日立综合报告2024

The Value Creation Process of Hitachi Contents CEO MessageThe Value Creation Process0612 Message from the Chairman of the Board34 Editorial Policy / Our Reporting Universe Editorial Policy The Hitachi Integrated Report is compiled for the purposes of facilitating a deeper understanding among stakeholders of Hitachi’s business model, as well as a dialogue throughwhich we can further enhance corporate value and realize a virtuous cycle of value co-creation. In the 2024 edition, we focus on Hitachi’s management strategies and measures In editing this report, we referred to the IFRS Foundation’s International Integrated Reporting Framework and the Japanese Ministry of Economy, Trade and Industry’s Guidance Production Structure Our Reporting Universe Hitachi publishes three corporate reports: theIntegrated Report, the Sustainability Report,and the Annual Securities Report. We defineeach report’s roles by content (from quantitative In particular, the Integrated Report and theSustainability Report, which are released onthe same day, can be read together to confirmESG initiative progress and data in addition to Sustainability Report Integrated Report Reporting Scope Period: Fiscal 2023(April 1, 2023–March 31, 2024)Note: Includes activities and other information occurring after April 1, 2024.Companies: Hitachi, Ltd., and its consolidated subsidiariesAccounting Standard: Unless otherwise noted, this report is prepared in accordancewith U.S. GAAP through fiscal 2013 and with the International Disclaimer Regarding Forward-looking StatementsCertain statements regarding the future of the Company set forth in this Report might constitute “forward-looking statements,” such as “plan,” “forecast,” “target,” and “strategy.” Although forward-looking statements contained in this report are based upon what the Company has determined to be Transformation of Hitachi OT and products CAGR from FY2021 to FY2024: 10% 22 Profit improvement The Social Innovation Business drives growth globally,particularly through the highly profitable Lumada business 33 Net income stabilization Enhanced risk management systems Core FCF (3-year cumulative): 1.5 trillion yen CEO Message Accelerate the Evolution from a Conglomerateto a Digital-centric Social Innovation Company, Transformation Journey into a Global Leader in the Social Innovation Business Over the past decade, Hitachi has embarked on a transformation journey to become a global leader in the social innovation business.This transformation began with establishing a vision of “Social Innovation,” aiming to solve social challenges through customer co-creation,leveraging Hitachi’s strengths in “IT, OT and products.” Recognizing the need to accelerate digitalization to gain a competitive edge, “Lumada” Through these structural reforms, we are making a significant shift toward organic growth under the current Mid-term Management Plan 2024.By expanding Lumada, we have evolved from a conglomerate stock, and our valuation is now between that of capital goods and technology Become a Company Always Striving for Growth In the Mid-term Management Plan 2024, we have built a robust business portfolio centered around three key technology trends: “Digital,” “Green,”and “Connective.”We have made a pivotal shift toward organic growth, pursuing top-line growth driven by DX and GX tailwinds, increasingprofit margins through the expansion of the Lumada business, and stabilizing net income through enhanced risk management.Additionally, meet our targeted financial structure: a revenues growth rate of 10%, adjusted EBITA margin of 11.5%, an ROIC of 9.5%, an EPS growth rateof 17%*1, and core free cash flow of 1.5 trillion yen (3-year cumulative).*2Furthermore, our focus on net income stability and cash generationhas yielded positive results, with net income conversion*3and cash conversion*4rates exceeding 60% and 80%, respectively. We are allocating the generated cash to growth investment and shareholder returns, setting us on a trajectory of sustainable and organic growth. *1 Calculated based on the number of shares before the stock split (effective July 1, 2024)*2 Revenues and Adj. EBITA margin are for three sectors. Growth rate is CAGR from FY2021 to FY2024 During the Mid-term Management Plan 2024, we have also embraced sustainable management.Strong governance is the foundation forenhancing corporate value. Under a robust Board structure, we have aligned executive compensation with shareholder value,in addition toachievement of the Mid-term Management Plan KPIs. By incorporating TSR growth against global peers into a reward metric, we established We are also focusing on environmentaland human capital aspects, which are essential for global and sustainable growth. With increasedGX demand, our contribution to CO2avoided emissions is projected to reach 153 million metric tons per year (three-year average), exceeding our target of 100 million metric tons. Additionally, we have mad