Corporate Vision - Hitachi Construction Machinery“GROW TOGETHER 2016” FY2014-2016 3 Management Plan 2020 VISION “Close and Reliable Partner" anywhere on the earth with best solutions

FY16-3Q

Corporate Vision

© Hitachi Construction Machinery Co., Ltd. 2017. All rights reserved.

Public Relations Strategy Office

Contents

Corporate Vision

Management Plan

1. Management Plan

2. Operating Results & Forecast

3. Regional Trend & Business Strategy

4. Company Outline and Topics

5. CSR Activity

3 “GROW TOGETHER 2016” FY2014-2016

Management Plan

2020

VISION “Close and Reliable Partner" anywhere on the earth

with best solutions through Kenkijin Spirit

4

605.8

773.8 817.1

772.4 803.0 815.8 758.3

700.0

'09 '10 '11 '12 '13 '14 '15 '16

HCM accelerates following policies

to fill a big gap between GT2016 plan

and actual situation, without expecting

demand recovery

Business Environment & Our Challenges

Hyd. Excavators’ World Demand ＊Estimates by HCM

＊Foreign manufactures only for China demand

GT2016

Plan

Revenue securement & Cost reduction

Increase in Market Share

Parts & Service expansion

Cost reduction

Fixed cost reduction

Overhead cost reduction

Increase of personnel efficiency

SCM Reform & MONOZUKURI

（Billion Yen / ％）

GT2016

plan

Revenue & Operating Income ratio

0

50

100

150

200

250

'09 '10 '11 '12 '13 '14 '15 '16

（K units）

151

230 225

202 211

183 155 159

Increase in Business Efficiency

Restructuring of group companies

3.2

5.4

6.7 6.7

8.6

7.7

4.5 3.1

Demand may not be recovered

(3.1) (4.0)

Adjusted operating income ratio

( ) shows operating income (IFRS) ratio

Management Plan : Business Environment & Our Challenges

5 <Policy> Sectors to Enhance for growth

Enhancement of Mining Business

Increase in market share of Dump Trucks

(pursuing the productivity and efficiency after sales service as important key)

⇒Increasing position by introducing Smart Dump Truck

Value Chain Structure on the axis of Parts & Service

⇒Driving business practically using the cumulated working machines and data

Upgrade the productivity and safety, reaction to the

requirement of life cycle cost reduction

⇒Upgrade of Reliability and durability and development of solution business

Enhancement of Wheel Loaders’ Business

⇒Business Synergy between WL and Excavator. (customers, dealers, technology)

Improvement of the Operational Efficiency

⇒SCM reform (reduction of lead time), production rationalization

Management Plan : Policies for Enhancement

6

Further amalgamation in technologies of HCM & KCM, Increasing of manufacturing efficiency

New KCM Business Enhancement Wheel Loaders

ZW-5B series(co-development)

B$

Source: Off-Highway Research

Market scale and distribution ratio by all global construction products (FY2014)


7 Market Exploitation by Large WL & KCM Sales Network

Global & Various application

① R & D

・ First mid-sized hybrid WL

in Japan

② Performance

・ High Fuel Efficiency

Active Engine Control System

Wheel Loaders

Quarry (Europe) Snow Removal

(Japan)

Industrial & Waste

Handling (Australia)

Timber Handling

(New Zealand)

Coal Mine

(South Africa)

Stockbreeding (Japan)

Palm Oil Factory

(Indonesia)

Share

in Japan

over 30%


8

0%

5%

10%

15%

'11 '12 '13 '14 '15

HCM awarded JSME Medal for New

Technology, “High-Performance

Stability Control Technologies" on

March 2015. JSME: The Japan

Society of Mechanical Engineers

User test

Thorough Differentiation & Trial

Trolley spec (South Africa)

High Altitude / High Power spec (South America)

Dump Truck Share (payload 150t over)

AC-3 series introduced on Dec 2014

’15 ’16 ’17 ’18

share

Development

of technology

Implementation

program

Dump Trucks

AHS truck R&D plan

Open-Pit Machinery Market 2014

Dump Trucks

Excavators

Wheel Loaders

Bulldozers

Others

Source: The Freedonia Group, Inc.

EH4000AC-3 Trolley spec


9 Enhancement of support capability & Expand parts’ revenue

full working data

Global e-Service

3G

regular report

automation

3G Unit equipped

New Service development

by utilizing data

- Offering the automatically issued

report to the machinery users

(accumulation of customers’ proof ) example: - monitoring of the machine status

- monitoring of the job site condition

Expansion of Parts Business

Component

replacement forecast

demand forecast + sales promotion

Component

replacement result

Automatic

linkage

- Analysis of maintenance data

for the main components

- Proper targeting

- Parts stock control considering

replacement schedule

To customers: offering “high availability” & “low life cycle cost”

To dealers/HCM: expansion of parts service business

Dump Trucks Management Plan : Policies for Enhancement

10 Practical Usage of ConSite

Contracts Increase & Value Creation

Customer Service

support

prompt

■Sales promotion of undercarriage parts • Automated notice for Inspection & repair undercarriage

• Automated suggestion of proper schedule for the inspection &

maintenance

■Proposal for increase the working efficiency

Parts & Service

Emergency &

regular report

Emergency

report

• Proposal to increase the working & fuel efficiency based on

regular report

• Effective for new machine Inquiry

‘14

Emergency report Customers opinion

‘15 ‘16

Frequent/Deep Communication creates Value


ConSite contract units (global)

11

Expansion of line-up

Minigng GET enhancement

Expansion of select parts &

business opportunity

• Offering select parts to the price oriented

customers

• Global supply of local parts & strategic

pricing for bestselling parts

＊Ground Engagement Tool

＊

Speedy Evolvement

Qualitative and Quantitative Approach Parts & Service

HCM H/Q

Promoters by region

Regional H/Q

Sharing the know-how

provided by direct sales

and service

Dealers

Customers

Info

rmatio

n(IC

T)


12 Customer Solution Business

- Offering the solution for customers’ task

- Expansion of Solution Offering to various customers

utilizing the business solution at mining

- One Hitachi & Open Innovation

R&D (ICT)

Solu

tion

HC

M o

ffer

Increase of Safety

Visualization of the

Information around

machinery

Custo

mers

task Reduction of

life cycle cost Upgrade of

Productivity

- Optimization of

operation process

- Introducing ICT at job

site along customers’

task

Automated

visualization of

machinery condition

Basic perform

ance

Reliability Low Fuel

Consumption Durability

＋


13 Challenge with Reliable Solutions

Establishment of Client Solutions Business Development Div. April 1st, 2016

Autonomous Haulage System

3D Survey 3D data ＩＣＴ

machinery

３D data

as-built

management

Survey Design &

Construction Plan Construction Verification

Visualization of the Information

around machinery

Mining Business

Mining Fleet Management System

Construction Business

One Hitachi & Open Innovation

Increase of safety Reduction of life cycle cost Upgrade of productivity

R&D (ICT)

Application for

i-Construction


14

321 314 300 249

140 120

146 135

SCM Reform & Manufacturing Enhancement

SCM Reform Detailed inventory control & provision of dead stock

Further reduction of lead time

(order receipt – procurement – manufacturing) Inventory (Billion Yen)

Factory in Japan Lead Time

(FY2015 vs FY2013)

Mid Excavators 1/3 reduced

Mini Wheel Loaders 1/2 reduced

’13

Actual

’14

Actual

’15

Plan ’15

Actual

Manufacturing

Enhancement - Comparison of actual machines made in

Japan, China, India & Indonesia

Evaluation of global manufacturing

(Made by Hitachi)

- Optimization of production capacity and

human resource

- Restructuring of production

- Promotion of local production

- Internal skill certification &

Int’l skill contest

accelerate

Made by Hitachi Quality

Operational Reform

Days on hand


15

Finance

Research

Development

Production and

procurement

Customers’ needs &

Information

gathering and analysis

After Sales

Service

Recycling of

Parts

Sales of New

Machinery

Sales of Used

Machines

Demand

forecasting/

Segment

analysis

Rental

Sales of

Parts

Repeat

Resale / Scrap of machinery

Value Chain Enhancement

One Hitachi

Open Innovation

Wheel Loaders

Dump trucks

R & D (ICT)

Parts & Service

Operational Reform


16

Seeds for Growth

Encourage Growth and Seeds for the next

Go Together 2013 GROW TOGETHER2016

Innovative change

for the continuous profitable constitution

Closing remarks

Growth (strategic enhancement)

- Wheel Loaders

- Dump trucks

- Parts & Service

- R & D

- Business Structural Reform

- Cost Structural Reform

- Restructuring of Production

- SCM Reform

co

ncu

rren

t

3rd step

Management Plan : Closing Remarks

Contents

Corporate Vision

1. Management Plan




5. CSR Activity

Operating Results & Forecast


18

*1 "Adjusted operating income" is calculated by excluding "Other income" and "Other expenses" from "Operating Income" listed in

Consolidated Statements of Income.

*2 "EBIT" stands for Earnings Before Interests and Taxes, and is calculated by excluding "Interest income" and "Interest expenses" from

“Income before income taxes”

・Revenue decreased by 8% year on year due to the negative exchange impact of the appreciation of

the Japanese yen (approximately -10%).

・Adjusted operating income decreased by 28% year on year due to the negative exchange impact of

the appreciation of the Japanese yen.

I. Summary of consolidated results

change

Revenue -8%

Adjusted

operating income *1 11.0 15.2 -28%

Operating income -33%

Income before

108%

-

EBIT *2 58%

Rate (YEN/US$) -15.1Rate (YEN/EURO) -16.5

Rate (YEN/RMB) -3.3

(billions of yen)

FY2016

1Q-3Q

FY2015

1Q-3Q

507.0 549.1

8.2 12.3

income taxes 9.4 4.5

owners of the parent 2.5

Net income attributable to

-0.0

10.1 6.4

16.0 19.3

F

X

106.6 121.7

117.9 134.4


19

amount %

Japan 158.8 (31%) 167.6 (31%) -8.8 -5%

Asia 42.3 (8%) 49.4 (9%) -7.1 -14%

India 33.9 (7%) 28.7 (5%) 5.2 18%

Oceania 63.4 (13%) 69.4 (13%) -5.9 -9%

Europe 58.6 (12%) 62.4 (11%) -3.8 -6%

N.America 54.6 (11%) 69.5 (13%) -14.8 -21%

L.America 3.4 (1%) 5.2 (1%) -1.9 -36%

Russia-CIS 13.4 (3%) 13.4 (2%) 0.1 1%

M.East 14.6 (3%) 20.7 (4%) -6.1 -29%

Africa 24.4 (5%) 27.2 (5%) -2.8 -10%

China 39.5 (8%) 35.7 (7%) 3.8 11%

Total 507.0 549.1 -42.1 -8%

69% 69%

(billions of yen)

FY2016

1Q-3Q

FY2015

1Q-3Qchange

(ratio) (ratio)

Revenue by geographic region (consolidated)

・Revenue in India and in China have increased compared to the previous year despite the negative

exchange impact.

・On the other hand, the revenue significantly decreased by 21% or 14.8 billion yen in North America

year on year, and by 5% or 8.8 billion yen in Japan year on year, and by 14% or 7.1 billion yen in Asia

year on year.

Overseas revenue

ratio

Overseas revenue

ratio


20

68.0 66.2 66.5 66.5 71.4

17.6 17.3 21.156.0

82.5 97.260.3 55.6 44.1

8.8 8.0 10.9

27.7

150.4163.4

126.8 122.1 115.5

26.4 25.3 32.0

83.6

0.0

50.0

100.0

150.0

200.0

FY11 FY12 FY13 FY14 FY15 FY16

1Q

FY16

2Q

FY16

3Q

FY16

1Q-3Q

New Machine

Parts & Services

68.0 66.2 66.5 66.5 71.4

17.6 17.3 21.156.0

98.1 96.6 104.1 108.4 104.3

21.6 21.4 21.8

64.8

166.1 162.8170.7 174.9 175.7

39.1 38.7 42.9

120.8

0.0

50.0

100.0

150.0

200.0


1Q

FY16

2Q

FY16

3Q

FY16

1Q-3Q

Construction

Mining

Mining / Parts & Services revenue

(billions of yen) shows sales ratio against total company sales

[ % ] shows changed ratio from the same period of

previous year

％

18% 21%

16% 15% 15%

16% 19%

16% [ -5%]

[-21%]

[ 7%]

[ 0%]

[ 3%]

[ -1%]

[ -2%]

[-10%]

[ 3%]

20% 21% 21%

24%

21% 23%

22%

24%

[ 0%]

[ -4%]

[ 7%]

[ -10%]

[ -17%]

[ -1%]

[ -9%]

[-10%]

[ -9%]

[ -8%]

[ -16%]

[ 3%]

Mining

Parts & Services

[ -13%]

[ -20%] [ -9%]

[ 8%]

[ -10%]

[ 20%]

15%

[ -5%]

[-21%]

[ 20%]

25%


21 Comparison of consolidated profit & loss

Adjusted operating income has decreased by 4.2 billion yen year on year due to the negative impact of the

appreciation of the Japanese yen despite the reduction in overheads and material costs.

(billions of yen)

Ad

juste

d o

pe

ratin

g

inco

me

(*1)

Sa

les v

olu

me

, mo

del

mix

& o

the

rs

Pric

ing u

p

15.2 -9.7

0.1 -19.7

2.8

22.3 11.0 12.3 -4.2

-1.6 8.2

Fo

reig

n e

xch

an

ge lo

ss

Ma

teria

l co

st d

ow

n

Ove

rhea

d

co

st d

ow

n (*2

)

Ad

juste

d o

pe

ratin

g

inco

me

(*1)

Op

era

ting in

com

e

Op

era

ting in

com

e

Va

riance o

f ad

juste

d

op

era

ting in

com

e

Oth

er o

pe

ratin

g in

com

e

an

d e

xp

en

se

s

*2 Overhead cost : included +5.5billion by KCM consolidation



1.7

Stru

ctu

ral re

form


22 Consolidated statement of income

・Adjusted operating income decreased by 4.2 billion yen to 11.0 billion yen due to the negative exchange

impact of 19.7 billion yen compared to the previous year.

・Operating income decreased by 4.1 billion yen to 8.2 billion yen compared to the previous year.

・Net income attributable to owners of the parent increased by 2.6 billion yen to 2.5 billion yen compared to

the previous year by the reduction of financial costs despite the decrease in operating income.



amount

Revenue 507.0 549.1 -42.1

Cost of Sales (77.1%) 390.7 (75.7%) 415.7 -25.0

SGA expenses (20.8%) 105.3 (21.5%) 118.2 -13.0

Adjusted operating income *1 (2.2%) 11.0 (2.8%) 15.2 -4.2

Other Income/expenses -2.8 -3.0 0.1

Operating income (1.6%) 8.2 (2.2%) 12.3 -4.1

Financial income/expenses 1.2 -8.0 9.3

0.0 0.3 -0.3

Income before income taxes (1.9%) 9.4 (0.8%) 4.5 4.9

Income taxes 4.6 3.7 0.8

Net income (1.0%) 4.9 (0.1%) 0.8 4.0

(0.5%) 2.5 (-0.0%) -0.0 2.6

1.3 -13.9 15.2

(billions of yen)

%

FY2016

1Q-3Q

FY2015

1Q-3Q

change

-8%

-6%

-11%

-28%

-4%

-33%

-

Share of profits of investments

accounted for using the equity method -89%

108%

23%

499%

Net income attributable to

-

Comprehensive income -

owners of the parent


23

2014 2015

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q

Rate (YEN/US$) 80.2 78.6 81.2 92.4 98.8 99.0 100.5 102.8 102.2 103.9 114.5 119.1 121.4 122.2 121.5 115.5 108.1 102.4 109.3

Rate (YEN/EURO) 102.9 98.4 105.3 122.0 129.0 131.1 136.7 140.8 140.1 137.8 143.1 134.2 134.2 136.0 133.0 127.2 122.0 114.3 117.8

Rate (YEN/RMB) 12.7 12.4 13.0 14.9 16.1 16.2 16.5 16.9 16.4 16.9 16.8 19.1 19.6 19.3 18.9 17.6 16.5 15.4 16.0

20162013FX rate

2012

200.6 176.2 177.6 217.9 186.6 187.2 184.1 245.1 187.7 201.4 190.6 236.0 177.4 187.7 184.1 209.2 161.3 173.6 172.1

6.8%

4.4%

4.2%

10.6%

5.1%

8.3%

8.3%

11.8%

7.0%7.8% 7.8% 7.7%

3.1%

5.8%

-0.7%

3.9%

1.5%

2.1% 2.9%

7.1%7.8% 8.1%

7.9%

2.8%

5.9%

-2.0%

10.4%

2.3%

0.4% 2.2%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

450.0


2012 2013 2014 2015 2016

Sales / Revenue

Operating income Ratio (J-GAAP)

Adjusted operating income/loss Ratio

Operating income/loss Ratio (IFRS)

(billions of yen)

(billions of yen)

2014 2015


Sales / Revenue 200.6 176.2 177.6 217.9 186.6 187.2 184.1 245.1 187.7 201.4 190.6 236.0 177.4 187.7 184.1 209.2 161.3 173.6 172.1

Operating income(J-GAAP) 13.6 7.7 7.4 23.2 9.6 15.5 15.2 28.9 11.6 13.8 13.2 15.8

Adjusted operating income/loss 13.1 15.7 14.8 18.3 5.5 11.0 -1.2 8.1 2.4 3.6 5.0

Operating income/loss(IFRS) 13.2 15.8 15.5 18.6 4.9 11.1 -3.8 21.8 3.7 0.7 3.8

20162012 2013

Summary of quarterly consolidated revenue and operating income/loss (ratio)


24 Consolidated statement of financial position

・Total assets increased by 5.9 billion yen compared to the previous year by reduction of trade receivables

despite the asset increase by 25.9 billion yen resulting from consolidation of H-E parts.

・Days of net working capital on hand was reduced by 14 days compared to the previous fiscal year end.

(billions of yen)

(A) (B) (C) (A)-(B) (D) (E) (F) (D)-(E)

FY20163Q Mar '2016 FY20153Q change FY20163Q Mar '2016 FY20153Q change

Cash and cash equivalents 81.4 79.1 73.0 2.3 Trade and other payables 209.1 205.9 217.5 3.2

Trade receivables 145.4 182.9 167.6 -37.6 Bonds and borrowings 210.9 217.9 261.0 -7.0

Inventories 252.4 248.6 295.0 3.8 Total current liabillities 483.7 469.8 528.1 13.9

Total current assets 548.9 549.2 589.0 -0.3(Equity attributable to owners of

the parent ratio) (42.1%) (42.7%) (40.7%) (-0.6%)

Total non-current assets 383.7 377.4 408.3 6.3 Total equity 448.9 456.8 469.1 -7.9

Total assets 932.6 926.6 997.3 5.9 Total liabilities and equity 932.6 926.6 997.3 5.9

Trade receivables incl.

non-current 171.6 206.1 193.2 -34.4

Unit 77.3 62.2 87.4 15.2 (22.6%) (23.5%) (26.2%) (-0.9%)

Parts 91.3 96.0 104.8 -4.7 Interest-bearing debt 210.9 217.9 261.0 -7.0

Raw materials, WIP and etc 83.7 90.3 102.8 -6.6 Cash and Cash equivalents 81.4 79.1 73.0 2.3

Total inventories 252.4 248.6 295.0 3.8 Interest-bearing debt, net (13.9%) (15.0%) (18.8%) (-1.1%)

（Days） Debt 129.5 138.8 188.0 -9.3

Trade receivables 87 99 90 -12

Inventories 129 120 137 9 Net D/E Ratio 0.33 0.35 0.46 -0.02

Trade payables 65 54 59 11

Net working capital 149 163 166 -14

Inventories by products

On hand days(divided by net sales)


25 Consolidated cash flow

・Net cash provided by (used in) operating activities decreased by 29.3 billion yen to a positive 64.9 billion yen

compared to the previous year.

・Free cash flows was a positive 33.3 billion yen despite the acquisition of shares of H-E parts of 19.3 billion

yen.

Net income 4.9 0.8 4.0Depreciation and amortization 30.1 25.3 28.2 27.4 1.9 -2.2(Increase)decrease in trade/lease receivables 32.7 72.6 -39.9(Increase)decrease in inventories -3.5 22.1 -25.6Increase(decrease) in trade payables 49.6 20.4 89.2 -5.5 -39.6 25.9Others, net -14.8 -23.3 8.5

Net cash provided by (used in) operating activities 64.9 94.1 -29.3Cash flow margin for operating activities 12.8% 17.1% -4.4%

Net cash provided by (used in) investing activities -31.6 -9.1 -22.5Free cash flows 33.3 85.1 -51.8

Net cash provided by (used in) financing activities -31.0 -59.0 28.0

(billions of yen)

FY2016

1Q-3Q

FY2015

1Q-3Qchange


26 II. Consolidated earnings forecast

The ratio of emerging countries in FY2016 : 51%(+3% of previous year)

*Emerging countries : China, Asia/Oceania and others

HCM expects the FY2016 global demand for hydraulic excavators to increase by 3% year on year , to 159K

units, an increase of 8K units from the previous forecast mainly due to an increase in China, Western Europe

and Asia & Oceania.

Total

* incld. India

year on year change by region

'15

'16

Previous

Forecast

'16

Latest

Forecast

-15% -3% +3%

-36% +15% +31%

Russia-CIS & E.Europe -46% -8% -8%

Africa -34% -8% -8%

Middle East -2% -45% -45%

Latin America -38% -22% -22%

-25% -29% -29%

India +29% +50% +50%

Indonesia -38% +11% +29%

Others +0% +1% +4%

0% +19% +22%

-4% -12% -12%

-3% 3% 13%

-23% -17% -17%Japan

Total

Others

Asia & Oceania

China

North America

Western Europe


27

amount %

(700.0)

Revenue 700.0 758.3 -58.3 -8%

(28.0)

Adjusted operating income *1　 28.0 23.4 4.6 20%

Operating income (22.0) 22.0 34.1 -12.1 -35%

Income before (15.0)

income taxes 15.0 24.5 -9.5 -39%

Net income attributable to (5.0)

owners of the parent 5.0 8.8 -3.8 -43%

EBIT *2 (17.0) 16.5 26.9 -10.4

Rate (YEN/US$) (102.6) 104.8 120.1 -15.3

Rate (YEN/EURO) (113.7) 115.5 132.4 -16.9

Rate (YEN/RMB) (15.3) 15.6 18.6 -3.0

Cash dividend per share (yen) 40 -

note : ( ) shows previous forecast as of October 2016

ChangeFY2016

Forecast

FY2015

Actual

to be determined

F

X

Summary of consolidated earnings forecast

・The forecast for FY2016 remains unchanged from the previous forecast.

・HCM expects revenue for FY2016 to decrease by 8% year on year due to the negative impact (-10%) of

the appreciation of the Japanese yen.

・Adjusted operating income is to increase by 20% year on year considering the favorable impact of

restructuring reform. billions of yen

*1 "Adjusted operating income" is calculated by excluding "Other income" and "Other expenses

" from "Operating Income" listed in Consolidated Statements of Income.

*2 "EBIT" stands for Earnings Before Interests and Taxes, and is calculated by excluding

"Interest income" and "Interest expenses" from “Income before income taxes”

Forecast rate for Q4 FY2016

Previous Latest

Rate (YEN/US$) (100.0) 100.0

Rate (YEN/EURO) (110.0) 110.0

Rate (YEN/RMB) (15.0) 15.0


28

(billions of yen)

amount % amout %

Japan 213.6 (31%) 217.6 (31%) 232.8 (31%) -4.0 -2% -19.2 -8%

Asia 62.6 (9%) 61.5 (9%) 66.9 (9%) 1.1 2% -4.3 -6%

India 56.5 (8%) 58.1 (8%) 40.4 (5%) -1.6 -3% 16.1 40%

Oceania 84.0 (12%) 83.6 (12%) 93.5 (12%) 0.4 0% -9.5 -10%

Europe 81.8 (12%) 80.9 (12%) 89.0 (12%) 0.8 1% -7.2 -8%

N.America 76.2 (11%) 77.3 (11%) 93.0 (12%) -1.2 -2% -16.8 -18%

L.America 4.1 (1%) 4.1 (1%) 6.7 (1%) 0.0 1% -2.6 -39%

Russia-CIS 15.4 (2%) 13.4 (2%) 16.9 (2%) 2.0 15% -1.5 -9%

M.East 19.5 (3%) 21.5 (3%) 28.2 (4%) -1.9 -9% -8.7 -31%

Africa 33.0 (5%) 32.2 (5%) 37.0 (5%) 0.9 3% -4.0 -11%

China 53.3 (8%) 49.8 (7%) 53.8 (7%) 3.5 7% -0.5 -1%

Total 700.0 (100%) 700.0 (100%) 758.3 (100%) 0.0 0% -58.3 -8%

Overseas

revenue ratio69% 69% 69%

FY2016

Updated Forecast

FY2016

Previous Forecast

FY2015

Actual

VS. Previous

ForecastVS. FY2015

Sales forecast by geographic region (consolidated)

Compared with the previous forecast, HCM forecasts an increase in revenue in China, Russia-CIS and Asia.


29 Mining / Parts & Services revenue forecast

(billions of yen) shows sales ratio against total company sales

[ % ] shows changed ratio from the same period of

previous year

％

18% 21%

16% 15%

20% 21% 21% 25% 21% 23%

15% 18%

24%

16%

20%

29%

[ -1%]

[-18%]

[ 9%]

[ 6%]

[ -7%]

[ 6%]

[ -2% ]

[-10%]

[ 3%]

[ 28%]

[ 0%]

[ 13%]

[ 0%]

[ -7%]

[ 9%]

[ 0%]

[ -9%]

[ 6%]

[ -8%]

[-16%]

[ 3%]

[ 26%]

[ 10%]

[ 13%]

16%

25%

Mining

Parts & Services

[ - ]

[ - ]

[ - ]

[ - ]


30 Comparison of consolidated profit & loss forecast

HCM forecasts FY2016 adjusted operating income to increase by 4.6 billion yen compared to FY2015,

which remains unchanged from the previous forecast, while it is negatively impacted by the appreciation of

the Japanese yen.

note : ( ) shows previous forecast as of Oct. 2016 (billions of yen)

Ad

juste

d o

pe

ratin

g

inco

me

(*1)

Sa

les v

olu

me

, mo

del

mix

& o

the

rs

Pric

ing u

p

23.4 -1.5 1.7 -26.3

4.5

26.2 28.0

34.1 4.6 -16.9

0.2 Fo

reig

n e

xch

an

ge lo

ss

Ma

teria

l co

st d

ow

n

Ove

rhea

d c

ost d

ow

n (*2

) (in

clu

ded e

ffects

of s

tructu

ral re

form

)

Ad

juste

d o

pe

ratin

g

inco

me

(*1)

Op

era

ting in

com

e

Op

era

ting in

com

e

Va

riance o

f ad

juste

d

op

era

ting in

com

e

Oth

er o

pe

ratin

g in

com

e

an

d e

xp

en

se

s

22.0

Stru

ctu

ral re

form

(2.2) (1.0) (-29.7)

(5.1)

(26.0) (28.0)

(4.6) (-16.9)

(0.2) (22.0)

*2 Overhead cost : increase by consolidation (KCM +5.5billion, H-E Parts +1.6billion) is included.



<Appendix> Detail of mining revenue

(Billions of yen）

1Q-3Q 4Q Year 1Q-3Q 4Q Year 1Q-3Q 4Q Year

America Excavator 4.3 1.6 6.0 7.8 1.7 9.5 3.5 0.0 3.5

Dump Truck 3.9 2.8 6.6 3.9 5.1 9.1 0.0 2.4 2.4

Total 8.2 4.4 12.6 11.7 6.8 18.5 3.5 2.4 5.9

Europe, Africa Excavator 10.7 4.0 14.6 10.2 4.7 14.9 -0.5 0.7 0.2

and Middle East Dump Truck 11.0 3.6 14.6 14.5 3.3 17.8 3.5 -0.3 3.2

Total 21.7 7.5 29.2 24.7 8.0 32.6 3.0 0.4 3.4

Asia & Oceania Excavator 43.3 15.7 59.0 31.7 12.9 44.6 -11.6 -2.8 -14.4

Dump Truck 11.6 2.2 13.9 13.6 11.0 24.6 1.9 8.8 10.7

Total 54.9 17.9 72.9 45.3 23.9 69.1 -9.7 5.9 -3.7

China Excavator 0.1 0.1 0.2 0.8 0.5 1.2 0.7 0.3 1.0

Dump Truck 0.0 0.0 0.0 0.1 0.0 0.2 0.1 0.0 0.1

Total 0.1 0.2 0.3 0.9 0.5 1.4 0.8 0.3 1.1

Japan Excavator 0.0 0.5 0.5 1.1 0.0 1.1 1.1 -0.5 0.6

Dump Truck 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Total 0.0 0.5 0.5 1.1 0.0 1.1 1.1 -0.5 0.6

Total Excavator 58.4 22.0 80.3 51.5 19.7 71.2 -6.9 -2.3 -9.1

Dump Truck 26.6 8.6 35.2 32.1 19.4 51.6 5.6 10.8 16.4

Total 84.9 30.6 115.5 83.6 39.1 122.8 -1.3 8.6 7.2

FY15　Result FY16 Forecast Difference


31

Contents

1. Management Plan




5. CSR Activity

Corporate Vision

Regional Trend & Business Strategy

33 33


-150%

-100%

-50%

0%

50%

100%

150%

0

5

10

15

20

FY11/1Q

2Q

3Q

4Q

FY12/1Q

2Q

3Q

4Q

FY13/1Q

2Q

3Q

4Q

FY14/1Q

2Q

3Q

4Q

FY15/1Q

2Q

3Q

4Q

FY16/1Q

2Q

3Q

-150%

-100%

-50%

0%

50%

100%

150%

0

5

10

15

20

FY11/1Q

2Q

3Q

4Q

FY12/1Q

2Q

3Q

4Q

FY13/1Q

2Q

3Q

4Q

FY14/1Q

2Q

3Q

4Q

FY15/1Q

2Q

3Q

4Q

FY16/1Q

2Q

3Q-40%

-20%

0%

20%

40%

FY11/1Q

2Q

3Q

4Q

FY12/1Q

2Q

3Q

4Q

FY13/1Q

2Q

3Q

4Q

FY14/1Q

2Q

3Q

4Q

FY15/1Q

2Q

3Q

4Q

FY16/1Q

2Q

3Q

<Japan>

-150%

-100%

-50%

0%

50%

100%

150%

0

5

10

15

20

FY11/1Q

2Q

3Q

4Q

FY12/1Q

2Q

3Q

4Q

FY13/1Q

2Q

3Q

4Q

FY14/1Q

2Q

3Q

4Q

FY15/1Q

2Q

3Q

4Q

FY1６

/1Q

2Q

3Q

・住宅投資：済(10%)

・公共投資：済(-5%)

・設備投資：済(4%)

・油圧、ミニ、WL需要：済

Market Environment: Housing/Public Spending and Capex (y-o-y) (K units) Demand Trend for Mini Excavators

*Estimates by HCM

(K units) (K units) Demand Trend for Hydraulic Excavators Demand Trend for Wheel Loaders

*Estimates by HCM *Estimates by HCM

*Source: MLIT, Cabinet Office, and

Construction Surety Company

New housing starts (number of houses)

Capex （Orders for machinery, excluding foreign demands)

Public spending （Public work orders）

◇ Public investment turned downward, though capital investment and housing investment are both on a continuously increasing trend.

◇ During the third quarter (from October to December 2016), the demand for construction machinery decreased in reaction to last-

minute demands before the emissions regulations.

(The demand for hydraulic excavators, mini excavators, and wheel loaders decreased by 10%, 24% and 19% year-on-year,

respectively.)

34 34


-100%

-50%

0%

50%

100%

0

5

10

15

20

FY11/1Q

2Q

3Q

4Q

FY12/1Q

2Q

3Q

4Q

FY13/1Q

2Q

3Q

4Q

FY14/1Q

2Q

3Q

4Q

FY15/1Q

2Q

3Q

4Q

FY16/1Q

2Q

3Q

-1%

0%

1%

CY11/1Q

2Q

3Q

4Q

CY12/1Q

2Q

3Q

4Q

CY13/1Q

2Q

3Q

4Q

CY14/1Q

2Q

3Q

4Q

CY15/1Q

2Q

3Q

4Q

CY16/1Q

2Q

3Q

-100%

-50%

0%

50%

100%

0

5

10

15

20

FY11/1Q

2Q

3Q

4Q

FY12/1Q

2Q

3Q

4Q

FY13/1Q

2Q

3Q

4Q

FY14/1Q

2Q

3Q

4Q

FY15/1Q

2Q

3Q

4Q

FY16/1Q

2Q

3Q

<Europe>

-100%

-50%

0%

50%

100%

0

5

10

15

20

FY11/1Q

2Q

3Q

4Q

FY12/1Q

2Q

3Q

4Q

FY13/1Q

2Q

3Q

4Q

FY14/1Q

2Q

3Q

4Q

FY15/1Q

2Q

3Q

4Q

FY16/1Q

2Q

3Q

1.5%

0.5%

-0.5%

主要国GDP：済

◇ 16年1～3月ＧＤＰはユーロ圏全体で堅調に推移するも、2Q以降は下振れリスク有。 ◇ 建設機械需要は英国で減少も、全体では増加傾向。（対前年油圧7%増、ミニ12%増, ホイール10%増）

FY16 1Q

FY16 2Q

◇ ＧＤＰはユーロ圏全体で堅調に推移。 ◇ 建設機械需要は英国で減少も、全体では増加傾向継続。（対前年油圧7%増、ミニ4%増、ホイール8%増）

◇ GDPはユーロ圏全体で緩やかな回復が持続。 ◇ 油圧ショベル需要は仏での需要低迷の影響等により微減。(対前年5%減)

FY15 3Q

◇ GDPはユーロ圏全体で緩やかに回復。 ◇ 油圧ショベル需要は仏での需要低迷の影響等により減少。(対前年12%減)

FY15 2Q

◇ GDPはユーロ圏全体で緩やかな回復が持続。 ◇ 油圧ショベル需要は仏での大幅減等を受け、全体では微減。(対前年同期比6%減)

FY15 1Q

GDP Growth Rate in Major Countries (q-o-q) (K units) Demand Trend for Mini Excavators

*Source: IMF, etc *Estimates by HCM

Demand Trend for Hydraulic Excavators (K units) (K units) Demand Trend for Wheel Loaders

*Estimates by HCM *Estimates by HCM

France

UK

Germany

Italy

Others

UK

Germany

France

EUR zone

France

UK

Germany

Italy

Others

France

UK

Germany

Italy

Others

◇ GDP growth remained flat throughout the Euro zone. ◇ The demand for construction machinery throughout the Euro zone remains on a continuously increasing

trend, despite a decrease in the UK. (The demand for hydraulic excavators, mini excavators, and wheel loaders increased by 19%, 21% and 11% year-on-year, respectively.)

35 35


75%

100%

125%

150%

CY11/1Q

2Q

3Q

4Q

CY12/1Q

2Q

3Q

4Q

CY13/1Q

2Q

3Q

4Q

CY14/1Q

2Q

3Q

4Q

CY15/1Q

2Q

3Q

4Q

CY16/1Q

2Q

3Q

4Q

Residential Non-residential State & local

0

5

10

15

20

FY11/1Q

2Q

3Q

4Q

FY12/1Q

2Q

3Q

4Q

FY13/1Q

2Q

3Q

4Q

FY14/1Q

2Q

3Q

4Q

FY15/1Q

2Q

3Q

4Q

FY16/1Q

2Q

3Q

-100%

-50%

0%

50%

100%

-10%

-5%

0%

5%

10%

0

500

1000

1500

2000

CY11/1Q

2Q

3Q

4Q

CY12/1Q

2Q

3Q

4Q

CY13 1

Q

2Q

3Q

4Q

CY14/1Q

2Q

3Q

4Q

CY15/1Q

2Q

3Q

4Q

CY16/1Q

2Q

3Q

4Q

<North America>

＊Bureau of Economic Census, US Census Bureau

＊Bureau of Economic Census, US Census Bureau

0

5

10

15

20

FY11/1Q

2Q

3Q

4Q

FY12/1Q

2Q

3Q

4Q

FY13/1Q

2Q

3Q

4Q

FY14/1Q

2Q

3Q

4Q

FY15/1Q

2Q

3Q

4Q

FY16/1Q

2Q

3Q

-100%

-50%

0%

50%

100%

GDP Growth Rate, Housing Starts in US (K units) (K units) Demand Trend for Hydraulic Excavators

*Estimates by HCM

Construction Spending in US (y-o-y) Demand Trend for Mini Excavators (K units)

*Estimates by HCM

GDP （q-o-q/Right axis)

（Seasonally adjusted） Housing starts (Left axis)

◇ 15年度 ◇ 16年度

◇ Housing starts remained brisk; however, construction spending in the public sector is continuously on a

downward trend.

◇ Regarding construction machinery, the demand for hydraulic excavators continuously decreased by 16%

year-on-year, while the demand for mini excavators increased by 3% year-on-year.

36 36


0

10

20

30

40

50

60

70

FY11/1Q

2Q

3Q

4Q

FY12/1Q

2Q

3Q

4Q

FY13/1Q

2Q

3Q

4Q

FY14/1Q

2Q

3Q

4Q

FY15/1Q

2Q

3Q

4Q

FY16/1Q

2Q

3Q

-150%

-100%

-50%

0%

50%

100%

150%

<China>

0%

10%

20%

30%

40%

CY11/1Q

2Q

3Q

4Q

CY12/1Q

2Q

3Q

4Q

CY13/1Q

2Q

3Q

4Q

CY14/1Q

2Q

3Q

4Q

CY15/1Q

2Q

3Q

4Q

CY16/1Q

2Q

3Q

4Q

0

5

10

15

20

（％）

North China -30%/-21%/34%/226%

North West 51%/-19%/41%/89%

South West 1%/-8%/100%/82%

North East -21%/-23%/2%/2%

South Middle China 8%/-13%/59%/64%

East China 7%/-20%/52%/103%

Total China 6%/-15%/58%/83%

FY15 4Q FY16 1Q/2Q/3Q

(6.8%) (8.0%)

0%

20%

40%

60%

80%

100%

FY131H 2H

FY141H 2H

FY151Q 2Q 3Q 4Q

FY161Q 2Q 3Q

～6t

20t

10～15t

21～29t

30～39t

40t～

6～10t

GDP and Fixed Asset Investment Quarterly Demand for Hydraulic Excavators by Region (y-o-y)

*Foreign manufactures only *Estimates by HCM

GDP (Right axis)

(y-o-y)

Fixed Asset Investment (y-o-y) (Left axis)

Demand Trend for Hydraulic Excavators

Y-o-y comparison data is limited to foreign manufactures only *Estimates by HCM

＊National Bureau of Statistics of China

Demand Composition by Class for Mini Excavators and Hydraulic Excavators

＊Estimates by HCM Foreign manufactures

only

20t and below

20t over

Domestic

Foreign

(K units)

＊当社推定＊当社推定

◇ GDP growth from October to December 2016 remained flat at a rate of 6.8%, and fixed-asset investments continuously slowed at a rate of 8%.

◇ The demand recovered mainly due to increased public investment (increased 83% year-on-year).

37 37


0

5

10

15

4月 5月 6月 7月 8月 9月 10月11月12月 1月 2月 3月 4月 5月 6月 7月 8月 9月 10月11月12月 1月 2月 3月 4月 5月 6月 7月 8月 9月 10月11月12月-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

《Supplementary Information》 Chinese Market

0

1

2

3

4

5

6

7

8

9

4月 5月 6月 7月 8月 9月 10月 11月 12月 1月 2月 3月

FY2015 Actual

FY2014 Actual

y-o-y

-51%

FY2016 （Forecast）

-49% -39% +6% -15% +58% +83%

Demand Trend for Hydraulic Excavators (y-o-y)

*Estimates by HCM

(Foreign Manufactures only） (K units)

Monthly Demand Trend for Hydraulic Excavators （Foreign Manufactures Only) （Compared to the same month in the previous year）

*Estimates by HCM

(K units)

FY2014 FY2015 FY2016

Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec.

Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar.

※ Actual result (From April to December)

【Chinese New Year】

Feb 19, 2015

Feb 8, 2016

Jan 28, 2017

38 38

Regional Trend & Business Strategy 《Topic》

“Artisan work fine award” CMIIC2016 in China

The Construction Machinery Industry Internet Competition 2016 (CMIIC2016) was held on

November 21, 2016, hosted by Hui Cong Construction Machinery Network. Our hybrid

hydraulic excavator ZH200-5A received the annual prize of “Artisan work fine award” after a

six-month process of internet voting, customer reviews, expert examination and other factors.

In China, there is increasing market demand for energy-saving products, including the hybrid

hydraulic excavator, and ZH200-5A is a fuel-efficient machine with improved energy

efficiency.

Going forward, we will strive to expand the product line-up to meet market needs and further

expand sales.

ZH200-5A CMIIC2016 Award Ceremony

39 39


0

1

2

3

4

5FY11/1Q

2Q

3Q

4Q

FY12/1Q

2Q

3Q

4Q

FY13/1Q

2Q

3Q

4Q

FY14/1Q

2Q

3Q

4Q

FY15/1Q

2Q

3Q

4Q

FY16/1Q

2Q

3Q

-150%

-100%

-50%

0%

50%

100%

150%

0

2

4

6

8

10

FY11/1Q

2Q

3Q

4Q

FY12/1Q

2Q

3Q

4Q

FY13/1Q

2Q

3Q

4Q

FY14/1Q

2Q

3Q

4Q

FY15/1Q

2Q

3Q

4Q

FY16/1Q

2Q

3Q

-150%

-100%

-50%

0%

50%

100%

150%

<Asia, Oceania, and India>

-10

-5

0

5

10

15

20

CY11/1Q

2Q

3Q

4Q

CY12/1Q

2Q

3Q

4Q

CY13/1Q

2Q

3Q

4Q

CY14/1Q

2Q

3Q

4Q

CY15/1Q

2Q

3Q

4Q

CY16/1Q

2Q

3Q

(％)

主要国GDP：済

インドSH需要：済

・油圧、ミニ、WL需要：済

Demand Trend for Hydraulic Excavators in Asia & Oceania

(K units) *Estimates by HCM

GDP Growth Rate in Major Countries (y-o-y)

*Source: IMF, etc

Malaysia Indonesia India

Singapore

Thailand

Demand Trend for Hydraulic Excavators in India

(K units) *Estimates by HCM

※ Calculation criteria for GDP growth rate in India was revised in CY2013 2Q

Thailand

Malaysia

Singapore

Australia

Indonesia

NZ

Others

◇ Demand has continuously increased in the entire Asia Pacific region, driven by increases in Indonesia and

Malaysia, etc. (increased by 11% year-on-year).

◇ In India, demand has continuously increased by 56% year-on-year, mainly for infrastructure investments, such

as railways and roads.

40 40


0.01

0.014

0.018

0.022

0.026

0.03

0.034

0.038

0

1

2

3

4

5

FY11/1Q

2Q

3Q

4Q

FY12/1Q

2Q

3Q

4Q

FY13/1Q

2Q

3Q

4Q

FY14/1Q

2Q

3Q

4Q

FY15/1Q

2Q

3Q

4Q

FY16/1Q

2Q

3Q

-100%

-50%

0%

50%

100%

0

5

10

15

20

30

55

80

105

130

<Russia and the Middle East>

(US$) (US$)

-100%

-50%

0%

50%

100%

0

1

2

3

4

5

FY11/1Q

2Q

3Q

4Q

FY12/1Q

2Q

3Q

4Q

FY13/1Q

2Q

3Q

4Q

FY14/1Q

2Q

3Q

4Q

FY15/1Q

2Q

3Q

4Q

FY16/1Q

2Q

3Q

FY11 FY12 FY13 FY14 FY15 FY16 FY17


原油・天然ガス実績値予測値：済

ルーブル為替推移：済

ロシア、中東SH需要：済

原油価格：下げ止まり

通貨：低調に推移

*Estimates by HCM *Ex-Works base

*Incl. Local manufacturing

Price Trend of Crude Oil and Natural Gas Demand Trend for Hydraulic Excavators in Russia (K units)

*Created by HCM , the source from IMF HP

Natural Gas (Right axis)

Crude Oil （Left axis）

<IMF forecast as of December>

Foreign Exchange Rate of the Ruble

*Estimates by HCM *Ex-Works base

Demand Trend for Hydraulic Excavators in the Middle East (K units)

*Data concerning Turkey is on a retail-sales basis, unlike the others.

UAE

Saudi Arabia

Turkey

Others Against

US$

Against

EUR€

*According to HCM’s research

【Russia】 Despite a sign of recovering crude oil prices, demand has been continuously sluggish.

【Middle East】 Demand for hydraulic excavators continued to decrease, mainly around the Gulf countries, by 51%

year-on-year.

41 41


<Mining Machinery>

0

500

1000

1500

2000

2500

3000

12上 12下 13上 13下 14上 14下 15上 15下 16上

0

100

200

300

400

500

12上 12下 13上 13下 14上 14下 15上 15下 16上

Demand proportion by region: Ultra-large Excavator (over 100t) *Estimates by HCM

(Units)

Demand proportion by region: Truck (over 55t)

*Estimates by HCM

(Units)

Africa and Middle East

Asia

China

Oceania

Europe,Russia,CIS

North America

Central and South America

Africa and Middle East

Asia

China

Oceania

Europe,Russia,CIS

North America

Central and South America

12/1H 12/2H 13/1H 13/2H 14/1H 14/2H 15/1H 15/2H 16/1H

12/1H 12/2H 13/1H 13/2H 14/1H 14/2H 15/1H 15/2H 16/1H

◇ Excavators: Demand increased in Europe, Russia and CIS, and some countries in Asia, while demand

decreased in Central and South America, etc.

◇ Trucks: Demand increased in the Russia CIS region and Africa, etc., while demand decreased

in the entire Americas and Oceania etc.

42 42


《Supplementary Information》 BB Ratio

BB Ratio (Ultra-large Hydraulic Excavator)

BB Ratio (Dump Truck)

※Book-to-Bill(BB)Ratio = Bookings (Orders received) / Billings (Value of shipment)

Non-consolidated basis (average of 6 months)

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

43 43

Regional Trend & Business Strategy 《Topic》

First order received from a copper mine

in the Republic of Chile

• 2 units of EX5600-6 will be delivered to a copper

mine in the Republic of Chile.

• This is our first mining machinery order received

from the Republic of Chile.

Full acquisition of H-E Parts in the

United States

We have acquired all the equity of H-E Parts (H-E Parts International LLC and H-E Parts

Australian Holdings LLC). H-E Parts provides service and solution business regarding mining,

quarry and construction machineries and equipment mainly in Australia and the U.S. It is also

engaged in the development, processing and sales of parts associated with these machineries.

Going forward, we will provide cost efficient and highly productive service that meets the local

needs of clients. Furthermore, we strive to strengthen our value chain and further improve our

earnings stability.

(Reference: the actual sales revenue of FY2015 was ¥23.5 billion.)

Reference photo: EX5600-6

http://www.google.co.jp/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwiJ8vbqv_DQAhUC4iYKHStZAYYQjRwIBw&url=http://h-epartsmining.com/sales-and-support/index?pid=41A230085P2&psig=AFQjCNFj76ygUaZuKKug8MDkVxHfSbvRHg&ust=1481695449262749

Contents

1. Management Plan




5. CSR Activity

Corporate Vision

Company Outline and Topics

45 Company Outline and Topics

・Company Name Hitachi Construction Machinery Co., Ltd.

Stock Exchange Listings：Tokyo (#6305)

・Major Operations Manufacturing , sales and service of construction machinery,

transportation machinery, and other machines and devices.

・Established 1 October, 1970

・Capital 81,576 million Yen (Hitachi, Ltd：51%)

・President Yuichi Tsujimoto

・Subsidiaries

Affiliates

Japan: 11 companies, Overseas: 57 companies

Japan: 3 companies, Overseas: 8 companies

・Number of Employees Consolidated :21,447 Non-consolidated :4,038

Company Outline

(March 31, 2016)


Construction

New Machine

and others

71%

Construction

Parts &

Services

14%

Mining

New

Machine

6%

Mining

Parts &

Services

9%

Double-Front Work

Machine

Hydraulic

Crawler Crane

Wheel-drive Type

Hydraulic Excavator

Mini excavator

Road

Construction

Machinery

Our Products and Revenue

Wheel Loader

Hydraulic Excavator

(Hybrid hydraulic excavator,

ICT hydraulic excavator)

Mining

Construction

Solution Business

Dump Truck Ultra-large Hydraulic Excavator

Consite Mine management system

FY2015 Revenue

758.3

(Billions of yen )


81.6

0

20

40

60

80

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

'70 '72 '74 '76 '78 '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14

Overseasrevenue

Domesticrevenue

Overseasrevenue ratio

（ Billions of yen ）（％）

“Made in Japan”

main

Localizing Manufacturing

‘85 Plaza Accord

‘91 the bursting of

the Japan’s bubble

economy

‘97 Asian

Financial Crisis

‘08 the collapse of Lehman Brothers

‘15

Globalizing and Localizing Manufacturing

Europe &

America China Sales network

covering the Europe,

3.8 22.2 21.4 Capital（ Billions of yen ）

Main business: Jpan Expansion of

overseas business

Mini excavator

Wheel Loader Dump truck

1,000

900

800

700

600

500

400

300

200

100

0


The Americas

Manufacturing:3

Sales:4

EMEA※

Manufacturing:1

Sales:5

Southern Africa

Manufacturing:1

Sales:4

India

Manufacturing:1

Sales:1

China

Manufacturing:2

Sales:4

Asia

Manufacturing:1

Sales:5

Oceania

Sales:1

Japan

Manufacturing:5

Sales:1

Russia＆ CIS.

Manufacturing:1

Sales:1

Globalization of Manufacturing & Sales Bases (Major group companies)

※Europe Middle east and Africa

https://www.hitachicm.com/global/wp-content/uploads/2015/04/hcme_office-1.jpg


Clarion Co., Ltd.

Sky Angle

Hitachi Ltd.

Grid box

Hitachi Ltd.

AC drive system（Control cabinet）

Hitachi Ltd.

AC Wheel motor

Hitachi Ltd.

Alternator

Hitachi Power Solutions Co., Ltd..

Pantograph(Trolley Dump Trucks)

Dump Truck The synergy of Hitachi Group

・The synergy of Hitachi Group ・High-Performance Stability Control Technologies

50 50


Dump Truck Product characteristic

AWARD - JSME(The Japan Society of Mechanical Engineer)

Medal for New Technology 2014,

We received JSME Medal for New Technology 2014 from The Japan Society of

Mechanical Engineers for “High-Performance Stability Control Technologies” installed in

the new AC-3 dump truck series.

The technologies were “Pitching restraint control” and “Sideslip prevention control”. The

former reduces pitching of the truck, resulting in better operating comfort and fewer load

spillage. The latter prevents sideslip of the truck, resulting in enabling stabilized operation

under various road conditions including slippery rutted surfaces. This award was highly

evaluated these two technologies.

Pitching restrain control

Sideslip prevention control EH5000AC-3 dump equipped with

”High-Performance Stability Control Technologies"

Without control

Without

control

With

control

With control

51 51


Parts & services Used Rented New Equipment sales Client operation enhancement

Source: Off-Highway, Freedonia, Company Reports, IRN, Expert Interview, Team Analysis, Parkerbay, Capital IQ

@ US$1=JPY120 in 2014

Growth strategy

The potential market size will double through initiatives to develop the entire value

chain, rather than widening the product lineup.

*1: Mining shovels, mining RDTs, mini shovels, wheel loaders, medium-sized shovels

Max. JPY24tn

Other product group

Increase revenue and

profitability through value

chain expansion with core

products (e.g. shovels)

Broadening of “Business Portfolio”

Competition in

increasing product lineup

Market Size of Core Product Group in Construction & Mining Machinery

Core product group*1

Bro

ad

en

ing

of

“G

oo

ds

”

Mining SHs

Mining Dump

Trucks

SHs

WLs

Mini SHs

Enter business of

client operation

enhancement using

IoT

ADTs

Backhoe

Loaders

Motor

Graders

Skid Steer

Loaders Max. JPY10tn

Max. JPY 9tn

52 © Hitachi Construction Machinery Co., Ltd. 2016. All rights reserved.


Operation Services

Software & IoT

Parts

Hardware

Solution

Goods

Va

lue

Ch

ain

Geological modeling companies

Mine planning companies

Field monitoring companies

Maintenance planning companies

Asset management companies

Fleet Management

Growth Strategy

A provider of services solutions

Surface mining field operations

Accumulation & crushing

Reinforce services business by

acquiring service providers in a fragmented market, saturated with many small-scale suppliers

Reinforce IoT capability with

Wenco (the #1 fleet management company) as a base

Improve productivity (including planning) based on data integration

Accumulate operating know-how

and data by forming alliances with operators (including mining companies)

Provide solutions for productivity enhancements using IoT

HCM Strategic Field

Enhanced

Hardware Supplier

Step 3

Step 2

Step 1

Mining Companies & Operators

Business strengthened by the acquisition of

Business development through enhancement of value chain

Extraction & transportation

Service

Growth strategy



Overview of H-E Parts International

Business

Description

Provides service solutions for mining /

construction machines and develops,

manufactures and sales aftermarket parts

CEO Steve McBrayer

Headquarters Atlanta (USA)

Countries Australia, USA, Chile, Canada, et al.

Foundation 2006 (commencement of business)

Employees approx. 750

≪Topics≫ Overview of H-E Parts International

Financial Overview(1)

(1) Consolidated base, exchange rate of USD/JPY:115.0, AUD/JPY:85.0

Transaction Overview

Acquisition Ownership 100%

Enterprise Value USD 240mn

Key Dates Board Resolution: Dec 21, 2016

Agreement: Dec 21, 2016

Closing: Dec 21, 2016

Seller H-E Parts Investors LLC (SPC owned

by Frontenac and Champ Ventures)

Overview of Seller

Frontenac US-based PE fund established in 1971

Focus on food, services and industrials

Invests in mid-sized companies

Champ

Ventures

Australia-based PE fund established in 1987

Invests in a broad range of companies from

seed stage to later stage

Invests in mid-sized companies

(JPYbn）

18.6

26.1 23.5

28.8

11.1%

9.3% 10.9% 11.1%

0.0%

5.0%

10.0%

15.0%

20.0%

(2.0)

3.0

8.0

13.0

18.0

23.0

28.0

33.0

2013A 2014A 2015A 2016E

Revenue EBITDA Margin

http://www.google.co.jp/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwiJ8vbqv_DQAhUC4iYKHStZAYYQjRwIBw&url=http://h-epartsmining.com/sales-and-support/index?pid=41A230085P2&psig=AFQjCNFj76ygUaZuKKug8MDkVxHfSbvRHg&ust=1481695449262749



≪Topics≫ Transaction Rationale

0

5,000

10,000

15,000

20,000

0

2,500

5,000

7,500

10,000

'96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14E '15E

Coal Iron Ore Copper

Global Production of Coal, Iron Ore & Copper(1)

Strategic Rationale of the Acquisition

Grow solutions business and establish a

leading position in the aftermarket services

segment by leveraging H-E Parts’ platform

Strengthen distribution network by utilizing

sales and services network of H-E Parts

Enhancement of our value chain through

gaining access to the aftermarket services,

remanufactured parts, and non-genuine parts

markets

Effective use of remanufacturing / rebuilding

facilities

Industry Trends

Demand for mining equipment is recovering

• Growth market in the medium to long-term

Increase in customers’ needs driven by

improvements in safety and productivity as well

as decreases in life-cycle cost

• Market participants are differentiated by

providing value added solutions to

customers’ challenges

Innovation led by ICT-IoT at production &

operating site

(1) HCM research

(M Metric t: Coal, Iron Ore) (K Metric t: Copper)



Comprehensive aftermarket solutions for mobile

mining equipment including haul trucks, shovels

and dozers

Maintenance and repair services and alternative

parts for major makes and models

Largest global footprint and broadest product

coverage of any non-OEM

Customize parts to meet clients’ demands

Products and Services Offered:

General Parts

Drive Systems

Cooling Systems

≪Topics≫ H-E Parts Operating Segments

Mining Solutions Crushing Solutions

Engine Solutions Construction

Aftermarket services & parts for crushing

equipment as well as on-site and off-site

services & repairs

Services to design, evaluate and optimize to

reduce costs and increase productivity

Innovative computer modelling and scanning

for application-specific crushing machines


Crusher Parts

Wear Plates

Comprehensive, high-horsepower diesel

engine remanufacturing solutions

Parts and rebuilds for diesel engines ranging

from 1,500 to 4,000 horsepower

Provide rebuilding services using customized

parts and components, which boast the

industry's lowest failure rates and superior

engine performance


Camshaft Machining

Dyno Testing

Crankshafts Machining

Comprehensive undercarriage parts

and ground engagement tools (G.E.T.)

for mobile construction equipment

ln-house designing and engineering to

lower the total cost of undercarriage

and G.E.T.


Undercarriage for construction

G.E.T. (Ground Engaging Tools)

for construction

6% of Total Revenue 7% of Total Revenue

Clutch & Brakes

Hydraulics

Cylinder Block Machining

Magnaflux

59% of Total Revenue 28% of Total Revenue

Note: Revenue share for FY2015



≪Topics≫ Revenue Breakdown

Mining Solution 59%

Crushing Solution 28%

Construction Machinery

7%

Engine Solution 6%

Australia 44%

USA 27%

Chile 13%

Canada 6%

Others 10%

Gold 18%

Copper 17%

Iron Ore 13% Thermal Coal

10%

Coking Coal 10%

Construction 8%

Aggregate 3%

Oil Sand 3%

Other 18%

After Parts Solution

48%

Remanufacturing / Rebuilding

37%

Fabrication / Service

14%

Other 1%

Geography

Commodity Solution Sales by Type

Segment

Note: Revenue share for FY2015



≪Topics≫ Synergies with H-E Parts

Current

Business

Access to On-Site Operating Machines

Collaboration with Wenco System

Distribution and Services Network

• Access to H-E Parts’ existing clients presents significant business

opportunities

• Obtaining access to long-term operating machines

• Selling opportunity of H-E Parts’ original compatible parts

Expansion of Mining Parts Offering

Access to Services Market

• Rebuilding and remanufacturing engines as

well as processing services

• Differentiation through upgraded parts

• Rebuilding / remanufacturing engines

• Utilization of distribution and services

network of H-E Parts

https://www.google.co.jp/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwiv_ojHxvHQAhVIRCYKHViSB4cQjRwIBw&url=https://thenounproject.com/term/dump-truck/671867/&bvm=bv.141320020,d.cGw&psig=AFQjCNFqdYQItmllHziotc3Lz6CHu_l2jw&ust=1481731586004698

58 58


Overview of the Transaction

Acquisition price

A$ 3.25 per ordinary share (a 37.7% premium to the 1 month VWAP of Bradken shares up to 30 September) Maximum total consideration of A$ 689 million (JPY 51.6 billion JPY75=A$)

Acquisition structure

A cash takeover offer for 100% of the ordinary shares

Source of funds Existing cash reserves and external funding

Anticipated schedule*1

1 Nov. 2016: Commence takeover bid

24 Feb. 2017: Complete takeover bid

Overview of Bradken

Name Bradken Limited

Business Casting, manufacturing and distribution service of casting products

Representative Paul Zuckerman (CEO)

Headquarters Newcastle (NSW), Australia

Established 1922

No. of employees Almost 3,500

Stock listing Australian Stock Exchange (ASX: BKN)

*1 The schedule is subject to extension

Key Financials Share Performance

1,008

1,154

1,4561,317

1,138

968

82116.6% 17.0%

15.1%16.2%

15.2%14.1%

13.2%

8.0%

12.0%

16.0%

20.0%

24.0%

28.0%

0

200

400

600

800

1,000

1,200

1,400

1,600

FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

Revenue EBITDA margin

(A$ million) (A$)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

0.0

2.0

4.0

6.0

8.0

10.0

12.0

'10 '11 '12 '13 '14 '15 '16

Share price S&P/ASX 200 Index

≪Topics≫Acquisition of Bradken


High-precision wear parts for

mobile mining equipment

Revenue：A$228.4mm

% total revenue：27.8%

Global leader in crawler systems,

GET

Crawler systems

GET（Ground Engaging Tools）

Industrial product for infrastructure

Mining wear parts business Specialty castings business

Wear surface solutions for fixed

plant mining equipment

Revenue：A$349.5mm


Global leader in metallic mill

liners

Metallic mill liners

Wear surface solutions

Live, remote wear monitoring technology

High-spec, specialty castings for

the industrial, energy and

defence industries

Revenue：A$227.2mm


Customized specialty castings

Industrial

Energy

Defence

* Revenue and % Total Revenue based on 2016/6A.

In addition to these three businesses, Bradken’s total revenue includes Cast Metal Services (A$13.9 mm, 1.7%), Others (A$1.6mm, 0.2%).

≪Topics≫Core Products and Solutions of Bradken

60 60


Australia/NZ

North America

South America

Africa

Europe

SE Asia

China

Coal

Iron Ore

Copper

Gold

Other Minerals

Oil & Gas

ConsumableProducts

CapitalProducts

Resources

Non-Resources

REVENUE BY INDUSTRY SECTOR REVENUE BY PRODUCT

Strong presence in the resources sector

Consumable products account for c.

90% of total revenue

REVENUE BY REGION REVENUE BY COMMODITY

Strong presence in Australia and North America

Well-balanced exposure to commodities

Note: Revenue for FYE 2016/6.

15.3%

84.7%

10.6%

89.4%

45.0% 44.1%

2.9%

2.7% 2.6%

0.2% 2.5%

23.7%

19.2%

18.8%

18.1%

11.7%

8.5%

≪Topics≫Overview of Bradken～Revenue Breakdown～

61 61 Company Outline and Topics

Combined Market of Parts & Services

Genuine Products Non-branded Products

Landscape of Construction & Mining Machinery Parts & Services Market

≪Topics≫ Anticipated Synergies① Enhancement of Value Chain through Reinforcement of the Mining Wear Parts Business

The acquisition of Bradken will not only raise the capture rate of mining wear parts used in our

own construction machinery, but also raise those in our competitors’ machinery.

HCM genuine products

for HCM machinery

【Hardware manufacturer

(HCM)】

【Hardware manufacturer

(other companies)】

Market for genuine products

manufactured by HCM

competitors

(HCM unable to capture)

Non-branded products

for HCM machinery

【Parts manufacturer (Bradken)】

Market for non-branded

products

(Bradken already in market)

【Parts manufacturer (Bradken)】

Oth

er

OE

Ms

HC

M

Capture Rate: High

Market for non-

branded products

【Parts manufacturer


Competitor’s share of

non-branded products

for HCM machinery

【Parts manufacturer


Capture Rate: Low

・・

・

・・

・

Penetrate parts & services business of

competitors

Increase capture rate

Pu

rsu

e s

yne

rgy

Pu

rsu

e s

yne

rgy


Expansion of global customer coverage through the combination of the HCM and

Bradken brands

* HCM: Based on the operating unit shares of operating mining equipment. Bradken: Based on units implied by market share by revenue

≪Topics≫ Anticipated Synergies②Expand Customer Coverage

【Customer coverage by region※】

N. America S. America Europe Africa Asia Oceania

HCM New Equipment

Bradken

GET -

Mill Liners

Solid customer platform through new

equipment sales based on

production technology cultivated

over years and continuous

innovation

Broad customer platform based on

wide value chain comprised of

mining facility, mining consumable

and maintenance service

businesses

etc. etc.

Expanding the

customer coverage

through the proven

brand value


Upgrade productivity Reduction of life cycle cost Improve safety

Bradken’s Strength

Competitive mining consumable products

Ability to respond to sophisticated

customers’ needs

Superior casting technology

Experienced management team

Brand value based on established

relationship with customers

HCM’s Strength

New Equipment development capability

Production technology cultivated over

years

Continuous innovation (ICT・IoT, hybrid)

Large operating fleet based on high

reliability and durability

Brand value based on established

relationship with customers

Consolidated

revenue

JPY 758bn*1

Consolidated

revenue

A$821mn *1

Provide solutions to

customers

Synergies Synergies

≪Topics≫ Anticipated Synergies③Accelerate Innovation

Combining Superior Technology, Product Capability and Operational Know-How

*1 HCM: 2016/3A; Bradken: 2016/6A


≪Topics≫Solutions that resolve customer issues

We will build networks of the various personnel involved with construction equipment and

work sites using ICT to provide accurate and efficient processes.

Customer issue (1)

safety

Visualizing peripheral

Information for machinery

Expanding the on-board

“Aerial Angle” product that

displays peripheral information

for machinery on a monitor

inside the cab

Customer issue (2)

productivity

[mining]

Optimization of the operation

process

Mining operations

Management system through

use of the Fleet Management

System (FMS) for managing

mining operations from the

successful Wenco International

Mining Systems Ltd. Currently

conducting verification testing

on autonomous (unmanned)

dump truck driving systems

Customer issue (3)

productivity

[civil engineering works]

Use of information and

communication technologies

(ICT) adapted to customer

needs on work sites

Compliance with the

“i-Construction” platform

promoted by the Ministry of Land, Infrastructure, transport

and Tourism since FY2016.

Expanding solutions from

a customer perspective

Customer issue (4)

Life-cycle cost

reductions

Visualization of construction

equipment operating condition

and predictors of malfunction

Staying on top of malfunction

predictors and reducing machine

down-time through thorough

standardization of servicing

via the “ConSite” remote

monitoring system

ICT hydraulic excavator ZX200X-5B

The “ZX200X-5B” comes equipped with

HCM’s proprietary machine control functions

and machine guidance functions that

navigate the operator, and complies with the

“i-Construction” initiative promoted by the

Ministry of Land, Infrastructure, Transport

and Tourism. 「ZX200X-5B」

Contents

1. Management Plan




5. CSR Activity

Corporate Vision

CSR Activity

66 CSR Activity

FY2020～

FY2017～2019

CSV*:Creating a framework to

integrate CSR with management

strategy

Identification of materiality &

disclosure of activities

(CSV 3 themes and basic 5 themes)

Setting up Mid/Long term goals

in view of COP21・SDGs

Integration CSR with

management

Disclosure of Goals and

Reporting on progress

Sustainable

society that the

HCM group

aspires for

will come true

The HCM Group CSR Goal and Measures

●ＣＳＲ Goal

On the basis of our basic corporate credo and

corporate vision, we will strive to realize

sustainable society by properly understanding

global social expectations into our expectations

and integrating those expectations into our

management, (1) contributing to resolving social

issues, (2) governance, and

(3) communication.

GROW TOGETHER

FY2014 ～2016

Go Together

２０１３

CSV* ： Creating Shared Value

Combining solution for social

problems with corporate

competitiveness and growth.

Promotion of diversity

(Domestic companies)

Prevailing CSR

in foreign companies

Publication of

Integration Report

(2011）

Next mid-term plan

67

67 CSR Activity

Ⅱ. The HCM Group CSR Activity

ＣＳＲ/Diversity Committee Committee chair: Executive Officer in

charge of CSR

Committee members： Heads of business

divisions (officer/director class)

Management meeting Director,

Vice President and Executive Officer以上

CSR Promotion Meeting

・Decisions on initiative content

・Identification of materiality

・Consideration of evaluation methods

Tasks of CSR/Diversity

Committees

１．Deliberations on important

matters including promotional

policies and measures

２．Approval of annual plans

３．Approval of annual

operations results and

evaluations

Reporting

Divisions/Group companies （Staff in charge of CSR promotion)

Deliberation/reporting

Hitachi Construction Machinery Group CSR Promotion Systems

Secretariat

（CSR Promotion

Department

68 CSR Activity

Three themes having high

social expectations and a high

level of correlation with our

business operations

Solutions to global

environmental issues

Enhance initiatives

to increase social

infrastructure

workforce

Contribution to

community

development 3 CSV

themes

5 Base

themes

Five themes that provide

the foundation for three

CSV themes

“Toward the richness of

Earth and prosperous

communities in the

future…”

Occupational safety

Development of global

and local human

resources

Creation of better

business transactions

and value chains

Governance

Pursuit of safe, effective, and sophisticated products and working

environments

Structure of CSR key initiative themes


69 CSR Activity


Process for

Specifying

Key Initiative

Themes

Solutions to

global

environmental

issues

Contribution to

community

development

Development of

global and local

human resources

Pursuit of safe, effective, and

sophisticated products and

working environments

Creation of

better business

transactions

and value

chains

Governance

Occupational

safety

Enhance initiatives

to increase social

infrastructure

workforce

Socia

l expecta

tions

Business correlation

key initiative

3 themes = CSV

key initiative 3 themes in high position at Social

expectations and Business correlation

The other 5 themes are essential contents for CSV 3 key

initiative themes’ realization.

Basic

5 themes

70 CSR Activity

ＣＳＶ Theme Ⅰ Solutions to global environmental issues

71 CSR Activity

・Managing standby electricity and

air –condition (Emilia system)

Power monitoring(visualization)

makes carbon dioxide emissions

reduction

Products make

carbon dioxide

emissions reduction

・Product development

and sales on

Hybrid Wheel Loader

Products adapt disaster

recovery and mitigation

Product development

and sales on

Twin-aremed excavater

standby electricity

Machining

system

Energy saving meeting


72 CSR Activity

Long-termTurget（2030Goal）

GHG Emission*

CO2 saving ration by production ▲33％

＊GHG Emission(Greenhouse Gas Emission):At our

company, CO2 is mainly applied


73 CSR Activity

CSV Theme Ⅱ Enhance initiatives to increase social

infrastructure workforce

Social issues of mining, construction, or civil engineering works ⇒ labor shortages, site efficiency, and work quality

Improved safety

Visualizing peripheral information for machinery

Improved productivity 【mining 】

Optimization of the operation process

Improved productivity 【civil engineering works 】

Use of information and communication technologies (ICT) adapted to customer

needs on work sites

Life-cycle cost reductions Visualization of construction equipment

operating condition and predictors of malfunction

Resolution of customer issues：“improved safety”, “improved productivity”, and “reduced life-cycle”

“ZX200X-5B” ICT hydraulic excavator

“ConSite” remote monitoring system

“Aerial Angle”, a safety confirmation support device with a full peripheral view for vehicles

Fleet Management System/ Autonomous dump truck

74 CSR Activity

Contributing to community development

SDG target Middle and long term target

Offer access

to education（4）

・Diversify and enliven R&D section

and promote open-innovation in a

community

Create employment

opportunities(8）

・Creation of local employment at

re-manufacturing plant

・Propulsion of local procurement

Crate a global

partnership（17）

・collaboration with NPOs/NGOs

in a community

Build resilient

infrastructure , and

foster innovation(9）

・Development and offer of

machinery that meet regional

requirements

Creating partnerships with diverse

stakeholders in a community

We support authorized NPO Good Earth Japan which helps Cambodians become self-sufficient

Support by the Hitachi Construction Machinery Group

・Fund-raising activities

・Employees participating in Cambodia study tours

Providing base machines

for mine clearing

Cambodia Mine Action

Centre（CMAC)

Mine clearing

Infrastructure

development

Agriculture

training

ＣＳＶ Theme Ⅲ

UN Sustainable development goals(SDGｓ)

Support for

education support activities undertaken by Good Earth Japan

75 CSR Activity

The five fundamental themes of our CSV initiatives

Pursuit of safe, effective, and sophisticated products and working environments

・Development of technologies for

securing quality and safety, and differentiation

・Provision of accurate information

on products/services

We provide accurate information about products

and services in a timely manner such as preventive

maintenance and after- sales service that prevents

product malfunctions, in addition to information

about product recalls and service campaigns.

The advanced “ZX200X-5B” ICT

hydraulic excavator

Occupational safety

“ Hitachi Construction Machinery Group Safety and

Health presentation ”

We are promoting various health and safety

activities that are derived from our basic

stance of giving the highest priority to

protecting the safety and health of

employees.

“ Hitachi Construction Machinery Group

International Skills Competition ”

76 CSR Activity


Development of global and local

human resources

Succession plan, which we initially

implemented in 2011, is currently operated on a

consolidated basis, and covers all Group

employees in each company and department

with a position equivalent to section manager

or higher.

Creation of better business

transactions and value chains

Suppliers with which it has ongoing business

transactions are invited to become members of

either the Chikuhou-kai (62 corporate members) or

the Tokiwa-kai (46 corporate members). (current as

of April 2016). These two organizations host a wide

range of activities such as joint lectures.

Joint lectures of Tokiwa-kai

77 CSR Activity


●The HCM Group has adopted a corporate organizational system based on a structure for company with

nominating committee, etc., as defined in the Companies Act, with the aims of ensuring highly fair and transparent

management while building an operational system that facilitates the prompt and sound execution of management

strategy. We have greatly strengthened our system of corporate governance through this separation of

management oversight from business execution.

●As a member of the Hitachi Group, the HCM Group shares Hitachi, Ltd.’s Basic Credo and Conduct guidelines

and states our Standards of Corporate Conduct in line with them. The HCM Group positions these corporate

behavior standards as the basic policies on corporate governance.

Basic policies

(as of October 12, 2016)

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15

15

Corporate Governance

78 CSR Activity

Directors

Yutaka Saito Chairman of the Board

Kazushige Okuhara Outside Director

Haruyuki Toyama Outside Director

Junko Hirakawa Outside Director

Osamu Okada Director

Tetsuo Katsurayama Director

Koji Sumioka Director

Yuichi Tsujimoto Director

Corporate Governance


79

END

Public Relations Strategy Office

Corporate Vision

© Hitachi Construction Machinery Co., Ltd. 2017. All rights reserved.

Any forward-looking statements in the “Corporate Vision” , including

results forecasts, are based on certain assumptions that were

deemed rational as well as information currently available to the

Company at this time. However, various factors could

cause actual results to differ materially.

FY16-3Q

Documents

Corporate Vision - Hitachi Construction Machinery“GROW TOGETHER 2016” FY2014-2016 3 Management Plan 2020 VISION “Close and Reliable Partner" anywhere on the earth with best solutions