Message from Hitachi's Top Executives

Restoring Public Trust in Our Manufacturing

Fiscal 2006 was a challenging year for the Hitachi Group. Although every division saw increased revenues, we incurred a deficit overall. In Japan, we caused customers and others great inconvenience and concern with the turbine trouble at Hamaoka Nuclear Power Station Reactor No. 5 and Unit 2 of the Shika Nuclear Power Station, operated by the Chubu Electric Power Co., Inc. and the Hokuriku Electric Power Company, respectively. We take this problem very seriously because it raises questions about Hitachi's production and quality control. With the goal of restoring confidence, we have created the Supervisory Office for Monozukuri and the Supervisory Office for Power Systems to clarify all risks in monozukuri (manufacturing) and to review development and manufacturing in all business areas. (Hitachi's response to the turbine issue is detailed on page 6.)

• Hitachi's Response to Nuclear Reactor Turbine Problems

Pursuing Collaborative Creation and Profits

Hitachi has contributed to the advancement of Japan and the world through its unique businesses and technologies based on the Hitachi Founding Spirit of harmony, sincerity, and pioneering spirit. No matter how the times and social context may change, this remains our lasting ambition. Drawing on these roots, Hitachi announced a new corporate strategy in November 2006 based on the key phrase collaborative creation and profits, with the ultimate objective of achieving sustainable growth and contributing to the resolution of the various issues society faces.
This corporate strategy aims to create new value through two key initiatives. First, we will comprehensively reorganize the Hitachi Group's various businesses into social innovation business-consisting of our social infrastructure, industrial infrastructure, life infrastructure, and information infrastructure-and infrastructure technology/products business, including high-functional materials and components. Second, we will enhance the synergy among the members of the Hitachi Group and enrich our partnership with stakeholders. Always taking the perspective of the market and society, we aim to give new inspiration to the next era by consistently implementing this corporate strategy.

Steadily Implementing CSR Activities Group-wide

Based on the Hitachi Group Three-Year CSR Roadmap formulated in fiscal 2005, we have created a framework to promote CSR activities throughout the Group and the world and have placed emphasis on building employee awareness of CSR. In our CSR promotion activities, we focus on encouraging a personal understanding of CSR and face-to-face discussions. We aim to not simply communicate information about CSR, but to have CSR pervade every aspect of our daily activities. To achieve this, it is crucial that every employee be aware of the relationship between his or her work and society and be able to talk about CSR in his or her own words. In Japan, the CSR Promotion Department at each Group company has formed a CSR Caravan and developed direct dialogue about CSR with employees at every office. Overseas, local employees have initiated CSR Workshops to explore the relationship between their work and CSR. Our executives are also visiting business divisions and branch offices to discuss Hitachi's corporate strategy and have contact with younger employees.
Through these persistent efforts, we are starting to see new examples of "contributions to society through business activities," including proposals for new environmentally friendly transportation systems and ecosystem conservation. This report describes some of these activities, and we invite you to submit your frank comments and suggestions.
In fiscal 2007, we will evaluate the results of fiscal 2006 and steadily implement measures in line with our new corporate strategy. In our CSR activities as well, we will join hands with our employees to make concrete progress toward realizing our activity goals and implementing our proposals based on the Hitachi Group Three-Year CSR Roadmap. In addition, we will enhance our ongoing communication with stakeholders.

Looking Ahead to Our Centennial

Hitachi, Ltd. will celebrate its centennial in 2010.
With the Corporate Credo of "contributing to society through the development of superior, original technology and products," the Hitachi Group has developed into the company it is today thanks to your firm support. As we look ahead to our centennial, we aim to demonstrate a synergy that integrates the knowledge and technology of the Hitachi Group, to contri bute to the resolution of fundamental issues faced by the global community, and to create prosperous lifestyles and a better society based on Hitachi's founding spirit.

June 2007