Hitachi (6501) Investor Day 2025 summary

Strategic direction 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, leveraging GenAI and advanced digital capabilities.

• Aiming to be a global leader in Social Innovation Business by 2027, focusing on organic growth, digitalization, and sustainable social infrastructure.

• CEO priorities include expanding Lumada, disciplined capital allocation, and deepening governance to drive sustainable growth and high profitability.

• Portfolio restructuring to divest low-affinity, low-growth businesses and pursue bolt-on M&A in digital and service areas, with a strong emphasis on synergies and global expansion.

• Strengthening group-wide integration and cross-sector collaboration, especially through the rollout of HMAX across mobility, energy, and industry sectors.

Business segment growth strategies

• Mobility targets ¥2 trillion revenue by FY2027, with 74% from recurring/software-based business and adj. EBITA margin of 11%+, leveraging HMAX for digital asset management.

• Energy sector to invest $6 billion in capacity expansion, quadruple service business, and achieve 13-15% margins by FY2027, with a focus on grid, service, and nuclear (SMR) opportunities.

• Connected Industries to focus on integrated industry automation, targeting high-growth hybrid sectors, recurring business growth, and adj. EBITA margin of 13%+ by FY2027.

• Digital Systems & Services to drive growth through AI-powered SI and service businesses, expand GlobalLogic, and achieve a Lumada sales ratio of 65% and adj. EBITA margin over 16% by FY2027.

Financial and capital allocation policy

• Maintaining a balanced approach to capital allocation, prioritizing returns, and flexibly allocating between growth investments and shareholder returns, with strict investment criteria.

• Over half of core free cash flow or net income to be returned to shareholders via dividends and share buybacks, with a payout ratio above 50%.

• Inorganic growth investments to increase, focused on digital and service expansion, with strict ROIC and hurdle rate criteria and post-M&A monitoring.

• Improving capital efficiency by expanding Lumada, optimizing invested capital, and reducing WACC, with asset sales considered for non-core or low-growth businesses.

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