Hitachi Announces Consolidated Financial Results for Fiscal 2021

Tokyo, April 28, 2022 --- Hitachi, Ltd. (TSE:6501) today announced its consolidated financial results for fiscal 2021, ended March 31, 2022.

Note: All figures were converted at the rate of 122 yen to the U.S. dollar, as of March 31, 2022.

Summary

Notes: 1. The Company's consolidated financial statements are prepared based on IFRS.

2. "Adjusted operating income" is presented as revenues less cost of sales as well as selling, general and administrative expenses.
3. "EBIT" is presented as income from continuing operations, before income taxes less interest income plus interest charges.
4. The figures of the company are for 853 consolidated subsidiaries and 287 equity-method associates and joint ventures.
5. A part of the thermal power generation systems business is classified as discontinued operations in accordance with the provision of IFRS 5, "Non-current Assets Held for Sale and Discontinued Operations," which was not transferred to Mitsubishi Hitachi Power Systems, Ltd. (currently Mitsubishi Power, Ltd.) for the business integration in the thermal power generation systems with Mitsubishi Heavy Industries, Ltd. The results of the discontinued operations are reported separately from continuing operations.

1. Qualitative Information Concerning Consolidated Business Results

(1) Summary of Fiscal 2021 Consolidated Business Results

For fiscal 2021, the Hitachi's consolidated revenues were 10,264.6 billion yen, increased 18% year over year. While revenues in Smart Life segment decreased due to the sale of diagnostic imaging-related business and the overseas home appliance business, the revenues increased mainly in Automotive Systems segment where the revenues were affected by the integration impact from the establishment of Hitachi Astemo, Energy segment where the power grids business was acquired from ABB, Ltd., and Hitachi Construction Machinery segment where was benefited from firm demand due to market recovery.

Adjusted operating income increased 243.0 billion yen year over year, to 738.2 billion yen. The increase was mainly due to the increase in Energy segment, Hitachi Construction Machinery segment and Industry segment, despite the decrease in profit in IT segment and Smart Life segment.

EBIT increased 0.6 billion yen year over year, to 850.9 billion yen, led by adjusted operating income increase, despite gains from selling of Hitachi Chemical stock and gains from selling of diagnostic imaging-related business in Smart Life segment in fiscal 2020.

Income from continuing operations, before income taxes, decreased 5.1 billion yen year over year, to

839.3 billion yen. After deducting income taxes of 168.4 billion yen, Hitachi posted income from continuing operations of 670.8 billion yen, up 151.6 billion yen year over year. Net income increased

152.3 billion yen year over year, to 670.8 billion yen. Net income attributable to Hitachi, Ltd. stockholders increased 81.8 billion yen year over year, to 583.4 billion yen.

(2) Revenues, Adjusted Operating Income and EBIT by Segment

Please visit www.hitachi.com and refer to the presentation material, "Outline of Consolidated Financial Results for the Year Ended March 31, 2022."

(3) Outlook for Fiscal 2022

Reflecting these business environments, Hitachi forecasts the results shown above for fiscal 2022, the year ending March 31, 2023.

Projections for fiscal 2022 assume exchange rates of 120 yen to the U.S. dollar and 130 yen to the euro.

Hitachi will accelerate the global expansion of its Social Innovation Business through collaborative creation with customers, persist with its business structural reforms and pursue efforts to strengthen its business foundations by reviewing its business portfolio, with the aim of achieving sustainable growth.



2. Financial Position

(1) Financial Position

Total assets increased 2,034.6 billion yen from March 31, 2021, to 13,887.5 billion yen, mainly due to the acquisition of GlobalLogic. Interest-bearing debt increased 729.3 billion yen from March 31, 2021, to 3,126.7 billion yen, due to the acquisition of GlobalLogic. As of March 31, 2022, the total Hitachi, Ltd. stockholders’ equity increased 816.3 billion yen from March 31, 2021, to 4,341.8 billion yen. As a result, the total Hitachi, Ltd. stockholders’ equity ratio was 31.3%. The debt-to-equity ratio, including non- controlling interests, was 0.58 times and Cash Conversion Cycle was 78.1 days.



(2) Cash Flows

Operating activities provided net cash of 729.9 billion yen, 63.1 billion yen less than in the previous fiscal year, mainly due to the increase in working capital led by revenues increase and the increase in tax payments for selling assets, despite increase in adjusted operating income. Investing activities used net cash of 1,048.8 billion yen, 590.0 billion yen more than in the previous fiscal year, mainly due to the expenditure related to the acquisition of GlobalLogic. Free cash flows were negative 318.9 billion yen, a decrease of 653.2 billion yen year over year. Financing activities provided net cash of 202.7 billion yen,

387.5 billion yen more than in the previous fiscal year, mainly due to the absence of expenditures due to the conversion of Hitachi High-Technologies into a wholly owned subsidiary in the previous fiscal year, and the borrowings for growth investments.

Accordingly, cash and cash equivalents were 968.8 billion yen, down 47.0 billion yen from the end of the previous fiscal year.

Cautionary Statement

Certain statements found in this document may constitute “forward-looking statements” as defined in the U.S. Private Securities Litigation Reform Act of 1995. Such “forward-looking statements” reflect management’s current views with respect to certain future events and financial performance and include any statement that does not directly relate to any historical or current fact. Words such as “anticipate,” “believe,” “expect,” “estimate,” “forecast,” “intend,” “plan,” “project” and similar expressions which indicate future events and trends may identify “forward-looking statements.” Such statements are based on currently available information and are subject to various risks and uncertainties that could cause actual results to differ materially from those projected or implied in the “forward-looking statements” and from historical trends. Certain “forward-looking statements” are based upon current assumptions of future events which may not prove to be accurate. Undue reliance should not be placed on “forward-looking statements,” as such statements speak only as of the date of this report.

Factors that could cause actual results to differ materially from those projected or implied in any “forward-looking statement” and from historical trends include, but are not limited to:

• exacerbation of social and economic impacts of the spread of COVID-19;

• economic conditions, including consumer spending and plant and equipment investment in Hitachi’s major markets, as well as levels of demand in the major industrial sectors Hitachi serves;

• exchange rate fluctuations of the yen against other currencies in which Hitachi makes significant sales or in which Hitachi’s assets and liabilities are denominated;

• uncertainty as to Hitachi’s ability to access, or access on favorable terms, liquidity or long-term financing;

• uncertainty as to general market price levels for equity securities, declines in which may require Hitachi to write down equity securities that it holds;

• fluctuations in the price of raw materials including, without limitation, petroleum and other materials, such as copper, steel, aluminum, synthetic resins, rare metals and rare-earth minerals, or shortages of materials, parts and components;

• estimates, fluctuations in cost and cancellation of long-term projects for which Hitachi uses the percentage-of-completion method to recognize revenue from sales;

• increased commoditization of and intensifying price competition for products;

• uncertainty as to Hitachi’s ability to attract and retain skilled personnel;

• uncertainty as to Hitachi’s ability to continue to develop and market products that incorporate new technologies on a timely and cost-effective basis and to achieve market acceptance for such products;

• fluctuations in demand of products, etc. and industry capacity;

• uncertainty as to Hitachi’s ability to implement measures to reduce the potential negative impact of fluctuations in demand of products, etc., exchange rates and/or price of raw materials or shortages of materials, parts and components;

• credit conditions of Hitachi’s customers and suppliers;

• uncertainty as to Hitachi’s ability to achieve the anticipated benefits of its strategy to strengthen its Social Innovation Business;

• uncertainty as to the success of acquisitions of other companies, joint ventures and strategic alliances and the possibility of incurring related expenses;

• uncertainty as to the success of restructuring efforts to improve management efficiency by divesting or otherwise exiting underperforming businesses and to strengthen competitiveness;

• general socioeconomic and political conditions and the regulatory and trade environment of countries where Hitachi conducts business, particularly Japan, Asia, the United States and Europe, including, without limitation, direct or indirect restrictions by other nations on imports and differences in commercial and business customs including, without limitation, contract terms and conditions and labor relations;

• the potential for significant losses on Hitachi’s investments in equity-method associates and joint ventures;

• uncertainty as to the success of cost structure overhaul;

• the possibility of disruption of Hitachi’s operations by natural disasters such as earthquakes and tsunamis, the spread of infectious diseases, and geopolitical and social instability such as terrorism and conflict;

• uncertainty as to the outcome of litigation, regulatory investigations and other legal proceedings of which the Company, its subsidiaries or its equity-method associates and joint ventures have become or may become parties;

• the possibility of incurring expenses resulting from any defects in products or services of Hitachi;

• uncertainty as to Hitachi’s ability to maintain the integrity of its information systems, as well as Hitachi’s ability to protect its confidential information or that of its customers;

• uncertainty as to Hitachi’s access to, or ability to protect, certain intellectual property; and

• uncertainty as to the accuracy of key assumptions Hitachi uses to evaluate its employee benefit-related costs.

The factors listed above are not all-inclusive and are in addition to other factors contained elsewhere in this report and in other materials published by Hitachi.



3. Basic Stance on Accounting Standard Selection

Hitachi, Ltd. applied International Financial Reporting Standards (IFRS), starting with the consolidated financial statements in its annual securities report for fiscal 2014, the year ended March 31, 2015. IFRS was applied in response to globalization, with the primary goal of building a uniform standard for evaluating operating results, standardizing operations, and improving management efficiency of the Hitachi Group.