new medium-term management plan ”change & growth · 5/11/2017 · © 2017 hitachi zosen...
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© 2017 Hitachi Zosen Corp.
New Medium-Term Management Plan ”Change & Growth”
New Long-Term Vision ”Hitz 2030 Vision”
May 11, 2017Hitachi Zosen Corporation
Representative DirectorChairman & President Takashi Tanisho
© 2017 Hitachi Zosen Corp. 2
1. Review of former Medium-Term Management Plan“Hitz Vision Ⅱ”
2. New Long-Term Vision ”Hitz 2030 Vision”
3. New Medium-Term Management Plan ”Change & Growth”
4. Support Documentation
Contents
© 2017 Hitachi Zosen Corp. 3
1. Review of former Medium-Term Management Plan“Hitz Vision Ⅱ”
© 2017 Hitachi Zosen Corp. 4
Achievement of “Hitz Vision Ⅱ” (Consolidated)
Original plan of Hitz VisionⅡ Results of Hitz VisionⅡ(Achievement Rate)
FY2014 FY2015 FY20163 years
totalFY2014 FY2015 FY2016
3 years total
Order intake 400 450 500 1,350 452.7(113%)
435.4(96%)
398.9(80%)
1,287(95%)
N e t s a l e s 320 350 400 1,070 359.3(112%)
387(110%)
399.3(99%)
1,145.6(107%)
O p e r a t i n gi n c o m e
10 17 23 50 12.8(128%)
15.1(88%)
14.9(65%)
42.8(86%)
O r d i n a r yi n c o m e
8 14 20 42 7.5(93%)
12.2(87%)
11.2(56%)
30.9(74%)
Net income 4 8 13 25 5.1(127%)
5.8(72%)
5.8(45%)
16.7(67%)
I n t e r e s t -bearing debt
131.1 126 120 - 119 105.1 109.2 -
Shareholder’sequity ratio
27.6% 28.6% 30.6% - 26.6% 28.4% 29.4% -
(Unit: Billion Yen)
We have achieved the target toward business scale, but have to continue to improve earning capacity
© 2017 Hitachi Zosen Corp. 5
Evaluation of Management Targets and Actions
No. Management Targets Evaluation
1
Strengthen profitability
Each business and product to
achieve No. 1 profitability in its
area
Engineering:AOM leads growth of engineering
Manufacturing : Continuing slump
Troubles of marine diesel engines and
systematic machinery.
Projects troubles and technical
problem related to overseas
2Expand business scale
Expand to Yen 500 billion
company with public recognition
INOVA, NAC and large-scale desalination project
contribute increase of overseas net sales to
approximately JPY 500 billion
3
Fortify financial structure
Achieve and maintain at least
30% shareholders’ equity ratio,
and secure a stable financial
position
Shareholder’s equity ratio is 29%
Increase endurance to financial risk by
subordinated loan
AOM: After service, Operation and Maintenance
© 2017 Hitachi Zosen Corp. 6
Numerical Result
0
100
200
300
400
EnvironmentalSystems &
Industrial Plants
Machinery Infrastructure Others
Order Intake
2014(Plan)
2014(Actural)
2015(Plan)
2015(Actual)
2016(Plan)
2016(Actural)
(Billion Yen)
0
100
200
300
400
EnvironmentalSystems &
Industrial Plants
Machinery Infrastructure Others
Net Sales
2014(Plan)
2014(Actural)
2015(Plan)
2015(Actual)
2016(Plan)
2016(Actural)
(Billion Yen)
-5
0
5
10
15
20
EnvironmentalSystems &
Industrial Plants
Machinery Infrastructure Others
Operating Income
2014(Plan)
2014(Actural)
2015(Plan)
2015(Actual)
2016(Plan)
2016(Actural)
(Billion Yen)
◆Business Scale: Received Large-scale desalination plantExpanded Domestic environment solution business
◆Profitability:・Engineering: Expanded Domestic environment solution
business ・Manufacturing: Continuing slump by troubles related to
overseas (projects, acquisition activitiesand JV)and technical problem
© 2017 Hitachi Zosen Corp. 7
FY2010 FY2014 FY2015 FY2016
Domestic Business
237.5 83% 237.1 66% 258.1 67% 268.5 67%
OverseasBusiness
49.6 17% 122.2 34% 128.9 33% 130.8 33%
Total 287.1 100% 359.3 100% 387 100% 399.3 100%
Stable Business(AOM etc.)
115.5 40% 136.1 38% 148.5 38% 158.4 40%
New ProductsNew Businesses
- - 3.2 1% 11.5 3% 21.2 5%
Strengthen Profitability Status of Balanced Management
(Unit: Billion Yen)
Numerical Targets (Actual of FY2010)→(Target of FY2016)
Overseas Business Stable Business New Products New Businesses
17%→30% 40%→50% →50 bn. JPY
© 2017 Hitachi Zosen Corp. 8
Expand Business Scale
Hitz:Develop markets of developing countries centered around SE Asia
HZI:Expand business areas in European markets and strengthen O&M business (M&A)
India/Under operation(600t/d 11,500kW)
Malaysia/First Order(600t/d 18,000kW)
Vietnam/Under demonstrated operation (75t/d 1,930kW)
Thailand/First Order(460t/d 7,900kW)Thailand/Offer(370t/d 6,000kW)
EfW:Expand and strengthen business in Europe(HZI) and SE Asia (Hitz)
HZIBM(GER) 2015.3~Biogas Purification System
HZIKRB(CHE)2010.12~Boiler Parts and Maintenance for EfW
HZIS(SVK)2017.1~Design for EfW
HZIK(GER) 2014.12~Maintenance for EfW
HZIE(GER)2016.10~/Power to Gas(Synthesis Methane Production)
HZI(Asset Purchase for Kompogas)2014.10~ (Dry Biogas)
1 2
StrengthenAOM
Expand business
areas
Expand business
areas
Expand business
areas
Strengthenengineering
StrengthenAOM
© 2017 Hitachi Zosen Corp. 9
CHL
UAE
Advantages of Hitz Advantage of OSMOFLO
MSF/MED method Large-scale
installations in the Middle East
RO method AOM Rentals
Design・Sales・Manufacture・Operation of Desalination and Industrial Wastewater Treatment System
AUS
LHLight House
Remote Monitoring System Network
Territory
LHEU LH
JAPAN
Territory
LHUSA
LH(OSMOFLO)AUSTRALIA
Plant Connect*
Expand Business Scale
Desalination Business:Expand and enhance business by achieve RO method and the delivery records(Acquisition of OSMOFLO)
Remote Monitoring System
*Plant Connect:Remote Monitoring System by OSMOFLO
Cover for each other
Base for Remote Monitoring System (Light House)
INDTerritory
© 2017 Hitachi Zosen Corp. 10
Fortify Financial Structure
0
100
200
Interest-bearing debt2014(Plan) 2014(Actual) 2015(Plan)
2015(Actual) 2016(Plan) 2016(Actual)
(Billion Yen)
20.0
25.0
30.0
35.0Shareholder’s equity ratio
2014(Plan) 2014(Actual) 2015(Plan)
2015(Actual) 2016(Plan) 2016(Actual)
(%)
2014 2015 2016 2014 2015 2016
◆Increase endurance to financial risk・Secure JPY 30 billion commitment line (Securing flexible and efficient
fund procurement )・Promote non-core assets sell-off(JPY 10 billion)・Procure JPY 20 billion by subordinated loan
Credit Rating
JCR BBB (Stable) BBB (Positive)
R&I BBB (Stable) BBB (Stable)
© 2017 Hitachi Zosen Corp. 11
Enhance Corporate Governance
0
1
2
3
4
5
6
7
8
9
10
FY2011 FY2016
Mem
bers
Board composition
Internal・Men Outside・MenOutside・Women Outside・Non-Japanese
• Assess the effectiveness of Board of Directors meeting and comply all the 73 principles of corporate governance code
• Review of Board composition:→Appoint 3 independent outside directors(included woman and
non-Japanese)• Review guidelines of matters for resolution of the Board of Directors
→Stimulate discussion and enhance supervisory function
Mr. Chiaki Ito Ms. Kazuko Takamatsu Mr. Richard R. Lury
Enhance corporate governance by revitalize our Board of Directors meetings
Independent Outside Director
© 2017 Hitachi Zosen Corp. 12
2. Hitz 2030 Vision
© 2017 Hitachi Zosen Corp. 13
Direction of Businesses (1) Core Business Areas
Be Solution Provider to Create Recycling Society
Abnormal Weather,Natural Hazard
Social Challenges
Core Business Areas
Food, Water and Energy Shortage
Increasing Environmental
Pollution
WaterEnergy Energy from Waste(EfW) Renewable Energy Methanation Marine engines, process
equipment etc.
Desalination, Water Supply Sewage Treatment, Excreta Treatment Water Control(Hydraulic gates , Wave
Meters , Flap-Gates) Bridges・Shield tunneling machines etc.
Environment
Core Competences of Hitz Group
(1)Abundant delivery record(Expansive knowledge based on experience)
(2)Technological competences (Engineering+Manufacturing)(3)Deep connections with customers
© 2017 Hitachi Zosen Corp. 14
Main Power Supply
Offshore WindPower Generation
EfW
Anaerobic Digestion Biogas Power
Woody BiomassPower Generation
Garbage
Municipal Waste
Surplus Power
Methanation HydrogenGeneration System
Hydrogenrelated business
SOFC
HydrogenMethane
Hydrogen
Direction of Businesses (2ー1) Energy Business
Energy Business
© 2017 Hitachi Zosen Corp. 15
Direction of Businesses (2ー2) Water-related Business
GPS Ocean Wave Meterand
Tsunami Meter
Discharge
Sewage Treatment
Drainage
Recycled Wastewater
Evaporation
Hydraulic Gate
Seawater
Water-related Business
Desalination
Water Supply
Daily Life Water
MovableFlap-Gate Type
Seawall
© 2017 Hitachi Zosen Corp. 16
FY2016
29%
Net Sales
Shareholders’ Equity Ratio 40%
Overseas Net Sales to Net Sales
Operating Income
to Net sales
Business Image (1)Numerical Targets
“In FY2030, net sales will be JPY 1 trillion and operating income to net sales will be more than 10%”
33% 50%
4%
10%
New Business
(by M&A)
Existing
Business400bn. JPY
600~700bn. JPY
300~400bn. JPY
ApproachesFY2030
New Products and Businesses
Globalization
Expansion of Value Chain
Expansion of Value Chain
Globalization
© 2017 Hitachi Zosen Corp. 17
Business Image (2) To Accomplish Our 2030 vision
Accomplish Our 2030 Vision
Increase profitability
Scale expansion
Scale expansion
Improve motivation of employee
Change in ways of working
Added value and
productivity improvement
Enhance Internal Resources and Environment
Business Deployment(Increase profitability and Scale expansion)
Be Solution Provider to create recycling society
(5) Diversity Management(4)Advanced Technology
(1) Expansion of Value Chain(2) New Products
New Businesses(3) Globalization
© 2017 Hitachi Zosen Corp. 18
(1) Expansion of Value Chain
Engineering
Control Technology(Big Data, AI, IoT), Automation Technology, Advanced Simulation Technology
Manufacturing
Smile Curve
Earnin
g Po
we
r
Business Planning Service
Expansion of Value Chain
Advanced Technology
Finance, Electric Power Selling, Concession
After-sales Service, Maintenance, Operation
Renewable Energy(EfW), Desalination,Water Treatment
Marine Diesel Engines,Process Equipment, System Machinery,
Electronic Control Systems, Industrial Machines, Steel Structures, Shield Tunneling Machines, Functional Materials
© 2017 Hitachi Zosen Corp. 19
(2) New Businesses and Products
<2030>
▽Refuse derived fuel systems (Bioethanol)
<2020> <2025>
▽Industrial-use fuel battery (SOFC)
▽All-solid state lithium-ion batteries (Small-type)
▽Methanation (Demonstration)
▽Offshore Wind Power Generation (fixed-foundation turbines )
▽ Offshore Wind Power (Floating turbine)
▽Alkaline-type hydrogen production system (Demonstration)
▽SCR (Selective Catalytic Reduction) system for marine engines
▽Maintenance and repair work for infrastructure
▽Applications and service for satellite positioningsystem (Automatic operation)
▽New materials (Eucommia Elastomer)
▽ New materials (Carbon Nanotubes )
▽Desalination Plants (RO method, new type of water intake facilities)
▽Water treatment system for overseas
▽Drinking water supply by desalination plants(Concession businesses)
▽Rental service of wastewater treatment system
Expand menu for distributed energy
Develop distinctive equipment and service, and overseas deployment
Establish new core business
▽Alkaline-type hydrogen production system (Practical use)
Business areas New Businesses and Products
Energy Business
(Environment)
(Power Generation)
(Power Storage )
(New Energy)
Water Business
(DesalinationWater Supply)
(Sewage, Waste)
New Business
Schedule for launching new product and commercializing new business
© 2017 Hitachi Zosen Corp. 20
(3) Globalization
Share our vision around the world Have diverse human resources , implement work-style reforms Adopt English as official Company Language Develop Global Human Resources at Hitz Academy
EU,ME,AFR IND, SE Asia, AUS CHN,TWN,KOR USA,MEX,SA
Provide recycling solutions to the world
Executive Officer Strategic Planning Governance
Executive Officer Strategic Planning Governance
Executive Officer Strategic Planning Governance
Executive Officer Strategic Planning Governance
Hitz AcademyHitz(JapanHQ)
Europe HQ Asia Pacific HQ East Asia HQ Americas HQ
WaterEnergy Environment
© 2017 Hitachi Zosen Corp. 21
(4)Advanced Technology
Engineering・EfW, Woody Biomass Power Generation,
Desalination, Water Treatment etc.
Manufacturing・Marine Diesel Engines, Process Equipment,
Precision Machinery, Infrastructure Development, etc.
Advanced Technology
■Control Technology(Big Data, AI, IoT)■Automation Technology■Advanced Simulation Technology
■Automation・Labor-saving ■Give the best performance
■Preventive maintenance
<Software >
< Hardware >
<Added value and productivity improvement>
© 2017 Hitachi Zosen Corp. 22
Management Talent
Effective posting → High Performance
Work in Very Diverse Ways
Comfortable workplace → Maximize potential
(5) Diversity Management
●Recruit
→Recruitment of global staff and mid-career
●Personnel Allocation
→Timely staff deployment by visualization
of personnel information
●Development of HR
→Change of Corporate Culture by Human
Resource Enhancement
●ICT →Working style does not depend on time and location
→Convenience of global network
●AI and Robot →Decrease regular working hours by reform operations
●Work-Life Management →Create a comfortable working environment for all
employees
<To achieve the targeted HR>
Generate “staff motivation”
and lead to “high productivity”
Strong leadership
Capacity to change
the mindset
Strong will to
accomplish plan to the
end
Hitz Group is eagerto take on new
challenges
© 2017 Hitachi Zosen Corp. 23
3. New Medium-Term Management Plan ”Change & Growth”
© 2017 Hitachi Zosen Corp. 24
0.0
2.0
4.0
6.0
8.0
10.0
0
200
400
600
800
1,000
FY2013(Actual) FY2016(Actual) FY2019(Plan) FY2022 FY2025 FY2028 FY2030Target
Op
erat
ing
inco
me
to s
ale(
%)
Net
sal
es
(bn
. JP
Y)
Consolidated net sales Operating income to sale(%)
FY2013 Actual FY2016 Actual FY2019 Targets
Order intake 328.4bn. JPY 398.9bn. JPY 460bn. JPY
Net sales 333.4bn. JPY 399.3bn. JPY 430bn. JPY
Operating income7.8bn. JPY(2.4%)
14.9bn. JPY(3.7%)
20.5bn. JPY(4.8%)
ROE 3.7% 5.1% 7.7%
Number of employees 9,693 10,131 11,300
FY2030 Targets
Business Scale1 trillion JPY
More than 10%
Position of New Mid-Term Management Plan ” Change & Growth”
Guideline of business scale and profitability toward FY2030
■Basic strategies for New Mid-Term Management Plan ” Change & Growth”
The first step to grow for achieving 2030Vision (maintenance of business foundations)
1. To restructure business foundation and improve productivity
2. To maximize Hitz Group comprehensive strengths
3. Promote Portfolio Management
© 2017 Hitachi Zosen Corp. 25
Numerical Forecast (Consolidated)
( Unit: Billion Yen )
Hitz VisionⅡ (Actual) Change & Growth (Plan)
FY2014 FY2015 FY2016 3 years total FY2017 FY2018 FY2019 3 years total
Order intake 452.7 435.4 398.9 1,287 400 430 460 1,290
N e t s a l e s 359.3 387 399.3 1,145.6 360 400 430 1,190
O p e r a t i n gi n c o m e( R a t i o )
12.8(3.6%)
15.1(3.9%)
14.9(3.7%)
42,8(3.8%)
12.5(3.5%)
16.5(4.1%)
20.5(4.8%)
49.5(4.2%)
O r d i n a r yi n c o m e( R a t i o )
7.5(2.1%)
12.2(3.2%)
11.2(2.8%)
30,9(2.7%)
10(2.8%)
14(3.5%)
18(4.2%)
42(3.5%)
N e t i n c o m e 5.1 5.8 5.8 16.7 6.5 8 10 24.5
I n t e r e s t -bearing debt
119 105.1 109.2 - 110 105 100 -
Shareholder ’se q u i t y ra t i o(incl. subordinated loan)
26.6% 28.4% 29.4% -30.0%(32.4%)
30.5%(32.7%)
31.0%(33.3%)
-
R O E 4.9% 5.2% 5.1% - 5.5% 6.5% 7.7% -
© 2017 Hitachi Zosen Corp. 26
Numerical Forecast (Environmental Systems & Industrial Plants)
0
5
10
15
20
0
100
200
300
400
FY2014Actual
FY2015Actual
FY2016Actual
FY2017Plan
FY2018Plan
FY2019Plan
Order Intake Net Sales Operating Income
Order Intake
Net Sales
Operating Income
(Billion Yen)
315 283.7 240.6 255 275 290
226 241.6 254.6 215 250 273
13.6 14.8 11.3 8.5 11 13.5
© 2017 Hitachi Zosen Corp. 27
Numerical Forecast (Machinery)
-2
0
2
4
6
8
(50)
0
50
100
150
200
FY2014Actual
FY2015Actual
FY2016Actual
FY2017Plan
FY2018Plan
FY2019Plan
Order Intake Net Sales Operating Income
Order Intake
Net Sales
Operating Income
(Billion Yen)
100.6 107.2 106.9 100 105 115
104.4 104.5 103.7 100 105 110
0.8 -0.8 2.2 2.5 3.5 4.5
© 2017 Hitachi Zosen Corp. 28
Numerical Forecast (Infrastructure)
-3
-2
0
2
3
5
(40)
(20)
0
20
40
60
FY2014Actual
FY2015Actual
FY2016Actual
FY2017Plan
FY2018Plan
FY2019Plan
Order Intake Net Sales Operating Income
Order Intake
Net Sales
Operating Income
(Billion Yen)
27.7 34.5 33.2 35 38 43
19.4 30.8 29.2 30 33 35
-2.1 0.4 1.0 1.0 1.5 2.0
© 2017 Hitachi Zosen Corp. 29
Basic Strategies
Clarify position of each business by Portfolio
Priority given to growing business and new
business in resource allocation
Consider possibilities of revitalizing low-profit products
Basic Strategy(3)
Promote Portfolio Management
Business areas expansion
Use ICT
Reinforce the structure of risk management
Take specific measures to increase profitability
Strengthen financial condition and increaseinvestment capacity for growth
Basic Strategy(1)
Restructure business foundation and improve productivity
Form business clusters and maximize synergy
Promote consolidated basis profit monitoring
HRD by job rotation
Basic Strategy(2)
Maximize Hitz Group comprehensive strengths
1
2
3
4
5
1
2
3
1
2
3
© 2017 Hitachi Zosen Corp. 30
Basic Strategies (1)Restructure Business Foundation and Improve Productivity
CategorySegmen
tsProducts Plan
BasicDesign
DesignProcurement
Manufacturing
AssemblyConstruction
AOM Operation Investment
Engin
eering
Enviro
nm
ental System
s &
Ind
ustrial P
lants
EfW (Domestic)
EfW (Overseas)
EfW (HZI)
Desalination
Water treatment
Power generator
Man
ufactu
ring
Mach
inery
Marine Engine
Press Machine(H&F)
Process Equipment
Nuclear Equipment (NAC)
Systematic Machinery
Infrastr
uctu
re
Steel Structure・Bridge
Shield Machines
その他
Wind Power
New Material
Current Range : New and future Range :
※Focus on expanding AOM business remote monitoring system and ICT(AOM)
(1) Business areas expansion
© 2017 Hitachi Zosen Corp. 31
Basic Strategies (1) Restructure Business Foundation and Improve Productivity
(2) Use ICT
IoT・Big Data, utilize AIBusiness Areas Production Site Area
Remote Monitoring System・Support Center
Collect and Storedata
Analyze dataUtilize AI
Make works smartAchieve IoT innovation
in production site
Visualization
Automatic operation
Preventive maintenance
Lifetime diagnosis
Abnormal diagnosis
Support decision-making
Innovative Manufacturing&
Technology Research Center)
Ariake
MukaishimaSakai
InnoshimaMaizuru
IbarakiKashiwa
Marine diesel enginesSCR
Hydraulic gates
EfW
Water treatmentplants
Shield machine
Various dataVarious data
■Productivity improvement・ Productivity improvement by robots and ICT・ Standardized design by ICT
■Expansion of AOM business ・Horizontal development of remote monitoring system(Shield Machines, marine diesel engines etc.)・Stabilize electric output in EfW plants by big data
Technical Research Institute
Chikkou
© 2017 Hitachi Zosen Corp. 32
Basic Strategies (1) Restructure Business Foundation and Improve Productivity
(3)Reinforce the structure of risk management
■Risk assessment for M&A・Fully enforce guideline for PMI (Post Merger Integration)
OSMOFLO is under 100 days PMI master plan
■Risk assessment for order intakes・Diversified projects(New business, new products and investment operation)
Review system: Review risk assessment before receiving order Risk Portfolio : Set amount limit of risk
■Decrease Technical Problems・Reinforce structure of quality assurance:
Encourage closer cooperation and information sharing among Group companies, Quality Assurance Dept., Technology Development HQ and Corporate Planning Dept.(Risk Management Group and Project Management Group), and enhance function of each HQ, Dept. and group.
・Management Approaches: (1) Design review meeting(2) Top Management Review(3) Risk review meeting
© 2017 Hitachi Zosen Corp. 33
Basic Strategies (1) Restructure Business Foundation and Improve Productivity
Categories
Segments
Products
Increase Profitability
Technology AdvantagesStrengthenSolutions
New ProductsStandardizationCost Reduction
Others
Engin
eerin
g
Enviro
nm
ental System
s &
Ind
ustrial P
lants
EfW (Domestic)Combustion controlPower generation
efficiency
Expansion of operation business
Analysis Big Data
EfW (Overseas)300t/D
StandardizationCooperation with HZI
Establish DBO projects
EfW (HZI)Combustion controlPower generation
efficiencyM&A
BiogasMethanation
Development of New markets(RUS,ME,AUS)
Desalination Intake Technology Cooperation with Osmoflo(RO)
Water Treatment Unitization Cost reduction Cooperation with Osmoflo
Energy MaintenanceFuel battery for industrial
useOverseas FIT projects
Man
ufactu
ring
Mach
inery
Marine Diesel Engine Increase base for A/SDF engines
SCR
Collective procurement,
Inventory control
Structure reformPrevention of trouble
Press machines (H&F)
World NetworkCRGF sheet forming,
Laser blanking
Process EquipmentPipework inspection
MaintenanceNew material Establish overseas sales network
Nuclear Fuel Cycling-Related Equipment
Concrete casks Reactor
decommissioningCooperation with NAC
Systematic Machinery
Drone
MaintenanceSatellite positioning system for revision
delivery
Electron beam sterilization
Standardize design・Reduce products line up
・Sophisticate electronic control device of Hitz Group products
Infrastru
ctu
re
Steel Structure・Bridge
Maintenance Flap-gatesStandardize
construction work Advance into Southeast Asian
Reduce products line up
Shield MachinesTechnologicaldifferentiation
Standardize design
(4)Take specific measures to increase profitability
© 2017 Hitachi Zosen Corp. 34
Strengthen financial condition ⇒raise the rating
・Secure profit through executing Medium-Term Management Plan
・subordinated loan(Amount: 20 bn. JPY equity: 50%)
Increase investment capacity for growth
・Execute investment in core businesses for growth
・Withdrawal or sell non-core and troubled businesses by portfolio management
Basic Strategies (1) Restructure Business Foundation and Improve Productivity
(5)Strengthen financial condition and increase investment capacity for growth
Realize to strengthen financial condition and increase investment capacity for growth
After included subordinated loan Amount of equity capital :140 bn. JPY
Shareholder’s equity ratio:33%
© 2017 Hitachi Zosen Corp. 35
Fortify group strategies:Form business clusters and maximize synergy
Focus on consolidated management : Promote consolidated basis profit monitoring
Basic Strategies (2)Maximize Hitz Group Comprehensive Strengths
Hitz
AKSOsmofloGroup
AMCSERACH
EM
Water Treatment
Hitz
NACOCL
Nuclear fuel cycling-related
equipment
Hitz
IHZNagaoka
Process Equipment
Hitz
Promotec ToyoTechnica
NTIKDC
Steel Structure
Hitz
NPCHM
MarineComponents
IMEX
Hitz
HZIGroup
SPC
IMEX
EfW
HESC
SNT
1
2
Hitz
VTEXSHINKO
SEIKI
TSK
PrecisionMachinery
Works of Hitz
IMEXH&F Manufacturing
VTEX
© 2017 Hitachi Zosen Corp. 36
Position Action
Growth・Core Aggressive Investment (Development, capital investment, M&A)
Low ProfitabilityTake Quick Action
Find out if it can depart from low growth and low profit, promote selection and concentration(maintain business or withdrawal・sell)
New Businesses(Promotion Office)
Evaluate business viability and promote selection and concentration(Commercialization, withdrawal・sell)
Basic Strategies (3)Promote Portfolio Management
a. Basic Concept
More
Less
Re
sou
rces
Allo
cation
a. Growth
b. Core(Profit Increase)
c. Low Profitability
d. Take Quick Action
Our Business Levels (4 stages)
Aggressive Investment of Management
Resources (incl. M&A)
Draw up a scenario change to high profit,
review and take action
Withdrawal・Sell
Revitalization
Business ScaleProfit Growth
© 2017 Hitachi Zosen Corp. 37
(Unit: Billion Yen)
Basic Strategies (3)Promote Portfolio Management
・R&D expenses: Focus on investing in themes to expand business areas and to increase profitability.
・Capital investment: (1) Focus on investing in themes to improve productivity
(Ex.:Automation by robots)
(2) Focus on investing in themes to expand business areas
(Commercialization of new products)
■Investment Principle
b. Investment Scale of Management Resources
Hitz VisionⅡ
3 years total
Change & Growth
3 years total
Plan Actual Plan
R&D expenses 30 19.6 30
Capital investment 30 28.0 40
M&A & others 40 20.6 30
Total 100 68.2 100
© 2017 Hitachi Zosen Corp. 38
4. Support Documentation
© 2017 Hitachi Zosen Corp. 39
Numerical Forecast (By Segments)
(Unit: Billion Yen)
Hitz VisionⅡ (Actual) Change & Growth (Plan)
FY2014 FY2015 FY2016 FY2017 FY2018 FY2019
OrderIntake
Environmental Systems & Industrial Plants
315 283.7 240.6 255 275 290
Machinery 100.6 107.2 106.9 100 105 115
Infrastructure 27.7 34.5 33,2 35 38 43
Others 9.4 10 18.2 10 12 12
Total 452.7 435.4 398.9 400 430 460
Net Sales
Environmental Systems & Industrial Plants
226 241.6 254.6 215 250 273
Machinery 104.4 104.5 103.7 100 105 110
Infrastructure 19.4 30.8 29.2 30 33 35
Others 9.5 10.1 11.8 15 12 12
Total 359.3 387 399.3 360 400 430
Operating Income
Environmental Systems & Industrial Plants
13.6 14.8 11.3 8.5 11 13.5
Machinery 0.8 -0.8 2.2 2.5 3.5 4.5
Infrastructure -2.1 0.4 1 1 1.5 2
Others 0.5 0.7 0.4 0.5 0.5 0.5
Total 12.8 15.1 14.9 12.5 16.5 20.5
© 2017 Hitachi Zosen Corp. 40
Numerical Forecast (By Small Segment of Environmental Systems & Industrial Plants)
(Unit: Billion Yen)
Hitz VisionⅡ (Actual) Change & Growth (Plan)
FY2014 FY2015 FY2016 FY2017 FY2018 FY2019
OrderIntake
EPC 176.0 127.3 117 125 145 159
Stable Business
139.0 156.4 123.6 130 130 131
Total 315.0 283.7 240.6 255 275 290
Net Sales
EPC 116.2 122.6 130.0 94 120 132.5
Stable Business
109.8 119.0 124.6 121 130 140.5
Total 226.0 241.6 254.6 215 250 273
Operating Income
EPC 1.3 0.5 -4.9 -3.6 -2 -0.3
Stable Business
12.3 14.3 16.2 12.1 13 13.8
Total 13.6 14.8 11.3 8.5 11 13.5
© 2017 Hitachi Zosen Corp. 41
Numerical Forecast (By Small Segment of Machinery)
(Unit: Billion Yen)
Hitz VisionⅡ (Actual) Change & Growth (Plan)
FY2014 FY2015 FY2016 FY2017 FY2018 FY2019
OrderIntake
Marine Diesel Engine 23.3 35.4 20.8 17.5 18.5 23.0
Press Machine 23.2 22.9 23.6 20.0 21.5 22.0
Process Equipment 12.7 16.9 18.3 20.0 21.0 23.0
Systematic Machinery 29.7 17.1 28.7 27.0 28.0 29.0
Others 11.7 14.9 15.5 15.5 16.0 18.0
Total 100.6 107.2 106.9 100 105 115
Net Sales
Marine Diesel Engine 21.4 25.4 25.5 21.0 21.5 22.5
Press Machine 23.9 23.4 24.1 21.5 22.0 23.0
Process Equipment 22.0 16.0 16.4 17.0 19.0 20.5
Systematic Machinery 25.3 23.0 21.8 25.0 26.5 27.5
Others 11.8 16.7 15.9 15.5 16.0 16.5
Total 104.4 104.5 103.7 100 105 110
Operating Income
Marine Diesel Engine -3.5 -2.6 -0.4 0 0.2 0.4
Press Machine 2.8 2.7 2.3 1.4 1.8 2.3
Process Equipment 1.1 0.9 0 0.2 0.3 0.4
Systematic Machinery 0.4 -1.0 0.2 0.6 0.7 0.8
Others 0 -0.8 0.1 0.3 0.5 0.6
Total 0.8 -0.8 2.2 2.5 3.5 4.5
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Cautionary StatementForward-looking statements are based on information currently available to Hitachi Zosen Corporation. Therefore those forward-looking statements include unknown risks and uncertainties. Accordingly, you should note that the actual results could differ materially from those forward-looking statements. Risks and uncertainties that could influence the ultimate outcome include, but are not limited to, the economic conditions surrounding Hitachi Zosen Corporation and/or exchange rate fluctuation.