Hitachi 2010 Annual Report Download - page 5

We viewed fiscal 2009 as a year for the Hitachi
Group to make a fresh start. True to this positioning,
we pushed through business structure reforms in the
automotive systems, consumer and other busi-
nesses, and cut fixed expenses and procurement
costs. We also conducted public tender offers for five
publicly listed companies—Hitachi Information
Systems, Ltd., Hitachi Software Engineering Co.,
Ltd., Hitachi Systems & Services, Ltd., Hitachi Plant
Technologies, Ltd., and Hitachi Maxell, Ltd.—turning
them into wholly owned subsidiaries of Hitachi. The
aim of these moves was to strengthen our Social
Innovation Business. Moreover, we raised funds by
issuing new shares and convertible bonds with the
aims of strengthening our financial position and
providing funds for capital expenditures and strategic
investments to develop the Social Innovation Busi-
ness globally.
Fiscal 2009 saw the economic environment
improve as a whole from the second half of the
year. China, in particular, achieved a high rate of
economic growth, due in part to effective govern-
ment measures. Other Asian economies also expe-
rienced modest recoveries due mainly to exports to
China and government economic stimulus mea-
sures. The U.S. and European economies were
supported by massive quantitative easing and
government spending programs, enabling them to
see a moderate recovery in the latter half of 2009 as
well. Rebounding exports to emerging nations
aided this recovery.
Under these conditions, Hitachi posted consoli-
dated revenues in fiscal 2009 of ¥8,968.5 billion,
down 10% year over year. However, operating
income rose 59%, to ¥202.1 billion, a large
improvement resulting from fixed cost cutting and
the benefits of business structure reforms. On the
other hand, in income taxes, we incurred a one-off
charge of ¥67.0 billion, mainly due to the writing off
of deferred tax assets associated with making five
publicly listed companies wholly owned subsidiar-
ies. Due to this and other factors, we posted a net
loss attributable to Hitachi, Ltd. of ¥106.9 billion.
In terms of our financial position, total Hitachi,
Ltd. stockholders’ equity at March 31, 2010 was
¥1,284.6 billion due to the public offering to raise
capital. Total Hitachi, Ltd. stockholders’ equity ratio
improved 3.2 points from March 31, 2009 to 14.4%.
The debt-to-equity ratio (interest-bearing debt/
(noncontrolling interests + total Hitachi, Ltd. stock-
holders’ equity)) improved by 0.25 points from
March 31, 2009 to 1.04 at March 31, 2010. We
decided to suspend cash dividends applicable to
fiscal 2009 in light of our business performance.
As we said earlier, we viewed fiscal 2009 as a
year for making a fresh start. We feel that we made
strong progress implementing strategies that focus
more on the Social Innovation Business. Regret-
tably, however, our performance was not what
shareholders expected. We will therefore do our
utmost to improve our operating results in fiscal
2010 and thereafter.
Fiscal 2009 Results
Fiscal 2012 Mid-term Management Plan
Recently, we announced a new mid-term manage-
ment plan for the period through to fiscal 2012 as a
blueprint for moving from “defense” to “offense”
from fiscal 2010. Under this new plan, we will exe-
cute three management strategies aimed at achiev-
ing “Growth Driven by Social Innovation Business”
and a “Solid Financial Base.” First of all, our priority
is to leverage Hitachi’s strengths to promote a
global growth strategy. In order to give impetus to
this growth strategy, our second main initiative calls
on us to focus business resources on the Social
Innovation Business. Over the next 3 years, we plan
to allocate ¥1.6 trillion of the ¥2.6 trillion budgeted
to the Social Innovation Business. This includes
capital expenditures, strategic investments and
R&D expenses. The third initiative is to strengthen
the business structure to stabilize profitability. Here
we will cut costs, entrench our in-house company
system and take other steps.
In terms of management targets for fiscal 2012,
we are targeting revenues of ¥10,500 billion, an
operating income ratio of over 5%, net income
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Hitachi, Ltd. Annual Report 2010