Hitachi 2014 Annual Report Download

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Year ended March 31, 2014
Annual Report 2014

Table of contents

  • Page 1
    Annual Report 2014 Year ended March 31, 2014

  • Page 2
    ... 9: Message from the General Counsel 20 Financial Highlights 22 Segment Information 24 Foundation for Growth 24 CSR Management 26 Corporate Governance 28 Risk Management 30 Board of Directors 31 Executive Officers 32 Financial Section 32 Operating and Financial Review 38 Consolidated Balance Sheets...

  • Page 3
    ... 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...

  • Page 4
    ...in the ATM business • Merged with automotive systems equity method company TOKICO and subsidiary Hitachi Unisia Automotive through absorption-type mergers • Established joint venture with NEC Corporation in backbone router/ switch business • Acquired plasma display business and related patents...

  • Page 5
    ... • Transferred plasma display panel plant to Solar Frontier K.K. • Transferred hard disk drive business to Western Digital Corporation, of the United States • Integrated small and medium-sized LCD business with Japan Display Inc. • Stopped in-house production of ï¬,at-panel TVs (Yen...

  • Page 6
    ... Deliver innovation to customers and society globally • Enhance engineering teams to strengthen solutions-provision Net income attributable to Hitachi, Ltd. stockholders 3-year average system and accelerate global business initiatives • Sales growth in North America and China in addition to...

  • Page 7
    Hitachi, Ltd. | Annual Report 2014 Hitachi's Vision Hitachi delivers innovations that answer society's challenges. With our talented team and proven experience in global markets, we can inspire the world. Society's Challenges • Securing water resources, energy and food • Replacement of aging ...

  • Page 8
    ... Elevator and escalator business Product services supporting the entire product life cycle, such as operation and maintenance. Global Strategy Hitachi has reconfirmed the position of China and North America as priority regions and is now aiming for further growth. Europe • Railways • Nuclear...

  • Page 9
    Hitachi, Ltd. | Annual Report 2014 Target Performance o Service revenue ratio Revenues Fiscal 2015 Target FY2015 Over ¥10 trillion 40% FY2013 Fiscal 2013 Result ¥9,616.2 Fiscal 2015 Target billion EBIT ratio (operating income ratio) 32% Over 7% Fiscal 2013 Result (Over 7%) Overseas...

  • Page 10
    ... its basic management strategy from recovery to growth. Through our 2012 Mid-term Management Plan, launched in fiscal 2010, Hitachi successfully recovered from an operational crisis. In May 2013, in our path toward new growth, we launched our 2015 Mid-term Management Plan. In fiscal 2013, the...

  • Page 11
    ... a global, Group-wide human resources management platform that will help us place the right people in the right jobs and maximize the performance of our employees, wherever they may be. We have also taken steps to strengthen our management system so that we can promote our growth strategies, which...

  • Page 12
    ...Value Chain through Reforms Targeting Global Integrated Procurement Operations 18 SECTION 8: Message from the CHRO (Chief Human Resources Officer) Achieving Worldwide Business Growth with Global Human Resources Management 19 SECTION 9: Message from the General Counsel Supporting the Globalization...

  • Page 13
    ... structure through the Hitachi Smart Transformation Project and boosting our cash generation capacity through the E2E (End-toEnd) Supply Chain Project. These projects are being implemented on a Group-wide basis. Strategic Investment to Expand the Social Innovation Business Under the 2015 Mid-term...

  • Page 14
    ...SECTION 2 Message from the CMO Working with Customers to Identify Their Challenges and Provide Innovative Solutions Strengthening our sales and engineering teams to accelerate global growth in the Social Innovation Business. Driving Top-Line Growth Hitachi's 2015 Mid-term Management Plan includes...

  • Page 15
    ... technologies, the most important task is to first identify and understand those challenges. To that end, we emphasize a customer-oriented approach and conduct R&D in locations close to markets and customers. The 2015 Mid-term Management Plan includes objectives of more than 40% for the service...

  • Page 16
    ...chain, from demand forecasting to development, marketing, design, procurement, pro p oc cure rem me ent nt, , production, sales, installation, and service, we will standardize and consolidate Tatsuro Ishizuka Executive Vice President and Executive Officer, CTrO, and Deputy General Manager of Smart...

  • Page 17
    ..., we have established a Global Human Capital Database for the purpose of nurturing and utilizing Hitachi Group employees worldwide, who have a diverse range of skills. We are also actively using IT to advance business growth. In the past, the data handled by IT systems was principally generated by...

  • Page 18
    ..., or repair of products), Hitachi is advancing the shift of the value chain overseas bases-from demand forecasting, design, and procurement to manufacturing and service. We are taking steps to build the optimal design and production system and conduct manufacturing in the best location. In...

  • Page 19
    ... of the Group's value chain. These initiatives have been positioned as one part of the Hitachi Smart Transformation Project, a cost structure reform project that the Company is implementing on a Group-wide basis. Accordingly, the Corporate Procurement Division is working on joint initiatives in...

  • Page 20
    ... of diversified employees. Globalization of the Management System and Human Resource Management Human resource are the engine of Hitachi's growth, and under the 2015 Mid-term Management Plan, human resources play a central role in Hitachi's initiatives to advance the global development of the...

  • Page 21
    Hitachi, Ltd. | Annual Report 2014 SECTION 9 Message from the General Counsel Supporting the Globalization of Hitachi with World-class Governance and Compliance We strive to achieve highly transparent and trustworthy management through initiatives targeting a rigorous approach to corporate ...

  • Page 22
    ...financing activities Cash dividends declared Capital investment (Property, plant and equipment) Depreciation (Property, plant and equipment) R&D expenditures At year-end: Total assets Property, plant and equipment Total Hitachi, Ltd. stockholders' equity Interest-bearing debt Number of employees 11...

  • Page 23
    Hitachi, Ltd. | Annual Report 2014...,634 13 (FY) Return on equity (ROE) / Return on assets (ROA) Return on equity (ROE) (%) 50 Return on assets (ROA) ...13 (FY) Cash ï¬,ows Cash ï¬,ows from operating activities (left scale) Free cash ï¬,ows (right scale) (Millions of yen) Cash ï¬,ows from investing...

  • Page 24
    ... 13 (FY) 0 36% Share of Revenues FY2013 Electronic Systems & Equipment Main Products and Services Semiconductor and LCDs Manufacturing Equipment Test and Measurement Equipment Advanced Industrial Products Medical Electronics Equipment Power Tools Revenues and Profit Revenues (left scale) EBIT...

  • Page 25
    ... Systems' Semi-Active Suspension System nS 0 11 12 13 (FY) 0 49% Share of Revenues FY2013 Digital Media & Consumer Products* Main Products and Services Air-Conditioning Equipment Room Air Conditioners Refrigerators Washing Machines Optical Disk Drives Flat-Panel TVs Revenues and Pro...

  • Page 26
    ... related to the key management policies in our Mid-term Management Plan and we seek to materialize CSR in line with our management strategy. Importance for stakeholders Hitachi delivers innovations that answer society's challenges. With our talented team and proven experience in global markets...

  • Page 27
    ... certifications renewed. * A value closely related to the emission factor numerators (environmental burden) of energy use from business activities, etc. (for example, production quantity, output, building ï¬,oor space, and number of employees, etc.) We reduce the energy use per unit as one way to...

  • Page 28
    ... Officers and Directors to sustainably enhance corporate value and shareholders' common interests. The basic management policy includes the medium-term management plan and annual budget compilation. The Board of Directors focuses on strategic issues related to the basic management policy as well as...

  • Page 29
    ... Hitachi, Ltd. Category Executive Officer* Total amount of compensation, etc. (Millions of yen) 173 Monthly salary 122 Performance-linked component 51 * Although concurrently serving as Director, Mr. Hiroaki Nakanishi does not receive compensation as Director. Internal Control over Financial...

  • Page 30
    ... the Compliance Department at Hitachi or to an outside attorney. This system can be used not only by Hitachi employees but also by former employees, temporary staff, and business partners. Another system- the Channel to the Board of Directors-has been introduced to allow employees to report problems...

  • Page 31
    Hitachi, Ltd. | Annual Report 2014 In November 2012, a subsidiary dealing in automotive components received administrative orders from the Japan Fair Trade Commission for violating the Antimonopoly Law. In September 2013, the same company was prosecuted by the U.S. Department of Justice for ...

  • Page 32
    ...Non-Executive Director, BP plc. (UK) Chairman of the Board, Toray Industries, Inc. Chairman, Arle Capital Partners Limited (UK) President and Representative Director, Tokyo Small and Medium Business Investment & Consultation Co., Ltd. Chairman, SPRING Singapore Outside Director, Murata Manufacturing...

  • Page 33
    ... Infrastructure systems business (urban planning and development systems business) Power systems business (nuclear power systems business) Supply chain management (procurement) Infrastructure systems business (sales operations) Marketing and sales, and power systems business (sales operations...

  • Page 34
    ... ended March 31, 2014. A breakdown of these expenses is as follows. We posted expenses of ¥19.0 billion in the Automotive Systems segment owing to the fact that Hitachi Automotive Systems, Ltd. has agreed with the United States Department of Justice to conclude a plea agreement regarding alleged...

  • Page 35
    ... of 1% compared with the year ended March 31, 2013. This increase was due primarily to higher sales of hydraulic excavators in Japan and China, partially offset by lower sales of mining machinery in North America, Asia and Oceania. Segment profit increased 9% to ¥63.3 billion, as compared with the...

  • Page 36
    ...with a decrease in raw material prices that were recorded at Hitachi Metals, Ltd. in the year ended March 31, 2013. This increased segment profit was also attributable to the decrease in restructuring charges for the wires and cables business, etc. (Automotive Systems) Revenues were ¥892.1 billion...

  • Page 37
    ... reported higher sales of ATMs in China, the Social Infrastructure & Industrial Systems segment, which reported higher sales of elevators and escalators mainly resulting from the effects of foreign exchange rates ï¬,uctuations, and the Digital Media & Consumer Products segment, which reported higher...

  • Page 38
    ...49,574 58,449 ¥87.5 billion, due mainly to the absence of stock acquisitions related to the acquisition of Horizon Nuclear Power Limited in the year ended March 31, 2013. Proceeds from sale of investments in securities and shares of consolidated subsidiaries resulting in deconsolidation increased...

  • Page 39
    ... March 31, 2013. This increase was due primarily to the issuance of straight bonds, the procurement of new long-term debt by the Company, and the effects of the consolidation of NBL Co., Ltd. at Hitachi Capital Corporation. As of March 31, 2014, short-term debt, consisting mainly of borrowings from...

  • Page 40
    Financial Section Consolidated Balance Sheets Hitachi, Ltd. and Subsidiaries March 31, 2014 and 2013 Millions of yen Assets Current assets: Cash and cash equivalents Short-term investments Trade receivables: Notes Accounts Net trade receivables Investments in leases Current portion of financial ...

  • Page 41
    Hitachi, Ltd. | Annual Report 2014 Millions of yen Liabilities and Equity Current liabilities: Short-term debt Current portion of long-term debt Current portion of non-recourse borrowings of consolidated securitization entities Trade payables: Notes Accounts Accrued expenses Income taxes Advances ...

  • Page 42
    ...Consolidated Statements of Operations Hitachi, Ltd. and Subsidiaries Years ended March 31, 2014, 2013 and 2012 Millions of yen 2014 Revenues: Product sales Financial and other services Total revenues Cost of sales: Product sales Financial and other services Total cost of sales Selling, general and...

  • Page 43
    Hitachi, Ltd. | Annual Report 2014 Consolidated Statements of Equity Hitachi, Ltd. and Subsidiaries Years ended March 31, 2014, 2013 and 2012 Millions of yen 2014 Accumulated other comprehensive loss Treasury stock, at cost Total Hitachi, Ltd. stockholders' equity Common stock Capital surplus ...

  • Page 44
    Financial Section Consolidated Statements of Cash Flows Hitachi, Ltd. and Subsidiaries Years ended March 31, 2014, 2013 and 2012 Millions of yen 2014 Cash ï¬,ows from operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation ...

  • Page 45
    ... Ltd. | Annual Report 2014 Millions of yen 2014 Cash ï¬,ows from financing activities: Increase (decrease) in short-term debt, net Proceeds from long-term debt Payments on long-term debt Proceeds from sale of common stock by subsidiaries Dividends paid to Hitachi, Ltd. stockholders Dividends paid...

  • Page 46
    ... Balance Sheets by Manufacturing, Services & Others and Financial Services Hitachi, Ltd. and Subsidiaries March 31, 2014 and 2013 Billions of yen As of March 31, 2014 Manufacturing, Services & Others Financial Services Manufacturing, Services & Others As of March 31, 2013 Financial Services...

  • Page 47
    Hitachi, Ltd. | Annual Report 2014 Consolidated Statements of Operations by Manufacturing, Services & Others and Financial Services Hitachi, Ltd. and Subsidiaries March 31, 2014 and 2013 Billions of yen As of March 31, 2014 Manufacturing, Services & Others Financial Service Manufacturing, Services...

  • Page 48
    ...Japan Stock Exchange Listings Tokyo, Nagoya Accounting Auditor Ernst & Young ShinNihon LLC Investor Relations Contacts JAPAN Hitachi, Ltd. 6-6, Marunouchi 1-chome, Chiyoda-ku, Tokyo, 100-8280 TEL: +81-3-3258-1111 E-mail: [email protected] U.S.A. Hitachi America, Ltd. 50 Prospect Avenue, Tarrytown...

  • Page 49
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