Hitachi (6501) Investor Day 2025 summary

Management strategy and transformation

• Accelerating transformation into a digital-centric company, with Lumada as the core growth engine and a target of 80% Lumada sales ratio and 20% profit margin by 2027.

• Focusing on expanding Lumada, disciplined capital allocation, and deepening governance to drive sustainable growth and high profitability.

• Portfolio restructuring will prioritize businesses with high Lumada affinity and growth potential, while divesting low-growth, low-synergy units.

• Capital allocation will balance growth investments, especially in digital and services, with shareholder returns, aiming to return over half of core free cash flow and profits.

• Governance and management culture will evolve to support agility, global synergies, and a high-growth mindset, including compensation reforms and enhanced transparency.

Core business strategies and segment highlights

• Mobility sector targets up to ¥2 trillion revenue by 2027, with 74% from recurring/software-based business and profitability above 11%, driven by digital platforms like HMAX and integration of Thales GTS.

• Energy sector aims to become the top service provider, quadruple service business, invest $6 billion in capacity expansion, and reach $30B+ by 2030, leveraging a $43 billion backlog and digital solutions like HMEX.

• Connected Industries will focus on integrated industry automation, targeting high-growth hybrid sectors, expanding HMAX for industry, and transforming the portfolio for global leadership, with adj. EBITA margin of 13%+ by FY2027.

• Digital Systems & Services will drive growth through AI-powered SI and service businesses, GlobalLogic expansion, and scaling Lumada globally, targeting a 65% Lumada sales ratio and over 16% EBITA margin by FY2027.

• Business model innovation through IT/OT integration, digitalizing products, and expanding into new markets.

Financial and capital management

• Financial targets are presented as ratios/ranges due to market uncertainty, with a focus on enhancing cash generation, capital efficiency, and risk management.

• Over half of core FCF or net income to be returned to shareholders, with stable dividend growth and flexible share buybacks, supported by strong cash flow.

• Inorganic growth investments will increase, mainly via bolt-on M&A in digital and services, with strict ROIC and margin criteria and post-acquisition monitoring.

• Asset-light strategies and capital structure optimization will be used to improve ROIC, with dynamic portfolio reviews based on Lumada affinity and growth, targeting ROIC of 12-13% by FY2027.

• Leverage to be used within financial discipline, targeting D/E ratio of 0.5x and Net Debt/EBITDA of 1-2x.