NEW YORK, NY, July 10, 2001 -- Etsuhiko Shoyama, president and director
of Hitachi, Ltd. (TSE:6501/NYSE:HIT), Japan's largest electrical/electronics
manufacturer, today said that the company's strong focus on globalization,
extensive management reforms and the application of information technology
to its vast array of businesses are major factors that will help the
company enhance shareholder value and set the stage for future growth.
In an address to financial analysts
in New York today, Mr. Shoyama elaborated on progress the company
has made as part of its i.e.HITACHI Plan, the company's
medium-term business plan that sets out goals to be achieved as part
of a major transformation aimed at greatly increasing Hitachi's corporate
value. The plan was first introduced in late 1999. He said, management
reforms have dramatically facilitated more speedy and decentralized
decision-making. Eighty percent of decisions that would previously
have been made at the corporate level are now made by Group CEOs.
We estimate that our efforts to reform businesses contributed 24 billion
yen directly to operating income in fiscal 2000. In fiscal 2002, we
expect our reforms to contribute at least 70 billion yen. Moving forward,
we will continue using alliances, joint ventures, acquisitions, disposals
and other measures to reform businesses.
Mr. Shoyama cited four additional actions,
under a Corporate Innovation Initiative (CII) that will
be implemented in this fiscal year designed to drive further progress
at the corporate level.
One element of CII is our Procurement
Renewal Project. Through centralized Net-based purchasing, revisions
to Hitachi Group procurement specifications and methods, and other
actions, we will reduce materials purchasing costs by roughly 600
billion yen, or 20%, over two years. The second element of CII is
Project C, our cash flow improvement project. By March
2003 we aim to reduce by 25% the time it took us to turn over inventory
plus accounts receivable in fiscal 2000. Successful execution of Project
C will contribute an additional one trillion yen to cash flows over
two years. This cash will be used to repay five hundred billion yen
in debt, thereby strengthening our balance sheet.
The third element of CII,
said Mr. Shoyama, is our globalization strategy. Our long-term
goal is to grow overseas sales to account for fifty percent of consolidated
net sales, from the current thirty one percent. North America and
Europe are our main focus. China, as a market, and as a production
center too, is growing in importance for us. Hitachi will invest aggressively
in China with the view to sharply expand sales and production.
Under Project A, the fourth element
of CII, we will concentrate on growing systems and service areas where
we are highly competitive. Systems and services targeted under Project
A account for eight percent of current operating income. We plan to
elevate this figure to twenty-five percent in fiscal 2002. We will
grow sales and profits in fields in which we have a competitive edge,
Mr. Shoyama said.
Concluding his remarks, Mr. Shoyama
said, To prevail against global mega-competition and generate
the earnings expected of us by shareholders, we must exercise strong
management resolve in unifying business units. Information Technology
will continue to penetrate all business areas in the twenty-first
century. This will create a management environment in which we can
more strongly exhibit synergies between business units. Drastic change
of laws in Japan is also enabling us to make use of a wider range
of measures for restructuring. We intend to take full advantage of
this. We will not hesitate to create change and to do the things that
only Hitachi can. I am convinced of the potential to create entirely
new business models.
Hitachi, Ltd., headquartered in Tokyo, Japan, is one of the world's
leading global electronics companies, with fiscal 2000 (ended March
31, 2001) consolidated sales of 8,417 billion yen ($67.9 billion*).
The company manufactures and markets a wide range of products, including
computers, semiconductors, consumer products and power and industrial
equipment. For more information on Hitachi, Ltd., please visit Hitachi's
Web site at http://global.hitachi.com.
*At an exchange rate of 124 yen to the dollar.
About Hitachi's Presentation
The audio presentation of Mr. Shoyama will be available by phone beginning
at 1:00 p.m. until about 1:20 p.m., Eastern Daylight time. The toll
free number is 800.982.3654 or local 703.871.3021. The Confirmation
Number is 5107063.
A replay is available for approximately one week following the presentation
beginning at 4:00 p.m. Eastern Daylight time on July 10. The toll
free number is 888.266.2081 and local number at 703.925.2533. The
pass code is 5107063.
Statements in this document contain forward-looking
statements which reflect management's current views with respect to
certain future events and financial performance. Words such as anticipate,
believe, expect, estimate, intend,
plan, project and similar expressions which
indicate future events and trends identify forward-looking statements.
Actual results may differ materially from those projected or implied
in the forward-looking statements and from historical trends. Further,
certain forward-looking statements are based upon assumptions of future
events which may not prove to be accurate.
Factors that could cause actual results
to differ materially from those projected or implied in any forward-looking
statements include, but are not limited to, rapid technological change,
particularly in the Information Systems & Electronics segment;
uncertainty as to Hitachi's ability to continue to develop products
and to market products that incorporate new technology on a timely
and cost-effective basis and achieve market acceptance; fluctuations
in product demand and industry capacity, particularly in the Information
Systems & Electronics segment and the Consumer Products segment;
fluctuations in rates of exchange for the yen and other currencies
in which Hitachi makes significant sales or in which Hitachi's assets
and liabilities are denominated, particularly between the yen and
the U.S. dollar; uncertainty as to Hitachi's access to liquidity or
long-term financing, particularly in the context of restrictions or
availability of credit prevailing in Japan; uncertainty as to Hitachi's
ability to implement measures to reduce the potential negative impact
of fluctuations in product demand and/or exchange rates; general economic
conditions and the regulatory and trade environment of Hitachi's major
markets, particularly, the United States, Japan and elsewhere in Asia,
including, without limitation, continued stagnation or deterioration
of the Japanese or other East Asian economies, or direct or indirect
restriction by other nations of imports; uncertainty as to Hitachi's
access to, or protection for, certain intellectual property rights,
particularly those related to electronics and data processing technologies;
Hitachi's dependence on alliances with other corporations in designing
or developing certain products; and the market prices of equity securities
in Japan, declines in which may result in write-downs of equity securities