategy" for the period from FY2016 to FY 2018 to accelerate a further growth of the Group toward 2020. The specific strategies and measures are as follows.

1.Medium-term Management Policy

The Group's Medium-term Management Policy shall be "to keep profits by main business, and promote resource strengthening and investments." Based on this policy, the Group positions the three-year period ending FY2018 as an important period toward 2020 during which a growth cycle should be formed and strategic investment such as R&D should be actively made.
As for revenues, the Group aims to achieve growth beyond the market growth for each business segment, and as for profitability, the Group will aspire to stabilize the revenue base through continuously improving its earning capacity of its main business segments and enhancing its service business (*).

(*) Service business: Product maintenance services, IT solutions, trading services, and others

2.Division of management and business strategy for each segment

In implementing the Medium-term Management Strategy, the previous management model, i.e. management for each segment, will be changed, and the management will be divided into "Instrument" and "Materials" in consideration of the differences in business models for these distinctive areas. In promoting business, values to be provided and targets to be achieved will be set for the management of each area.

Instruments

"Science & Medical Systems," "Electronic Device Systems" and "Industrial Systems" segments will be combined as "Instruments" which deals with equipment and devices and provides solutions that combine strong products and commercial products, application and services.
In the "Science & Medical Systems," the Group aims to expand its business by strengthening collaboration with strategic partners, and at the same time, considers and promotes M&A and business alliances in a positive manner.
In the "Electronic Device Systems," the Group aims to maintain or expand its market share for the existing business, while venturing into new markets which are expected to grow, such as IoT-related market.
In the "Industrial Systems," the previous "Industrial & IT systems" and "Fine Technology Systems" are consolidated, and they will focus on enforcing their business by operating the social infrastructure business, such as railroad track inspection equipment and environmental and energy business, and the industrial infrastructure business, such as automobiles and secondary batteries, in an integrated manner.

Materials

The "Advanced Industrial Products" segment will be separated as "Materials" which deals with components and materials to further strengthen the existing business, and at the same time, they provide manufacturers with commercial services to solve challenges related to customer value chain.

3.Investment Strategy

The Group will actively make R&D investment to enhance its product development capacity as well as capital investment to reinforce collaboration with customers through increased manufacturing capacity that is the backbone of the Group's business, stronger production technology capacity and expansion of demonstration equipment. At the same time, the Group will promote realization of growth strategy by executing M&A and other business investment.

4.Corporate governance

By strengthening corporate governance, the Group will enhance transparency and efficiency, which, in turn, will lead to the enhancement of corporate value.