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Annual Report 2011
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Review Of Operations At A GlanceElectronic Device SystemsFine Technology Systems
Science & Medical SystemsIndustrial & IT SystemsAdvanced Industrial Products

Review of Operations

Industrial & IT Systems

Masaho Masuyama
Aiming to Expand High Value-Added Business
In Industrial & IT Systems, we aim to promote the development of high value-added business. We are focused on new ventures in the automotive, environment and energy, and other industries with strong growth potential, and the expansion of our IT solutions business leveraging proprietary software technologies.
Representative Executive Officer
Senior Vice President and Executive Officer
General Manager, Corporate Marketing Group
General Manager, Global Trading Group
Masaho Masuyama

Fiscal 2010 in Review

Industrial & IT Systems Changes in Sales (Industrial & IT Systems)The segment was characterized by contrasting areas of strength and weakness. Sales of automotive HDDs, lithium-ion battery (LiB) assembly systems, and other automotive components rose steadily as the market exhibited clear recovery from the 2008 financial crisis. As a result, we were able to grow our shares of these products handled.
On the other hand, the IT solutions business fell sharply, reflecting weak performance in mobile phone trading due to a U.S. customer's later-than-expected launch of new products.
Overall, sales in the segment declined 6% year on year to ¥118.2 billion.

Outlook for Fiscal 2011

The lingering effects of the recent earthquake and tsunami in Japan are expected to impact sales of automotive components in the first half of fiscal 2011. Japanese automakers are restoring manufacturing operations faster than originally anticipated, however, and therefore sales in the second half of the year are expected to rebound. A full-fledged recovery in the automotive HDD market will likely take time due to the long-term impact of the disaster on the supply chain.
Previously delayed mobile phone models are expected to be launched in the U.S. market. In addition, strong demand is likely for smartphones with such features as waterproof and shockproof design demanded by business users.
Though we do not expect surging growth in the market overall, we plan to forge ahead with a process of greater selectivity and focus to achieve a target of ¥114.7 billion in sales.

Strategy for Fiscal 2011, Shifting to Business Areas Where We Can Be the Global Top, while Accelerating the Asian Belt Zone Strategy

We are promoting a shift to business areas where we can build a Global Top position. This strategy will enable us to enhance the management of Industrial & IT Systems (as well as Advanced Industrial Products), and further strengthen trading functions.
More specifically, we are pursuing three business strategies: creating new businesses leveraging core competencies; accelerating the shift of resources to global growth markets; and promoting business with local partners in key regions. Geographically, the focus of the strategy will be on growth markets in the Asian Belt Zone (from Japan to the Arabian Peninsula).
One example of the new business opportunities being created in the segment is a project in Indonesia to bring solar generators and compact water purification systems to underdeveloped rural communities lacking electric power. The project was chosen by Japan's Ministry of Economy, Trade and Industry as a Bottom Of the Pyramid (BOP) project intended to support low-income people in Indonesia. We have developed the project in collaboration with local and Japanese companies and received praise for the results from the Indonesian and Japanese governments. We will use this project as a lever to launch new energy and water-related businesses in Indonesia.
Four key business areas are the environment and new energy, automobiles, social and industrial innovation, and lithium-ion batteries. In the area of social and industrial innovation, we are developing closer collaboration with Hitachi, Ltd., which has made “Social Innovation” a core business. We are also building footholds in overseas markets in anticipation of taking a leading role in large-scale projects in the future.
We have both trading company functions and manufacturing functions, and we will further promote this strength and differentiator by fusing it with other Hitachi High-Technologies products.
Going forward, we view our role as supporting Japanese companies as they explore business opportunities in the aftermath of the earthquake, including their expansion overseas. Instead of simply selling products, we will emphasize synergistic relationships and proactively develop new proposals geared towards business expansion.
Our priorities are to promote business in growing markets and expand value-added business around close collaboration with our leading customers and business partners, always aiming to be the Global Top in our field.
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