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    5486   JP3786200000

HITACHI METALS, LTD.

(5486)
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Hitachi Metals : Report 2019 (Integrated Report) English Version

09/13/2019 | 06:17am EDT

The Hitachi Metals Group Report 2019Integrated Report

MISSION

Corporate Creed

The origins of our company can be traced back

one hundred ten years,

and our main products have been standing at the top

in each industry both qualitatively

as well as quantitatively.

We devote ourselves to technology and aspire to contribute to society by being

the best enterprise based on "Wa sureba tsuyoshi"our people possess and their loyalty to the company.

VALUE

Corporate Philosophy

Wa sureba tsuyoshi

"Wa"refers to "individuals with different characters coming together to create harmony." "Tsuyoshi" means "strength to accomplish the results we hope for." "Wa sureba tsuyoshi" portrays our endeavor to work as one while improving ourselves individually in order to create the best possible company.

To Our Stakeholders

On the Publication of the

Hitachi Metals Group Report 2019

I took office as Representative Executive Officer, and President and Chief Executive Officer in April 2019. The Hitachi Metals Group began operating under a new Medium-Term Management Plan from fiscal 2019. Under this new plan, all of us will move forward one step, one day at a time, to be "One step ahead tomorrow of where you are today!" to build innovation that contributes to the resolution of customers' and society's issues, and become a high-performance materials company supporting sustainable societies.

This report is a communications tool to help our stakeholders understand how we are working to enhance corporate value, including the Group's strengths, Corporate Creed, and our process for creating value, together with a systematic compilation of financial and non-financial information that can be considered important for continuous growth. This report references the International Integrated Reporting Council's The International Integrated Reporting Framework and the Ministry of Economy, Trade and Industry's Guidance for Integrated Corporate Disclosure and Company-Investor Dialogues for Collaborative Value Creation. The report is prepared in close cooperation with our corporate divisions to consolidate our thinking across the Group, and is intended to present this information in a way that is easy to understand.

Koji Sato

Representative Executive Officer,

President and Chief Executive Officer

2

The Hitachi Metals Group Report 2019 (Integrated Report)

The Hitachi Metals Group Report 2019 (Integrated Report)

3

Business Performance

Highlights of fiscal 2018

Revenues

ROE*2

EBIT

¥1,023.4billion

5.5%

¥45.3billion

Adjusted operating income*1

ROA*3

R&D expenses

¥51.4billion

2.9%

¥18.6billion

Adjusted operating margin

Overseas sales ratio

Number of employees

5.0%

56%

30,304

*1 Adjusted operating income = Revenues − Cost of sales − Selling, general and administrative expenses

*2 ROE (return on equity) = Net income attributable to shareholders of the parent company ÷ Average of beginning and end-year equity attributable to shareholders of the parent company x 100

*3 ROA (return on assets) = Net income attributable to owners of the parent company ÷ Average of beginning and end-year total assets x 100

Scope of operations by region in fiscal 2018

Europe

North America

Japan

Revenues

¥50.4billion

Revenues

¥310.9 billion

Revenues

¥449.0 billion

Number of

180

Number of

7,235

Number of

13,860

employees

employees

employees

China

Other Asia

Other

Revenues

¥76.2billion

Revenues

¥124.5 billion

Revenues

¥12.4billion

Number of

3,222

Number of

5,807

Number of

-

employees

employees

employees

External ESG-related recognitions

Percentage of fiscal 2018 revenues by segment*

Included in the MSCI Japan ESG Select Leaders Index, a fundamental index for ESG investment.

Included in the MSCI Japan Empowering Women Index, an index comprising companies from various industries with high scores for gender diversity.

Included in the FTSE Blossom Japan Index, an index of companies that demonstrate strong environmental, social, and governance practices.

Advanced Components &

Other

0.2%

Materials Division

36.8%

Magnetic Materials

and Applications/

Power Electronics

13.4%

Revenues

¥1,023.4

billion

Wires, Cables,

and Related Products

23.4%

Advanced Metals Division

63.0%

Specialty Steel Products

27.1%

Functional

Components

and Equipment

35.9%

Advanced Metals Division

Revenues

¥644.5 billion

Adjusted operating income

¥32.9billion

Advanced Components

& Materials Division

Revenues

¥377.1 billion

Adjusted operating income

Included in the new S&P/JPX Carbon Efficient Index, which focuses on the "E" (Environment) in ESG.

The FTSE4Good Index is an index of companies recognized for their environmental and social sustainability, and is used by various market participants when structuring sustainable investment products.

The MSCI ESG Leaders Indexes comprise companies from various sectors that demonstrate strong ESG practices.

Selected as a fiscal 2017 Nadeshiko Brand by the Ministry of Economy, Trade and Industry and the Tokyo Stock Exchange as a company that "encourages women's success in the workplace."

Included as a target for investment in the SNAM Sustainability Index, which is used to invest in companies that are rated highly for their ESG performance.

  • As of April 1, 2019, soft magnetic and materials and applied products were transferred from the Specialty Steel Products segment to the Magnetic Materials and Applications segment, and the name of the Magnetic Materials and Applications segment was changed to the Magnetic Materials and Applications/Power Electronics segment.
    Fiscal 2018 actual results have been retroactively adjusted to reflect the segment change (the adjusted figures have not been audited).
  • Segment results are simple totals prior to eliminations for intersegment transactions.

¥16.5billion

THE INCLUSION OF Hitachi Metals, Ltd. IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT OR PROMOTION OF Hitachi Metals, Ltd. BY MSCI OR ANY OF ITS AFFILIATES.

THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.

4

The Hitachi Metals Group Report 2019 (Integrated Report)

The Hitachi Metals Group Report 2019 (Integrated Report)

5

Business Portfolio Road Map

Expanding "Only 1, No. 1" products and businesses with the aim of an operating margin above 10%

FY2025

Operating 10income

ratio%

The Hitachi Metals Group is expanding its "Only 1, No. 1" products and businesses in growing businesses and core businesses with the aim of achieving an operating margin of above 10% by fiscal 2025.

During the period covered by the Fiscal Year 2021 Medium-Term Management Plan, we are focusing on strengthening and expanding our "Only 1, No. 1" products and businesses in both growing businesses and core businesses. At the same time, we are pursuing selection and concentration to downsize, withdraw from, or spin off products and businesses that are deemed not to be core to our business. We are, therefore, forecasting a turnaround to a decline in revenues in fiscal 2021, but with an increase in the operating margin. We will develop a muscular product and business portfolio made up of highly competitive "Only 1, No. 1" products and businesses with the aim of achieving an operating margin of above 10% by fiscal 2025.

Downsizing, withdrawing, spinning off

(business selection and concentration to downsize, withdraw from, or spin off non-core businesses)

Growing businesses

(aiming for business expansion through proactive, disciplined investment in growth areas)

Operating

income

ratio

Revenues

FY2018

5.0%

¥1,023.4 billion

FY2021

Operating 8.3income

ratio%

Revenues ¥960.0billion

Core businesses

(continuing to expand high-value-added products for which there is strong market demand)

Product/Business Portfolio

Growing businesses

Core businesses

The largest share

worldwide

Clad materials

The largest share

worldwide

EPB harnesses

The largest share

worldwide

Torque sensors

* Shares are Hitachi Metals' estimates in target markets.

Components and

Magnet wires

materials for aircraft

Power electronics

Medical cables

materials

and tubes

Magnets for drive

motors

The largest share

The largest share

The largest share in

worldwide

worldwide

Japan

Lead frame materials

Cast iron

Rolls

The largest share

The largest share

The largest share in

worldwide

worldwide

Japan

Piston ring materials

Ferrite magnets

Cast fittings

The largest share

The largest share in

The largest share in

worldwide

Japan

Japan

CVT belt materials

Molds and tool steel

Wires and cables

for rolling stock

6

The Hitachi Metals Group Report 2019 (Integrated Report)

The Hitachi Metals Group Report 2019 (Integrated Report)

7

Contents/Editorial Policy

Mission/Value

  1. To Our Stakeholders
  2. Business Performance
  1. Business Portfolio Road Map
  1. Contents/Editorial Policy

Technology and R&D

35 Examples of Products That Help Realize a Sustainable Society

38 Aiming to Be a "Genuinely Development-Driven Company"

Value creation

  1. Milestones in Creating Value
  1. Values
  1. Value Creation Process

Strategies

17 Strategy and Vision-Message from the CEO

24 Overview of the Medium-Term Management Plan

26 Message from the General Manager of Finance Division

28 Message from the General Manager of Advanced Metals Division

30 Message from the General Manager

of Advanced Components & Materials Division

32 Message from the General Manager of Human Resources & General Administration Division

Foundation

  1. Message from the Chairperson of the Board
  2. Corporate Governance

52

Promotion of Diverse Human Resources

54

Health and Safety

  1. Initiative for Climate Change
  1. CSR-ConsciousProcurement
  2. Respect for Human Rights
  1. Financial/Non-FinancialHighlights
  1. Financial Management
  1. Stock Information
  2. Corporate Data/Stock Price

Value creation

Information provided by the Hitachi Metals Group

Information on how

the Hitachi Metals Group creates value andThe Hitachi Metals Group Report (Integrated Report) achieves sustainable growth

Information for various stakeholders

Securities Report

Notice of the Ordinary General

Company Profile

Corporate

CSR Detailed

Meeting of Shareholders

Governance Report

Activity Report

Publication of detailed information and

Corporate Website

https://www.hitachi-metals.co.jp/e/

the latest information

Information for

Corporate information

Product information

CSR information

shareholders and investors

Financial information

Non-financial information

Editorial Policy

From 2016 (Fiscal 2015 Report), we have released the Hitachi Metals Group Report (Integrated Report) for all stakeholders, including shareholders and other investors. The aim of the report is to deepen understanding among stakeholders about how the Group utilizes its strengths to create value for customers and achieve sustainable growth. This report was edited referencing the International Integrated Reporting Council's The International Integrated Reporting Framework and the Ministry of Economy, Trade and Industry's Guidance for Integrated Corporate Disclosure and Company-Investor Dialogues for Collaborative Value Creation. In addition to the Hitachi Metals Group Report (Integrated Report), we provide information to our various stakeholders as shown in the chart. We also periodically update our corporate website with the latest information, including detailed information and news releases.

Review Period

Fiscal 2018 (April 1, 2018-March 31, 2019)

Note: Where possible, the latest information is used at the time of publication.

Relevant Entities

Hitachi Metals, Ltd. and its consolidated subsidiaries

Note: In cases where information contained herein refers to a review period and/or relevant entities different from those stated above, this is pointed out accordingly.

CONTENTS

  1. Milestones in Creating Value
  1. Values

14

Value Creation Process

8

The Hitachi Metals Group Report 2019 (Integrated Report)

The Hitachi Metals Group Report 2019 (Integrated Report)

9

Value creation

Strategies

Technology and R&D

Foundation

Milestones in Creating Value

Diversity is the embodiment of

Hitachi Metals' uniqueness.

Over our more than 100-year history, the Hitachi Metals Group has continued to grow through a succession of

mergers and acquisitions. Through this process, we created the diverse technologies, products, and business

portfolios that are the source of our competitiveness, and this diversity is the embodiment of "Hitachi Metals'

uniqueness." Operating in the field of materials, which is undergoing drastic technological change, we will build

2020

on and strengthen the diversity that we have cultivated throughout our history, to continue to be a company

2000

2010

that is indispensable to customers and society.

1950

1900

March 1960

March 1980

March 2000

March 2015

March 2019

Revenues

¥14.0 billion

¥260.9 billion

¥463.5 billion

¥1,004.4 billion

¥1,023.4 billion

* Parent basis

1871

1955

Pioneer Foundry

Waupaca Foundry

1899

1916

Unpaku

Steel

Yasugi Steel Manufacturing

1922

Conversion to a business divisions

structure from April 1, 2019

Kizugawa Manufacturing

2014

2010

1917

Hitachi Metals MMC

1990

MMC Superalloy

Advanced Metals

Teikoku Foundry

Superalloy

1934

Mitsubishi Materials

Division

Specialty Steel Products

1926

1926

2014

2018

1956

2014

Functional Components

1910

1935

1967

and Equipment

Hitachi Metals

Tobata Foundry

Kokusan Industries

Hitachi Metals

Industries

1995

2003

2004

2013

Advanced Components

1963

2007

& Materials Division

2004

1935

Sumitomo Special

Magnetic Materials and Applications/

NEOMAX

Sumitomo Metal

Metals

Power Electronics

Wires, Cables, and Related Products

Industries

1954

1990

Honeywell International's Metglas®

1937

Nippon Ferrite

Hitachi Ferrite

division

Merger

1956

1910

Hitachi Cable

Spin off

Hitachi

1910Tobata Foundry

At a time when a modernizing Japan relied on imports for almost all of its industrial goods, Yoshisuke Ayukawa acquired malleable cast iron manufacturing technology and established Tobata Foundry, the predecessor of Hitachi Metals. In 1911, the company began manufacturing Gourd brand-black heart malleable cast iron pipe joints. The company later began to produce products for other uses including shipbuilding, railways, and spinning machines, and orders grew steadily as the superior quality of these products was recognized. Business areas were diversified through mergers with Teikoku Foundry, which at the time was producing steel for steel rolling, Kizugawa Manufacturing, a producer of fittings, and steelmaker Yasugi Steel Manufacturing.

1935Kokusan Industries

As the business expanded to cover heavy industries in general, Tobata Foundry changed its name to Kokusan Industries.

1956Hitachi Metals Industries

Hitachi transferred its metals business with five originally Tobata Foundry plants (Tobata, Fukagawa, Kuwana, Wakamatsu, and Yasugi) to establish Hitachi Metals Industries.

1967Hitachi Metals

Hitachi Metals Industries changed its name to Hitachi Metals.

Through creative monozukuriand proactive mergers and acquisitions, the Company went through a succession of changes and grew to become one of the world's leading materials manufacturers. Today, the Company provides technologies and services that are contributing to the shift in automobiles to electric vehicles, and advances in industry, infrastructure, and electronics around the world.

1995Hitachi Ferrite

Merged with Hitachi Ferrite in 1995 to strengthen the soft magnetic materials business in response to increased demand for noise reduction in automobiles and electronics.

2003Honeywell International Inc.'s Metglas®division

Acquired the Metglas®(amorphous metal materials) division of Honeywell International of the United States. Strengthened the soft magnetic materials division as demand in the electronics segment grew for size and weight reductions, energy conservation, and electromagnetic noise reduction.

2007NEOMAX

Established through the merger of the magnetic materials and applications operations of Hitachi Metals and Sumitomo Special Metals to manufacture high-performance neodymium magnets and ferrite magnets widely used in motors for automotive equipment and home appliances. With demand for automotive-use motors expected to grow, the merger was carried out in 2007 to integrate the magnetic materials businesses and increase synergies.

2013Hitachi Cable

Merged with Hitachi Cable, the Hitachi Group's electric wires and cable business, in 2013. As the pace of movement toward a low-carbon society accelerated, the merger was intended to create synergies in terms of technologies and sales in the automotive, electronics, and industrial infrastructure segments.

2014Waupaca Foundry

Made Waupaca Foundry, the world's largest manufacturer of automotive- use castings with an overwhelming share of the U.S. market, a subsidiary in 2014. Expanded our business to become the world's largest supplier of iron castings.

2014Hitachi Metals MMC Superalloy

Made MMC Superalloy, with extensive experience and technological capabilities in aircraft parts, a subsidiary with a view toward global growth in core industries including aircraft and energy. Hitachi Metals' Okegawa Works established in April 2018.

10The Hitachi Metals Group Report 2019 (Integrated Report)

The Hitachi Metals Group Report 2019 (Integrated Report) 11

Value creation

Strategies

Technology and R&D

Foundation

Values

Value that only we can create

Our DNA has been cultivated over our more than 100-year history. The Hitachi Metals Group's DNA consists

of the distinctive technologies and products of all of the companies in the Hitachi Metals Group and the unique human resources that create them.

By further integrating our diverse DNA with the common value represented by our Corporate Philosophy of "Wa sureba tsuyoshi," we are paving a unique path for growth that other companies cannot match.

To achieve this growth, our mission is to implement our Corporate Creed to become the "best enterprise."

Hitachi Metals WAY

The Hitachi Metals WAY is based on the Hitachi Metals' Good Practice Guidance and standards for decision-making, systematically incorporating the Corporate Creed (Mission), Corporate Philosophy (Value), and our diverse DNA that are the embodiment of Hitachi Metals' uniqueness.

Corporate Creed

The Hitachi Metals Group aims to be the "best enterprise" by "mass-producinghigh-quality materials"*1with our major products leading the industry in terms of both quality and quantity, with attention to technology as a "genuinely development-driven company"*2where all employees come together to create synergies. Using a large tree as an example, the Hitachi Metals Group's DNA (a tree's roots- diverse human resources, technologies, and products) passes through our Corporate Philosophy (tree

Mission to be fulfilled in society by the Hitachi Metals Group

Values that the Hitachi Metals Group protects and fosters in order to realize the corporate creed

MISSION

VALUE

Corporate Creed

The origins of our company can be traced back more than one hundred years,

and our main products have been standing at the top in each industry both qualitatively

as well as quantitatively.

We devote ourselves to technology and aspire to contribute to society by being

the best enterprise based on "wa sureba tsuyoshi"our people possess and their loyalty to the company.

Corporate Philosophy

Wa sureba tsuyoshi

龢則彊

Under our corporate philosophy of "Wa sureba tsuyoshi,"our group is One Force for Change.

trunk-common sense of values) to reach fruition as our Corporate Creed (flowers and fruit-technologies, products, and services). By growing as a "tree" that provides the flowers and fruits that meet the needs of society and individuals, we will achieve our Corporate Creed of being the "best enterprise."

*1 Advanced monozukurithat provides both "quality" and "quantity" in products and services that resolve issues for customers and society.

*2 A company that carries out research and development guided by business strategies that embody the needs of customers around the world and paves the way to the future.

Corporate Philosophy

Our Corporate Philosophy is our diverse DNA brought together as a common sense of values, or, to use the example of the Hitachi Metals Group as a large tree, our Corporate Philosophy plays the role of the trunk. Creative and diverse human resources, technologies, and products (with a "strong individuality") form a platform that is essential for the Hitachi Metals Group's growth, and, without this, cohesiveness innovation will not occur. Based on our Corporate Philosophy of "Wa sureba tsuyoshi," we bring together diverse "strong individuality" to create successive innovation that other companies cannot

The unique DNA nurtured by the

Hitachi Metals Group to support

the corporate creed and the

DNA

Diverse DNA is the basis of our corporate culture

corporate philosophy. It is added

that realizesWa Sureba Tsuyoshi.

to through the process of

corporate evolution such as

mergers, integrations, etc.

match, and use those achievements to provide products and services that resolve issues for individuals and society.

DNA

Our DNA consists of the distinctive technologies and products of all companies in the Hitachi Metals Group, and the unique, talented human resources who create them. Using the example of the Hitachi Metals Group as a large tree, our DNA would be the roots.

With many roots over a wide area, we will be able to obtain more nourishment as the roots grow stronger, and overcome changes in the operating environment and continue to grow. The diversity incorporated in our DNA is the growth driver that is our strength.

12The Hitachi Metals Group Report 2019 (Integrated Report)

The Hitachi Metals Group Report 2019 (Integrated Report) 13

Value Creation Process

Our strength lies in the "strong individuality" of our creative, diverse human resources, technologies, and products, and we create innovation that brings together the "strong individuality" embodied in our Corporate Philosophy of "Wa sureba tsuyoshi." Using this strength, we are addressing the materials-related needs of customers based on global megatrends and market needs, to become

a high-performance materials company supporting sustainable societies. By pursuing a growth strategy supported by corporate governance based on the principle of "obey the law and walk the path of virtue" and business activities as "a genuinely development-driven company" engaged in the "mass production of high-quality materials," we will work to become the "best enterprise" that contributes to society's sustainable development by continuing to be a company that is indispensable to customers and society.

Global megatrends

Market needs

Needs for materials

Environmental

resistance

Safety

Value creation

Strategies

Technology and R&D

Foundation

Climate change

Lack of energy and resources

Urbanization

Demographic changes

Technological advances including

in information technology

Measures for environmental regulation

Increased need for energy conservation

Increased need for mobility

Automotive

Electronics (Internet of Things, and

Infrastructure-related

(electric vehicles)

semiconductors and displays)

(aircraft, railways)

DNA

DNA cultivated over more than 100-year history

(addition and maturation through process of evolution including mergers and acquisitions)

Value

Corporate governance

Business activities

Strength

Strength

Fiscal Year 2021 Medium-

Growth

High efficiency

Bringing

Low loss

Term Management Plan

strategies

Strong

Vision

Corporate Creed

together

Building

individuality

A high-

Wa sureba tsuyoshi

strong

people

Building

Becoming the

with

Building

performance

where you are today

innovation

individuality

One step ahead tomorrow of

the future

materials company

diversity

龢則彊Innovation springing from

Experience a true sense of

"Only 1, No. 1" Monozukuri

"best enterprise"

personal growth through the

and new products

supporting

Creative human

the knowledge of creative

workstyle reform project

Monozukurithat considers of

sustainable

resources, technologies,

human resources and

safety, environment, and quality

products

diverse technologies and

societies

products

Lightweight

"A genuinely development-driven company" "The mass production of high-quality materials"

Multifunction

Addressing business risks

Changes in the external environment

Lower profits from high

Intensified competition from

Lower competitiveness

Increased costs from higher

Loss of standing for

rise of Chinese and emerging-

existing products from

resource prices

from strengthening yen

expectations for quality

market manufacturers

technological innovation

14The Hitachi Metals Group Report 2019 (Integrated Report)

The Hitachi Metals Group Report 2019 (Integrated Report) 15

Value creation

Strategies

Technology and R&D

Foundation

Strategy and Vision-Message from the CEO

Strategies

CONTENTS

17 Strategy and Vision-Message from the CEO

24 Overview of the Medium-Term Management Plan

Becoming a high- performance materials company supporting sustainable societies

We began operating under the new Fiscal Year 2021 Medium- Term Management Plan (covering fiscal 2019 through fiscal 2021) from April 2019.

By strengthening and expanding our "Only 1, No. 1" businesses and products, increasing synergies across businesses, and deepening collaboration with customers, the Hitachi Metals Group aims to be a high-performance materials company supporting sustainable societies.

Koji Sato

Representative Executive Officer,

President and Chief Executive Officer

26 Message from the General Manager of Finance Division

28 Message from the General Manager of Advanced Metals Division

30 Message from the General Manager of Advanced Components & Materials Division

32 Message from the General Manager of Human Resources & General Administration Division

March 1986

Completed master's course in metallurgy at the Kyoto University Graduate School

of Engineering

April 1987

Joined Hitachi Metals, Ltd.

August 2002

Completed doctoral course in materials science at the University of California, Berkeley,

Department of Materials Science and Engineering

January 2011

President and Representative Director of Japan Aeroforge, Ltd.

October 2014

General Manager of Metallurgical Research Laboratory of Hitachi Metals, Ltd.

January 2016

General Manager of Yasugi Works

April 2017

Executive Officer, President of Specialty Steel Company

April 2018

Vice President and Executive Officer, President of Specialty Steel Company,

General Manager of Technology, Research & Development Division

April 2019

Representative Executive Officer, President and Chief Executive Officer

(current position)

Koji Sato is highly experienced in metal materials, having served as General Manager of the Metallurgical Research Laboratory, General Manager of the Yasugi Works, and President of the Specialty Steel Company. Since October 2018, on his own initiative, he has been a driving force in Japan's cutting-edge metal materials development, working with Shimane University on its "Creation of global advanced metallic material base - Next Generation TATARA Project," which was selected by the Cabinet Office as a recipient under its "Regional University and Local Industry Revitalization Grant Program." He has also collaborated with the University of Oxford in the development of innovative special steel components in the pursuit of further possibilities in materials. With an unwavering belief that "The results of pursuing challenges are always successes and good opportunities for learning. Failure only happens when we lose hope," our aim is to use "Only 1, No. 1" monozukurito bring about social innovation through the resolution of customers' social issues, and for employees to perform their jobs with a sense

of satisfaction, and to have Hitachi Metals share the dreams of its customers.

16The Hitachi Metals Group Report 2019 (Integrated Report)

The Hitachi Metals Group Report 2019 (Integrated Report) 17

Value creation

Strategies

Technology and R&D

Foundation

Management policies

We aim to be a company that meets the needs of society through innovation in materials.

Becoming a "best enterprise"

The Hitachi Metals Group aims to be a high- performance materials company supporting sustainable societies, and the Fiscal Year 2021 Medium-Term Management Plan lays out a vision of "Building People, Building Innovation, Building the Future."

To achieve this vision, I consider it extremely important to provide employees, who are the foundation of the Company, with opportunities for both personal growth and rewarding social lives through participation in the management of the Company's businesses. At the same time, we will use combinations of the Group's creative technologies to strengthen our collaboration with customers, to create added value that leads to top market shares and high growth as we strengthen and expand our "Only 1, No. 1" businesses and products.

The integrated flow of combining creative technologies and strengthening collaboration with customers leads to innovation of new materials. Continuously repeating this process makes it possible to respond to the demands of society, a leading example of which are the Sustainable Development Goals (SDGs), and we believe that achieving a sustainable society will contribute to the creation of a future for all of society.

If the Hitachi Metals Group is able to continue to be a company where employees work with a sense of satisfaction and that customers believe shares their dreams, I am confident that we will be able to become the "best enterprise" as per our Corporate Creed regardless of various management indicators.

Wa sureba tsuyoshi

"Human resources" are of primary importance to a company. Hitachi Metals has a history of more than 100 years of bringing various companies together and accumulating unmeasurable expertise and challenges. Our Corporate Philosophy of "Wa sureba tsuyoshi" expresses our sense of value, and can be understood to mean that the diversity we have cultivated over our history is the source of our strength.

In 2017, the Hitachi Metals Group systematically incorporated its corporate culture and Good Practice Guidance as the Hitachi Metals WAY. Firmly instilling this

at Group companies around the world, carried out with vigor by every individual employee, will lead to our becoming the "best enterprise." We will also continue to hire and employ female employees and non-Japanese employees in the pursuit of diversity in management, and will strive to ensure that diversity is further incorporated in our corporate DNA.

Steady progress in 12 steps, taking one at a time

Creating added value that is recognized by customers is the source of a company's growth. The Fiscal Year 2021 Medium-Term Management Plan introduces management using ROIC as a new management indicator to improve asset efficiency. Approaching the plan's three-year period as 12 quarterly steps, we will take one step at a time and steadily build up results. Then, as we create value that exceeds stakeholders' expectations, we will gain their trust as a company that addresses the needs of society.

Recognition of issues as assumptions underlying the new Medium-Term Management Plan

Expanding collaborative relationships with customers in various business fields with "Only 1, No. 1" products and businesses

Looking beyond customers' immediate needs

The Hitachi Metals Group believes that it can contribute to the global megatrend of society overall working toward a low-carbon society with environmentally friendly products in a variety of ways. In automotive materials, for example, in addition to having the top global share in products for internal-combustion engines, we have a diverse range of products to address the shift to xEVs*, including materials for drive motors, and are, therefore, addressing moves toward both clean engines and xEVs. We also have various materials and applied products that are contributing to smaller-sized,larger-capacity telecommunications equipment.

Even if the business unit for individual products is small, using the Hitachi Metals Group's monozukuricapability to mass-produce "Only 1, No. 1" products enables us to provide diverse products across a wide range of industrial segments. We are collaborating more closely with customers in a range of business fields where we have similar perspectives, including developing products that will lead to the realization

of a low-carbon society.

  • xEVs: A general term for electric vehicles (EVs), hybrid electric vehicles (HEVs), andplug-in hybrid electric vehicles (PHEVs).

Selection and concentration

Changes in the external environment also present opportunities, but, at the same time, correct measures are needed in response to changes in demand from geopolitical risk and trade friction, and the decline and obsolescence of existing products from technological innovation. We have competitors around the world. We, therefore, consider it important to look constantly for selection and concentration in businesses and products, and, while thinking about how to grow in these areas, also considering the downsizing, withdrawal from, or spinning off of businesses that are deemed to be non-core.

Making full use of prior invested equipment

Under the previous Medium-Term Management Plan, we turned from a long period of minimal investment to make a series of major investments in what we correctly identified as growth markets. Nevertheless, because we made rapid and diverse capital investments at the same time, resources were dispersed, the plan was overly optimistic, and, as a result, staffing shortages emerged in terms of production technology. There were also market effects, including the drop in China-related demand, and delays in deploying the equipment purchased meant that the effects of the investments were not achieved as planned, and we fell short of our earnings targets, which was one of the reasons for the weakening of cash flow.

"Selection and concentration" and "making full use of prior invested equipment" are priority issues carried over from the previous Medium-Term Management Plan that we recognize as continuing to take priority under the Fiscal Year 2021 Medium-Term Management Plan.

Basic policy and key measures of the new Medium-Term Management Plan

Implementing five action plans to achieve the Fiscal Year 2021 Medium-Term Management Plan

The Fiscal Year 2021 Medium-Term Management Plan seeks to make the Hitachi Metals Group a high- performance materials company supporting sustainable societies by pursuing management strategies and programs to enhance further our strength of "Only 1, No. 1" monozukuriand new products. The plan sets final fiscal year targets of revenues of ¥960.0 billion, with adjusted operating income of ¥80.0 billion (for an adjusted operating margin of 8.3%), and ROIC of 7.7%.

The five action plans we will implement are shown on the following pages.

18The Hitachi Metals Group Report 2019 (Integrated Report)

The Hitachi Metals Group Report 2019 (Integrated Report) 19

  • Concentrating resources onhigh-growth and high-revenue areas

Value creation

Strategies

Technology and R&D

Foundation

Shift from four-company organization to

• Commonality among markets / customer needs / elemental technologies

Through selection and concentration, we are concentrating resources in high-growth and high- revenue areas, and collaborating with customers to bring "Only 1, No. 1" products to market. Areas we are growing include electrification, electric power, power electronics, aircraft, amorphous materials for motors, and fine powders for 3D molding. At the same time, we are restructuring businesses including casting components for automobiles and magnetic materials. In casting components for automobiles, we are pursuing synergies with the melting and casting technologies

developed in specialty steel. In magnetic materials, we are pursuing structure control technologies for magnets, while also offering solutions that combine soft magnetic material and cable material technologies. With regard to mergers and acquisitions, we are emphasizing the impact of being a trillion-yen company in terms of both size and synergies, and, at the same time, if there are businesses outside the Hitachi Metals Group that would be useful to society, we will carefully consider that course as well.

two-divisional organization

maximize the synergy between segments

• Effective use of resources, enhance strategy function & governance

■ Before organizational restructuring

■ After organizational restructuring

Advanced Metals Division

Specialty Steel Company

Specialty steel

Specialty steel

Rolls

Functional components and

Advanced microstructure control technology

Soft magnetic components

equipment

and materials

Automobile, aircraft, and electronics / battery markets

Functional Components Company

Functional components and

Advanced Components

equipment

Magnetic materials and

& Materials Division

applications /

Magnetic Materials Company

Magnetic materials and

Design technology for advanced components

Power electronics

applications

and materials

Wires, cables, and related

xEV / electronic components and industrial

Cable Materials Company

Wires, cables, and related

materials

materials

infrastructure markets

  • Maximizing synergies through organizational reforms

We are seeking to maximize synergies derived from organizational reforms. From fiscal 2019, we have transitioned our structure from four internal companies to two business divisions. With larger organizational units, we will use resources more efficiently and strengthen synergies between the specialty steel and functional components, and between the magnetic materials/power electronics and cable materials, and

related materials businesses. At the same time, we are strengthening corporate functions which support the business divisions to reinforce both the strategic planning function and corporate governance. Corporate functions are carried out by cross-functional teams, and, by reflecting corporate intent in organizational management, we expect each business to create solid value.

  • Making full use of prior invested equipment

Making full use of prior invested equipment is an important issue. During the three years covered by the previous Medium-Term Management Plan, we made historically large investments totaling ¥251.0 billion. This upfront investment will generate solid cash flow and underpin our return to growth. At the same time,

capital investment under the new Medium-Term Management Plan will be extremely selective. The amount of capital investment under the plan is ¥186.0 billion, of which ¥6.0 billion will be used to ensure intrinsic safety in work environments.

Accelerate the growth strategy

Create innovation by three organizations working as a unit to strengthen

  • Strengtheningfront-line operations and create collaboratively with customers

under the division system!

the management and collaborative creation with customers

To strengthen front-line operations, we are continuing with the Next-generation Automotive Components

technological development division leads to the sharing of information and reciprocal leveraging of underlying

Restructuring of portfolio

[Promote structural reforms]

  • Promote sound management by introducing multilateral KPIs
  • Downsize, withdraw from, and spin offlow-profit,low-growth businesses and products

[Drastic buildup of monozukuri]

  • Utilizecross-functional team

Promote the unity of "sales and marketing,"

"R&D," and "monozukuri"

"Go beyond customer needs!"

Talent development

Society

Customers

Advanced Metals

Advanced

Components &

Division

Materials Division

Corporate

(NAC) Project, initiated in fiscal 2017 to address the growth of the xEV market. Part of this has been to strengthen cooperation across divisions by establishing an account marketing structure, and this has proven highly effective for making the most of our "Only 1, No. 1" products and expanding collaboration with customers. We have also launched a new Power Electronics Components (PEC) Project from fiscal 2019, and begun work to be sure to capture the growth in demand in the emerging area of power electronics materials.

In terms of research and development, we see the integration of materials development and process development becoming increasingly important. Each business division has two division labs, which work together and also cooperate with the Global Research

technologies, promoting qualitative and functional innovation and creating new products and businesses. GRIT is also the core entity for promoting collaboration with research and development institutions, universities, and companies.

In addition, we are enhancing synergies across manufacturing bases in Japan and around the world to reinforce monozukuri. We are making monozukuricapabilities at plants visible and creating indexes that can be compared, so that best practices can be implemented even when product groups or processes are different. We are also using Hitachi's Lumada platform to improve productivity. In addition, to pursue monozukuriwith safety as the first priority, we are reemphasizing safety training and continuously making investments to ensure intrinsic safety.

  • Thoroughly pursue diversity management
  • Promote workstyle reforms

"One step ahead tomorrow of where you are today!"

  • Innovative Technology center (GRIT), the global technological innovation center that is the Companywide research and development organization. Bringing these together as a Companywide

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The Hitachi Metals Group Report 2019 (Integrated Report) 21

Corporate-wide function between "sales and

Collaboration with customers by strengthening front-line operations

marketing," "R&D," and "monozukuri"

and realization of monozukurithat supports this collaboration

Advanced Metals Division

Advanced Components & Materials Division

Master advanced microstructure control technology

Master design technology for advanced components and materials

Value creation

Strategies

Technology and R&D

Foundation

Message to stakeholders

With each employee implementing the Hitachi Metals Group's Corporate Philosophy of "Wa sureba tsuyoshi," we will contribute to the realization of a sustainable society.

Enhance cross-divisional collaboration

NAC Project*1

Batteries

PEC Project*2

Sales

Establish an account sales system

Drive motors

and

Inverters

marketing

High-speed chargers

Various motors

On-board chargers

Integrate a material development team and a process development team

R&D

Develop into a production process using

Advanced Metals Division

cutting-edge technology

Promote collaborative creation with research

Metallurgical

Casting Technology

Cable Materials

Magnetic Materials

institutions, universities, and companies

Research Lab.

Research Lab.

Research Lab.

Research Lab.

Monozukuri

Monozukuribuildup project

Utilization of "Lumada," which is an IoT platform built by Hitachi, Ltd.

Investment to ensure intrinsic safety: ¥2.0 billion/year

production conditions

Improve quality with a focus on key areas

Automation of

Man-hour reduction

Improvement in

Pursue monozukuriwith safety as the first priority

production plan

Optimization of

yield ratio

*1. Next-generation Automotive Components Project: Cooperation in marketing of next-generation vehicles

*2. Power Electronics Components Project: Cooperation in marketing of power electronics and electronic materials

  • Implementation of structural reforms and measures to build a stronger business base

I like to say, "Our own preconceived notions are an impediment to growth." Now that we have broken down internal company boundaries with the transition to a business division structure, we have become able to see many issues that currently exist. On the front lines of marketing and plants and at corporate divisions, we are overcoming traditional organizational boundaries, engaging in thorough exchanges of opinions involving different viewpoints, and beginning to work with a clear awareness of the current situation, and, as a result, a streamlined, appropriate structure is taking shape.

Another thing I like to say is, "In monozukuriand marketing, logic alone is not enough - inner passion is most important." In monozukuri,it is very important to balance passion, logic, and ethics, and through passionate monozukuri,I want to provide customers with products that have soul. I also recognize that one of a CEO's jobs is to create an environment where all employees feel comfortable acting on their own

initiative. To do this, we need to "shake the tree" to make the fruit fall to the ground, and gather the wisdom of all employees on the table and from all of that wisdom extract the best solutions.

The Hitachi Metals Group has various different histories and backgrounds, and is a trillion-yen company that is a collection of diverse DNA. Currently, our business performance is struggling, but I see this

as a period of preparing for new growth. Through

"Wa sureba tsuyoshi," we have many "Only 1, No. 1" businesses and products, and the passion and strength to use them. Senior management is taking the initiative in spreading the word inside and outside the Company about Hitachi Metals' value and the "Only 1, No. 1" technologies and products that are extensions of that value, and in making a greater contribution to society's sustainable development by stimulating innovation in materials as a company that is indispensable to society.

Continuing to be a company that creates value for society involves more than simply pursuing sales volume; we will also continue to renovate our business portfolio to match our strengths with society's needs. This means downsizing, withdrawing from, or spinning off low- profit businesses and products where sufficient improvement cannot be expected, while also working to concentrate management resources and use them effectively, and growing "Only 1, No. 1" businesses and products. We have introduced management using return on invested capital (ROIC) as a new management indicator, and are working to shorten the Cash

Conversion Cycle (CCC) to reduce invested capital and reduce the risk of fluctuations in resource material prices, while at the same time working to understand our business results from multiple perspectives to improve cash flow and raise capital efficiency.

We are also working to promote diversity in management and workstyle reforms by hiring and training global human resources and promoting active participation by female employees, and, by making the most of the results of these programs, we will create a corporate culture with a strong sense of challenge through innovation.

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The Hitachi MetalsGroup Report 2019 (Integrated Report) 23

Overview of the Medium-Term Management Plan

Under the Fiscal Year 2021 Medium-Term Management Plan, we will build on our existing initiatives for continuous growth, while pursuing management strategies and programs that will further strengthen the "Only 1, No. 1" businesses and products that are our strength, under a vision of "Building People, Building Innovation, Building the Future," to become a high-performance materials company supporting sustainable societies.

Value creation

Strategies

Technology and R&D

Foundation

FY2019-FY2021

FY2021 Medium-Term Management Plan

A high-performance materials company supporting sustainable societies

- building people, building innovation, and building the future -

FY2013-FY2015

FY2015 Medium-Term

Management Plan

Shifted to profit-generating segments and built structures for sustainable growth

  1. Strengthened capabilities to create new products and develop new technologies
  2. Strengthened and accelerated global growth strategies
  3. Established a robust operational foundation

FY2016-FY2018

FY2018 Medium-Term Management Plan

Expand the business globally while improving profitability

Change to be a competitive business; Challenge ourselves to meet new targets Achieving our goal of becoming the world's leadinghigh-performancematerials company

Action

Plan

1

2

3

Continuous

Organic growth

Growth through

portfolio

(from capital

M&A

remodeling

investment & R&D)

Expand "Only 1, No. 1" businesses and products

3

2

Making full use of prior

4

invested equipment

Maximize the synergy

Strengthen front-line

derived from

operations and

organizational reforms

collaborative creation

1

with customers

5

Concentrate resources

Structural reforms and

on high-growth and

measures to build a

high-profit areas

stronger business base

FY2015 results

(1USD=¥120)

Revenues

¥1,017.6 billion

Adjusted operating income*1

¥76.1 billion

Adjusted operating margin

7.5%

Net income attributable to owners of

¥69.1 billion

the parent company

D/E ratio

0.44 times

ROE

14.4%

Overseas sales ratio

56%

Three-year cumulative

Operating cash flow

+¥323.9 billion

Investing cash flow

-¥155.7 billion

R&D expenses

¥56.8 billion

FY2018 results

(1USD=¥111)

Revenues

¥1,023.4 billion

Adjusted operating income*1

¥51.4 billion

Adjusted operating margin

5.0%

EBIT

¥45.3 billion

Net income attributable to owners of the parent company

¥31.4 billion

Total assets

¥1,099.3 billion

Equity attributable to owners of the parent company

¥588.0 billion

D/E ratio

0.34 times

ROIC*2

4.1%

ROE

5.5%

CCC*3

90.7 days

Overseas sales ratio

56%

Employees

30,304

Three-year cumulative

Operating cash flow

+¥195.1 billion

Investing cash flow

-¥207.2 billion

Capital expenditure

-¥251.0 billion

FY2021 Plan

(Projected exchange rate: 1USD=¥105)

Revenues

¥960.0 billion

Adjusted operating income*1

¥80.0 billion

Adjusted operating margin

8.3%

EBIT

¥77.0 billion

Net income attributable to owners of the parent company

¥55.5 billion

Total assets

¥1,030.0 billion

Equity attributable to owners of the parent company

¥655.0 billion

D/E ratio

0.5 times or less

ROIC*2

7.7%

ROE

8.9%

CCC*3

81.9 days

Overseas sales ratio

57%

Employees

28,500

Three-year cumulative plan

Operating cash flow

+¥346.0 billion

Investing cash flow

-¥134.5 billion

Capital expenditure

-¥186.0 billion

M&A and others

+¥51.5 billion

Free cash flows

+¥211.5 billion

Depreciation

¥182.5 billion

R&D expenses

¥59.0 billion

*1 Adjusted operating income: Revenues - Cost of sales - Selling, general and administrative expenses

24The Hitachi Metals Group Report 2019 (Integrated Report)

M&A and others

+¥43.8 billion

Free cash flows

-¥12.1 billion

Depreciation

¥140.0 billion

R&D expenses

¥54.3 billion

*2 Return on Invested Capital (ROIC) = Net income attributable to owners of the parent company / (Average of beginning and end-yearinterest-bearing debt + Average of beginning and end-year equity attributable to owners of the parent company)

*3 Cash Conversion Cycle (CCC) = Working capital (Trade receivables + Inventories - Trade payables) / Daily average revenues

The Hitachi Metals Group Report 2019 (Integrated Report) 25

Message from the General Manager of Finance Division

Value creation

Strategies

Technology and R&D

Foundation

We are raising capital efficiency by making full use of prior invested equipment and investing selectively, while also emphasizing maximization of operating cash flow.

Hiroaki Nishioka

Vice President and Representative Officer

Chief Financial Officer

General Manager of Finance Division

Fiscal Year 2021 Medium-Term Management Plan-Financial policies

Selection and concentration in investment

Raising capital efficiency

Operating cash flow: +¥346.0billion

(Cumulative under previous Medium-Term Management Plan: + ¥195.1billion)

Investment cash flow: - ¥134.5billion

Free cash flow: + ¥211.5billion

(Cumulative under previous Medium-Term Management Plan: - ¥207.2billion)

(Cumulative under previous Medium-Term Management Plan: - ¥12.1billion)

Capital investment: - ¥186.0billion

Mergers, acquisitions, etc.: + ¥51.5billion

Returns to investors Target dividend payout ratio: 30%

Increase equity capital

Target KPIs (FY2021)

ROE 8.9%

ROIC 7.7%

CCC 81.9days

ROE (FY2018) 5.5%

Cost of capital 7.5%

CCC (FY2018) 90.7days

Internet of Things (IoT), and reduce costs. In addition, we will use information technology to streamline administrative operations and thereby reduce fixed costs. We will also continuously review our business portfolio by downsizing, withdrawing from, and spinning off low- profit, non-core businesses.

We are working to reduce invested capital by formulating optimal production plans using the IoT to shorten the Cash Conversion Cycle and conducting personnel exchanges to share best practices. In addition, we have launched the Reformed Human Resource Training Program in cooperation with Hitachi's IE Master system, to train human resources who will be kaizen(improvement) professionals, and implement thorough management from the plant floor to inventories and appropriate warehousing.

We aim to raise ROIC through these initiatives, but, currently, we have businesses where ROIC is significantly higher than the cost of capital, other businesses that are set for steady improvement, and other businesses requiring upfront investment where ROIC will be below the cost of capital over the short term. We, therefore, consider it important to instill management using ROIC by business division and main product group. Setting ROIC targets by

investment, and other aspects. Proposals for strategic investment emphasize cash flow, and investment decisions are based on a current valuation using discounted cash flow (net present value [NPV]), ROIC, and the period for recovering the investment.

Balance sheet management

The new Medium-Term Management Plan includes the streamlining of the balance sheet to improve our financial position and raise capital efficiency. With structural reforms through the improvement of working capital by shortening the Cash Conversion Cycle, use of the Hitachi Group's cash pooling system, and selection and concentration, we are forecasting total assets of ¥1,030.0 billion as of the end of fiscal 2021 (a 6.3% reduction from the end of fiscal 2018).

In addition, our basic policy is to cover the funds needed to invest for growth from cash generated by businesses and cash on hand. We have few apparent growth opportunities, however, we are looking to maintain our current debt-equity ratio of approximately 0.3x to 0.5x or less and our credit rating at A+, and will engage in flexible fund procurement.

Emphasizing selection and concentration in investment and raising capital efficiency

Under the Fiscal Year 2021 Medium-Term Management Plan, the Hitachi Metals Group will emphasize "selection and concentration in investment" and "raising capital efficiency." In terms of investment, we will be extremely selective while also making full use of prior invested equipment purchased under the previous Medium-Term Management Plan. We have also introduced return on invested capital (ROIC)*1to raise capital efficiency, and will emphasize the maximization of operating cash flow.

The Fiscal Year 2021 Medium-Term Management Plan aims for a cumulative three-year operating cash flow of ¥346.0 billion (the cumulative result under the Fiscal Year 2018 Medium-Term Management Plan was +¥150.9 billion). On the other hand, we are forecasting roughly -¥134.5 billion (previous cumulative result: +¥72.7 billion) for investment cash flow, which includes ¥186.0 billion (- ¥65.0 billion) of highly selective investment in priority areas. As a result, we expect a significant improvement in cumulative free cash flow for the three-year period under the Fiscal Year 2021 Medium-Term Management Plan, to +¥211.5 billion (from +¥223.6 billion).

With regard to raising capital efficiency, we will continuously review our business portfolio by expanding

high-value-added products and growth businesses and withdrawing from or spinning off low-profit,non-core businesses*2, while also working to shorten the Cash Conversion Cycle (CCC)*3to 81.9 days (an 8.8-day reduction from fiscal 2018) and thoroughly implementing effective inventory management.

Through these measures, we are aiming for ROE*4

of 8.9% and ROIC of 7.7%, above the 7.5% cost of

capital*5.

*1.

Return on invested capital (ROIC): Net income attributable to owners of the parent

company ÷ (Average of beginning and end-yearinterest-bearing debt + Average of

beginning and end-year equity attributable to the parent company)

*2.

Non-core businesses: Group businesses that are not sufficiently efficient

*3.

Cash Conversion Cycle (CCC): Working capital (Trade receivables + Inventories -Trade

payables) ÷ Daily average revenues

*4.

Return on equity (ROE): Net income attributable to shareholders of the parent

company ÷ Average of beginning and end-year equity attributable to shareholders

of the parent company x 100

*5.

Calculated using a capital asset pricing model and share price profit margin, and

taking into consideration results at peers.

Using ROIC as an index to raise capital efficiency

We calculate that the Group's cost of capital is 7.5%, and, currently, the Companywide ROIC is below the cost of capital, so we need to raise ROIC by increasing profit and reducing invested capital.

To increase profit, we will continue to expand high- value-added products and growth businesses, improve product quality through monozukuriinnovation using the

business division and main product group based on the unit's profit and invested capital will lead to Groupwide improvement in ROIC.

In addition, the Corporate Management Planning Division and Finance Division are jointly holding an ROIC awareness caravan, and, with the strong commitment of Board members, we are promoting an understanding of ROIC among all ground-level employees so that they can participate in raising ROIC through improvements in their daily operations.

Clarifying the investment decision-making process

We are reconstructing our processes and criteria for capital investment. For capital investment carried out by business divisions, corporate divisions participate from the advance study stage, with the advance screening process and responsibilities of the manager of the screening division clearly laid out.

In addition to equipment upgrades and streamlining, production capacity increases, establishment of new centers, and investments for safety, investments include mergers and acquisitions, and ordinary investment and strategic investment are separately defined and classified in terms of investment decision-making, recovery of

Cash allocation

The Group's basic policy for determining the distribution of profit to shareholders is to take comprehensively into account the operating environment, business results, and the future business outlook, together with the retention of internal reserves for medium- to long-term growth.

In terms of enhancing shareholder value, we look to increase total shareholder return (TSR) and aim to distribute profit with a balance between a higher share price through business growth and returns to shareholders. Under the new Medium-Term Management Plan, we will concentrate resources in high-profit,high-growth areas, carry out structural reforms, and strengthen the management base for business growth that leads to a higher share price, while maintaining a stable dividend with a target payout ratio of 30%.

In addition, we recognize that purchases of treasury stock are a useful way to provide returns to shareholders, but, at this time, we consider it rational to invest for strategic growth with high returns, and are, therefore, emphasizing business growth and expansion through strategic investments for growth in research and development and in high-value-added product areas.

26The Hitachi Metals Group Report 2019 (Integrated Report)

The Hitachi Metals Group Report 2019 (Integrated Report) 27

Message from the General Manager of Advanced Metals Division

Value creation

Strategies

Technology and R&D

Foundation

By integrating our specialty steel and functional components and equipment technologies, we will aim to become a "No. 1 high-performance business structure for advanced metals" through collaborative creation with customers.

Hiroshi Watanabe

Vice President and Executive Officer, General Manager of Advanced Metals Division

Fiscal Year 2021 Medium-Term Management Plan

specialty steel and functional components and equipment field-namely, structural control technology, alloy design technology, and production technology- and deepen collaboration with the Global Research & Innovative Technology center (GRIT), customers, and external research institutes to develop new alloys and processes, in addition to providing powder materials for 3D printers and metal injection molding (MIM) products.

4Ongoing restructuring of business portfolio

We will overhaul the portfolios of our core businesses.

In automotive castings, for example, we will expand our

presence in heavy-dutyareas-commercial vehicles,

of these capital investments, but, going forward, we will engage engineers and other human resources to promptly take the best advantage of these investments.

In the growing business of aircraft and energy materials, we expect demand for passenger jet aircraft to increase in the future. To capture this demand, we will deepen three-way collaboration among the Okegawa Works, Yasugi Works, and Japan Aeroforge, Ltd. to build an integrated production system that covers melting, forging, and processing. We will also strengthen our business with engine manufacturers and deploy specialized technologies related to isothermal forging, MIM, and precision casting to introduce next-

FY2018 Results

FY2021 Targets

Revenues

Specialty Steel

¥276.9 billion

¥320.0 billion

Adjusted operating income [Profit

margin]

[8.1%] ¥22.4 billion

[10.3%]

¥33.0 billion

Products

ROIC

6.3%

8.6%

Capital investment

Functional

Revenues

¥367.6 billion

¥350.0 billion

(3-year cumulative)

Adjusted operating income [Profit

margin]

[2.9%] ¥10.5 billion

[6.9%]

¥24.0 billion

Components

¥107.0 billion

and Equipment

ROIC

-0.6%

6.8%

Revenues

¥644.5 billion

¥670.0 billion

Total*

Adjusted operating income [Profit

margin]

[5.1%] ¥32.9 billion

[8.5%]

¥57.0 billion

ROIC

2.7%

7.8%

* Simple sum before eliminating intersegment revenues

Process innovation

  • Promote automation
    Automate finishing at Waupaca, etc.

Investments to increase production

  • Wide processing line for electronic materials at Yasugi Works
  • Facility to increase the production capacity of turbine wheels

agricultural machinery, construction machinery, rolling

stock, and industrial equipment-while promoting

process innovation for higher added value, in order to

generate reliable earnings. Through these efforts, we

plan to increase the sales ratio for heavy-duty automotive

castings at Waupaca Foundry, Inc. in the United States to

54% by fiscal 2021, from 42% in fiscal 2018.

In the growth businesses of industrial equipment,

aircraft and energy materials, and electronic materials,

generation products. In the process, we will enter the market for engine core components, targeting ¥60 billion in annual sales of aircraft components and materials by fiscal 2025.

In electronic materials, another growing business, we look forward to high growth driven by electrification of automobiles and advances in smartphone performance. In organic EL components and materials, we will commission a wide processing line in fiscal 2020, thus

Initiatives of Fiscal Year 2018

Medium-Term Management Plan

In the growing aircraft and energy materials businesses, we started operations at Hitachi Metals' Okegawa Works following the merger with Hitachi Metals MMC Superalloy, Ltd. We also invested in melting and forging facilities, mainly at the Yasugi Works. In electronic materials, we invested to increase production capacity at the Tsuchiura Works of Hitachi Metals Neomaterial, Ltd., with the aim of expanding our business in clad materials. In addition, we decided to invest in a wide processing line for organic EL components and

customers with the aim of becoming a "No. 1 high- performance business structure for advanced metals."

Five-part action plan

The Advanced Metals Division will implement the following five-part action plan to resolve problems and achieve sustainable growth.

  • Reduce inventories

We will steadily execute our action plan by strictly monitoring the Cash Conversion Cycle (CCC) and other key performance indicators (KPIs) to reduce inventories

we will expand medium-term sales and increase the

sales ratio.

  • Take the best advantage oflarge-scale investments In our core businesses, we have made significant capital investments under the Fiscal Year 2018Medium-TermManagement Plan. As a result, in automotive castings, we increased productivity at Waupaca Foundry and expanded sales ofDAC-i™,a new molds and tool steel product. There have been delays in reaping the benefits

taking the best advantage of our investments. The Group also boasts world-class technologies in clad materials, where multiple metals are combined to demonstrate unique properties. Bringing together the unique technologies of the Group's sites in Yasugi, Suita, Tsuchiura, Kitanihon, and Kagoshima will enable us to supply a wide variety of clad materials. In the electronic materials business, we are targeting a 14% increase in sales by fiscal 2021 compared with the fiscal 2018 figure.

materials, for which the Group's global market share is nearly 100%, and started investment.

Basic policy of Fiscal Year 2021

Medium-Term Management Plan

Two issues have remained unresolved at the completion of the Fiscal Year 2018 Medium-Term Management Plan: Increased inventories and a delay in reaping the benefits of the large-scale investments made at the production sites in Japan. Our new Fiscal Year 2021 Medium-Term Management Plan recognizes these issues. Under the plan, we will generate synergies between businesses and collaborate creation with

at an early stage of fiscal 2019.

  • Create synergy between businesses

In addition to identifying needs in the overlapping markets of specialty steel products and functional components and equipment, we will propose materials and products that combine our technologies in these two areas. We will also strategically and functionally allocate management resources, including a workforce of more than 17,000, to growth fields.

  • Bring innovations to materials and processesWe will integrate and develop our technologies in the

Take the best advantage of large-scale investments

Molds and tool steel

Yasugi Works 10,000-ton forging press (started operation in May 2018)

Respond to larger molds and expand the sales of new products such as DAC-iTM

Increase production efficiency and capacity

Rolls

(started operation in the 2H of FY2018 at Hitachi Metals Wakamatsu, Ltd.)

Core

Expand sales of rolls for steel mills and structural steel castings

Increase production capacity of piston ring materials

businesses

(operation in the 1H of FY2018 in China; 2H at Yasugi Works)

Industrial equipment

Responded to the needs for better fuel efficiency

of internal-combustion engines

Increased the system capacity of flexible piping at

Kuwana Works

Piping components

(started operation in the 2H of FY2018)

Expanded sales in the Chinese and European markets

Aircraft/Energy

Establish an integrated production system across the three sites (melting, forging, and processing)

Increase production efficiency and accelerate acquisition of melting certification to enter

materials

world's Top 4 manufacturers

Growing

businesses

Increase production capacity of clad materials

Electronic materials

(operation in the 2H of FY2018 at Tsuchiura Works of Hitachi Metals Neomaterial)

Increase capacity and integrate technologies of 5 sites to expand sales in new fields

10,000-ton forging press

Production site of piston ring materials in China

Clad terminal for a battery

28The Hitachi Metals Group Report 2019 (Integrated Report)

The Hitachi Metals Group Report 2019 (Integrated Report) 29

Message from the General Manager of Advanced Components & Materials Division

Value creation

Strategies

Technology and R&D

Foundation

Reaping the benefits of investments, we will concentrate resources and generate synergies aimed at expanding the growth areas.

Kazuya Murakami

Vice President and Executive Officer,

General Manager of Advanced Components & Materials Division

Fiscal Year 2021 Medium-Term Management Plan

strength as well as contribute to advances in power module cooling mechanisms in terms of compactness and cost reductions. We are increasing our domestic production capacity for silicon nitride substrates and started mass production of high-thermal-conductivity products. We are also reinforcing our polishing technologies for silicon carbide (SiC) substrates to expand business. Our aim is to achieve a 2.2-fold increase in sales of ceramic products by fiscal 2021 compared with the fiscal 2018 level.

Seeking to improve the efficiency of xEV drive motors, we developed a motor that uses amorphous metals as part of its core (see page 39 for details). Together with

less heavy rare earth magnets to reduce resource risk, and installed new production lines for neodymium magnets and ferrite magnets. Going forward, we will improve the productivity of our new production lines and optimize our global production system in order to enhance profitability and expand orders. We are targeting an adjusted operating margin of 10% for magnetic materials in fiscal 2021.

*1 xEV: A generic term for electric vehicles (EVs), hybrid electric vehicles (HEVs), and plug-in hybrid electric vehicles (PHEVs).

*2 Feed Assy: Wiring parts for xEV motors

FA/robots, medical devices, rolling stock

In electric wires and cables for FA/robots, we will strive

FY2018 Results

FY2021 Targets

Magnetic

Revenues

¥137.0 billion

¥175.0 billion

Materials and

Adjusted operating income [Profit

margin]

[2.9%] ¥4.0 billion

[12.6%] ¥22.0 billion

Applications/

Power Electronics

ROIC

3.9%

8.2%

Capital investment

Wires, Cables,

Revenues

¥240.1 billion

¥245.0 billion

(3-year cumulative)

Adjusted operating income [Profit

margin]

[5.2%] ¥12.5 billion

[7.8%] ¥19.0 billion

and Related

¥69.0billion

Products

ROIC

8.2%

11.3%

Revenues

¥377.1 billion

¥420.0 billion

Total*

Adjusted operating income [Profit

margin]

[4.4%] ¥16.5 billion

[9.8%] ¥41.0 billion

ROIC

5.5%

9.3%

* Simple sum before eliminating intersegment revenues

Power electronics

  • Enhance the global production system for soft magnetic components and materials
  • Increase the production capacity of ceramic products

Automotive components

  • Increase the production capacity of harnesses for EPB at the production sites in Thailand and Vietnam

German research organization Fraunhofer IISB, we also developed a high-power-density technology that contributes to advances in output and compactness of on-board xEV chargers. We plan to use the outcomes of these activities to expand our business in high- performance soft magnetic components and materials.

In automotive electronic components, we will increase the production capacity for electric parking brake harnesses in Thailand and Vietnam. We will also expand

to increase our market share, deploying our unique technologies that feature thinner and lighter design and longer-life performance. With production in Japan, China, and Vietnam, we will make flexible investment decisions in response to market fluctuations. We are targeting ¥10 billion in sales of electric wires and cables for FA/robots in fiscal 2021.

In medical devices, we will increase the performance of scintillator materials for CT equipment, expand our

Initiatives of Fiscal Year 2018

Medium-Term Management Plan

Targeting organic growth, we introduced innovative production lines, established Hitachi Metals San Huan Magnetic Materials (Nantong) Co., Ltd., and introduced a new continuous casting and rolling line. We also transferred our information system business and lead frame business as part of our continuous portfolio restructuring efforts. In addition, we pursued various M&A activities, with Santoku Corporation, a magnet alloy manufacturer, and HTP-Meds, LLC, a U.S. maker of medical products, becoming subsidiaries.

Expansion into growth areas

Automobiles

The Advanced Components & Materials Division offers a wide range of products in the automotive area, including soft magnetic components and materials for power electronics, magnets, and magnet wires for wires, cables, and related products. Leveraging our advanced functional material design technology, we will generate synergies between businesses and meet the rapidly expanding needs of electrification and emerging xEV*1vehicles.

In soft magnetic components and materials, where demand is growing, we commissioned a FINEMET®

our Feed Assy*2business in Japan and China while focusing on the development of new sensors. Our aim is to achieve a 1.7-fold increase in sales of automotive electronic components by fiscal 2025 compared with the fiscal 2018 level.

In magnet wires, we have commenced mass production in Japan and Thailand in response to strong xEV demand. Going forward, we will step up sales of differentiated products, such as high-PDIV (partial discharge inception voltage) wires and surge-resistant wires.

In magnetic materials, we brought production of magnet alloys 100% in-house, expanded our lineup of

line of combination products of catheters and cable for catheter testing and treatment equipment, and promote mass production of new probe cables for ultrasound diagnostic equipment. Our aim is to achieve a 1.3-fold increase in sales of medical devices by fiscal 2021 compared with the fiscal 2018 level.

In electric wires and cables for rolling stock, we aim to increase our market share in China, where demand for high-speed rail is growing. In Europe, we will propose cable navigation and other solutions, in addition to supplying products. We are targeting ¥14 billion in sales of electric wires and cables for rolling stock in fiscal 2021.

Basic policy of Fiscal Year 2021

Medium-Term Management Plan

Under the Fiscal Year 2021 Medium-Term Management Plan, we will work to address the megatrends of urbanization, declining birthrate and aging population, serious environmental problems, and technological advances. Specifically, we will focus on reaping the benefits of investments, concentrating our resources, and generating synergies between businesses. We have identified the following growth areas: automobiles, factory automation (FA) and robots, medical devices, and rolling stock.

Ribbon production line at the Metglas Yasugi Works in April 2019. This will quadruple our production capacity, establishing Hitachi Metals as the world's No. 1 manufacturer. In order to increase the production capacity of soft ferrite, meanwhile, we are scheduled to start mass production in the Philippines in January 2020. Our aim is to achieve a 1.4-fold increase in sales of soft magnetic components and materials by fiscal 2021 compared with the fiscal 2018 level.

In ceramic components, there is a growing need for silicon nitride substrates and other substrates that combine high thermal conductivity and mechanical

Automotive area

Seek synergy between magnetic materials, power electronics, and wires, cables, and related products

Feed assy

Amorphous metals

Magnet wires

Magnets

Deeply cultivate the automotive and industrial infrastructure markets with the design technology for advanced components and materials at the core

30The Hitachi Metals Group Report 2019 (Integrated Report)

The Hitachi Metals Group Report 2019 (Integrated Report) 31

Message from the General Manager of

Human Resources & General Administration Division

Value creation

Strategies

Technology and R&D

Foundation

We strive to be a company with a diverse workforce, where individual employees can fully demonstrate their abilities with rewarding jobs in worker-friendly environments.

Naohiko Tamiya

Vice President and Executive Officer,

General Manager of Human Resources & General Administration Division

Enabling individual employees to fully demonstrate their abilities in worker- friendly environments

Under our Corporate Creed, we aspire to be the "best enterprise." This means being the best company not only for customers and society, but for employees as well. Under our management policy of "Safety always comes first," we are working to create safe and healthy environments where employees can work with peace of mind every day. Moreover, good workplaces with health and safety lead to better productivity. In our Fiscal Year 2021 Medium-Term Management Plan, therefore, we

The Hitachi Metals Group embraces the concept of diversity-oriented management when selecting and developing management personnel. Once a year, we select and make a list of future executive candidates. We share this with the Board of Directors for discussion about ways to develop those candidates. To ensure diversity, we endeavor to include women and foreigners in our candidate lists.

Some candidates are subject to a training program for manager-level personnel. Others are sent to external training programs and given tough assignments in overseas locations and differing fields. In these ways,

Rigorous pursuit of diversity-oriented management

A company's business growth is tied directly to its human resource strategy. The wellspring of business growth lies in people-and no matter which era or sector, this will never change. The corporate vision of the Hitachi Metals Group's Fiscal Year 2021 Medium- Term Management Plan is "Building People, Building Innovation, Building the Future." We will rigorously pursue diversity-oriented management as our human

that transcends lines between business divisions. We aim to provide employees with varying opportunities that do not impede individual potential, while deploying the various skills and knowledge of each person across business divisions to generate new innovations.

For employee engagement, we conduct an annual employee awareness survey called Hitachi Insights. Based on survey results, we identify and implement necessary measures to take, such as workplace communication improvements, and use the plan, do, check, and act

will plan to make specific safety-related investments every year and also emphasize health-oriented management.

By having diverse human resources perform rewarding jobs in worker-friendly environments, we hope to be a company in which individual employees can achieve future self-fulfillment, one step at a time, and fully demonstrate their capabilities.

we strive to develop competent management personnel. By fostering diverse management personnel with

wide-ranging experiences, the Hitachi Metals Group aims to realize its "best enterprise" aspiration and achieve sustainable development.

  • For more details, see page 52 fordiversity-oriented management and page 54 for safety and health.

resource strategy to underpin this vision. With our "Only 1, No. 1" products, we have made positive contributions to customers and society. To continue generating innovation, we aim to be a company with a diverse workforce, where individual employees can fully demonstrate their abilities with rewarding jobs in worker-friendly environments.

Attract diverse human resources with diverse values

The Hitachi Metals Group will strive continuously to attract diverse human resources in terms of gender, nationality, age, and the like, including new graduates and mid-career hires. When fostering human resources, we will focus on independence and work to implement effective human resource development that is suitable for their individual characteristics. This is embodied in our Corporate Philosophy: Wa sureba tsuyoshi,which portrays our endeavor to work as one while improving ourselves individually in order to create the best possible company.

Effective fiscal 2019, we have shifted our company's structure to two business divisions. We will also promote the dynamic utilization, development, and allocation of human resources from a whole-company perspective

(PDCA) cycle to increase employee engagement.

Rewarding work

In addition to good work content and clear workplace instructions, motivating individual employees requires proper communication between superiors and subordinates. We strive to improve communication by conducting regular interviews between superiors and subordinates based on our belief that serious and deep discussions will lead to job satisfaction. These discussions cover such matters as career choice suited to individual aptitude, employee satisfaction related to treatment and evaluation, and proper sharing

of company management information.

With regard to workstyle reforms, we have made tangible progress in reducing working hours thanks to top-down initiatives over a three-year period from fiscal 2016. For true workstyle reforms, however, individual independence is a key. Going forward, we will encourage individual employees to take the initiative in enhancing work efficiency and superiors to embrace a deep commitment to improving the business. This will lead to increased productivity, which is our original purpose.

Fostering management personnel

To achieve sustainable corporate growth, it is very important to adopt long-term perspectives in line with our Corporate Creed, and foster management personnel accordingly.

Human resources: Strategic KPIs

Initiatives

KPI

FY2018 result

FY2021 plan (target)

1

Employee engagement

Engagement index*1

59%

62%

2

(Hitachi Insights)

Overall positive response rate (non-consolidated)

57%

60%

3

Diversity recruitment ratio*2

56%

50%

4

Diversity-oriented management

Ratio of women in management positions*3

1.5% (19 people)

2.0% (26 people)

5

Ratio of women in career-track positions

4.7% (99 people)

5.6% (138 people)

(non-consolidated;full-time)

6

Workstyle reforms

Total annual working hours*4

2,049 hours

14 days

(average annual leave to be taken)

7

Safe and healthy workplaces

Occupational accident frequency*5

0.42

0

*1 Number of positive engagement indicators in the Hitachi Insights survey (non-consolidated)

*2 Percentage of foreign nationals, women, and mid-career hires in planning divisions' hires (non-consolidated)

*3 Percentage of women in managers and professionals (non-consolidated; currently working as manager or professional)

*4 Average annual working hours of back-office workers (non-consolidated; including managers and professionals)

*5 Occupational accident frequency = Number of casualties due to occupational accidents ÷ Total actual working hours × 1,000,000 (calendar year)

32The Hitachi Metals Group Report 2019 (Integrated Report)

The Hitachi Metals Group Report 2019 (Integrated Report) 33

Value creation

Strategies

Technology and R&D

Foundation

Examples of Products That Help Realize a Sustainable Society

The growing effects of climate change, reflected in rising sea levels and increasing storm and flood damage due to abnormal weather events, are prompting people around the world to take action to reduce environmental impacts. The Hitachi Metals Group focuses on developing key environmentally conscious products and providing them to customers in wide-ranging fields, such as automobiles and electric power. In these ways, we contribute to the realization of a low-carbon society.

Technology and R&D

For theautomobile industry Forthe electric power industry

NEOMAX®neodymium magnets

Metglas®amorphous alloy ribbon

CONTENTS

35 Examples of Products That Help Realize a Sustainable Society

38 Aiming to Be a "Genuinely Development-Driven Company"

In 2015, the United Nations adopted a set of 17 Sustainable Development Goals (SDGs) as part of a universal action plan aimed at ending poverty, protecting the planet, and ensuring peace and prosperity for all people by 2030.

34The Hitachi Metals Group Report 2019 (Integrated Report)

The Hitachi Metals Group Report 2019 (Integrated Report) 35

Value creation

Strategies

Technology and R&D

Foundation

INeodymium magnets: Contributing to popularization of xEVs

In 1982, our company (then called Sumitomo Special Metals) invented a neodymium magnet with a much stronger magnetic force than ordinary ferrite magnets. In general, a stronger magnetic force of the magnet means higher performance of the motor, which contributes to miniaturization and weight reduction. In light of technological advances in xEVs*, neodymium magnets play a significant role, which are indispensable for making motors smaller and lighter, thus increasing efficiency and saving energy. The Hitachi Metals Group was the first in the world to develop and mass-produce neodymium magnets, sold under the NEOMAX®brand. Boasting the world's strongest magnetic force among permanent magnets, NEOMAX®magnets are used in various fields, including automobiles, IT, home appliances, industry, medical devices, and environment and energy. Currently, we are focusing on increasing our presence in the automotive market, which is undergoing transformation due to advances in connectivity, automated driving, and electrification. Supplying high-performance neodymium magnets for around 1.18 million vehicles annually, we contribute to higher efficiency and downsizing of xEV drive motors and generators.

  • xEV: A generic term for electric vehicles (EVs), hybrid electric vehicles (HEVs), andplug-in hybrid electric vehicles (PHEVs).

High-performance neodymium magnets supplied by the Group annually

Approx.

1.18

million vehicles

IAmorphous alloys: Contributing to energy efficiency of power transformers

Transmission energy gets lost as electricity travels from the power plant to factories and homes. High-voltage electricity sent from the power plant is converted to low-voltage electricity by transformers for safety reasons. However, transformers not only consume power during the conversion, but also when in standby mode.

To solve this problem, the Hitachi Metals Group developed an amorphous alloy called Metglas®. Transformers using Metglas®as the core material consume around one-third of the power of those using conventional materials, such as magnetic steel sheets. We have been supplying this alloy since 2003. Unlike ordinary metals and alloys, amorphous alloys have excellent soft magnetic properties due to their lack of crystal structure, which makes it possible to suppress power loss in standby mode. To date, the Group has provided Metglas®as the core material for around 480,000 amorphous transformers. Compared with magnetic steel sheet transformers, this translates to a reduction in CO2emissions* of approximately 50,000 tons per year.

* Based on shipment volume and difference in transformer energy loss, according to Indian standards

For the CO2emission coefficient, we use IEA CO2emissions from fuel combustion (2017 world).

CO2emissions compared with conventional transformers

Approx.

50

thousand-ton reduction

ISustainable use of rare earth materials

Neodymium magnets are expected to find more widespread use as companies work to realize an energy-efficient society. These magnets consist mainly of neodymium, iron, and boron, a composition that is vulnerable to heat and whose magnetic properties deteriorate when the temperature exceeds around 80°C. Therefore, it is necessary to add dysprosium (Dy) and terbium (Tb), which are heavy rare earth elements.

Neodymium and heavy rare earth elements are indispensable

NEOMAX®neodymium magnets

materials for the evolution of magnets, but since they are derived

from natural resources, there are risks in terms of procurement

stability and costs. Because it is difficult to reduce the amount of

neodymium, which is the basic composition of the magnets, the

Group has been developing the NEOMAX®F Series since 2014,

reducing the amount of heavy rare earth elements while

maintaining heat resistance. By limiting the use of rare earth

elements, we contribute to their sustainability.

Rare earth magnet business

We produce neodymium rare earth magnets (neodymium magnets), which are indispensable for advances in miniaturization, weight reduction, and operational and energy efficiency. They are used in motors in such fields as automobiles, IT, home appliances, industry, medical devices, and environment and energy. In the automotive field, they are used in xEV drive motors and generators.

Contribution to SDGs

Value created

We provide high-performance rare earth magnets for xEV applications in order to improve fuel efficiency, reduce

Environmental

vehicle exhaust emissions, and enhance operational efficiency and miniaturization of xEV drive motors and

generators, stemming from replacement of internal combustion engines with xEV motors. (Approximately 1.18

value

million vehicles/year equivalent) [Customer value created]

7.3

11.6

13.1

*Based on the amount used and shipment volume for xEV applications

Developing magnets that require less heavy rare earth resources (less heavy rare earth magnets) will reduce the use of

such resources. [In-house value created]

Potential risk of business on society/environment

Response

Environmental destruction due to rare earth mining;

Procure from companies that care for the environment and working conditions

poor working conditions

IPursuing new possibilities for materials and developing products that help reduce environmental impact

Because amorphous alloys can contribute to energy savings in

various products, we anticipate their deployment in many areas

other than transformers. Unlike general metals, amorphous

alloys are hard yet flexible, meaning they are difficult to deform

or cut. However, there are still many unknown points about

Metglas®amorphous alloy ribbon

this principle. Hitachi Metals participates in the Next

Generation TATARA project, a joint initiative by regional

universities and industry promoted by Shimane University.

Under the project, we engage in research aimed at further

High-frequency transformer core

clarifying the properties of amorphous alloys. By deepening

our understanding of these materials and establishing solid

theories, we believe we can create new production methods

and processes and develop eco-friendly products that help

reduce environmental impacts.

Soft magnetic materials business

We produce soft magnetic materials used in energy-saving transformers and noise suppression components in industrial and electronic equipment.

Contribution to SDGs

Value created

Environmental

Compared with transformers using conventional soft magnetic materials, such as grain-oriented magnetic steel sheets,

the no-load loss (standby power) of those using amorphous alloys is low, at around one-third. We provide high-efficien-

value

cy amorphous transformer materials that can significantly reduce power conversion loss (used in around 480,000 trans-

formers). This translates to an annual CO2emission reduction of around 50,000 tons compared with transformers using

7.3

13.1

grain-oriented magnetic steel sheets. [Customer value created]

Potential risk of business on society/environment

Response

-

-

36The Hitachi Metals Group Report 2019 (Integrated Report)

The Hitachi Metals Group Report 2019 (Integrated Report) 37

Aiming to Be a "Genuinely Development-Driven Company"

In April 2017, the Hitachi Metals Group opened the Global

Research & Innovative Technology center (GRIT), reflecting its

Value creation

Strategies

Technology and R&D

Foundation

Groupwide technological development to enhance motor efficiency

By establishing GRIT, we have put in place a system for pursuing medium- and long-term research themes across the Group. Our aim is to create new businesses and products by organically combining technologies and information to drive innovation. Here, we introduce our development of a motor core structure using amorphous metals.

principle to "promote research, development, and innovation for the future, to become a genuinely development-driven company." In April 2018, we opened a new facility within GRIT consisting of a research building and an experimental building. Through

collaboration between GRIT and the research facilities of our business divisions, we promote cross-departmental projects and open innovation in our quest to create new levels of value.

IDevelopers gather at GRIT to create a new structure

Using our Metglas®amorphous metals, we have developed technology to improve the efficiency of motors. This is in response to calls from various sectors-including those related to automobiles, industrial infrastructure, and electronics-for motors that are smaller, lighter, and more efficient. It is the result of R&D on using amorphous metals for motor cores, because core loss from amorphous metal cores is 10% or less than for cores using magnetic steel sheets.

Due to the thinness of amorphous metal, a higher number of sheets to be processed is required. Moreover, the post- pressing assembly process is difficult and reduces the life of the press mold. Therefore, amorphous metals are more difficult than magnetic steel sheets to process, and transforming it into complex shapes comes with many challenges. Through open innovation by internal and external development teams centered on GRIT, we solved the problem by creating a structure in which amorphous metals are used only for the teeth part, rather than making the entire core from amorphous metals.

Main R&D achievements in fiscal 2018

In fiscal 2018, the Group made investments in R&D totaling ¥18.6 billion and achieved the following results.

Image of the newly developed motor core (amorphous metals used only in the teeth part)

Contributing to xEV popularization Specialty Steelwith motor components and lithium-

Products

ion battery components and materials

To improve the efficiency of motors, we have developed a motor core consisting of amorphous metals. We will forge ahead with R&D aimed at applying this technology to xEV drive motors (see page on right for details).

In addition, we developed a lithium-ion battery clad terminal, processed from aluminum and copper clad materials*1, with the aim of improving the connection reliability of automotive lithium-ion batteries used in harsh conditions, such as high- and low-temperature environments. We expect this to help reduce battery weight and assembly time.

Components and

Contributing to reductions in seawater

Functional

Equipment

desalination costs

We have developed a ceramic adsorption filter that minimizes fouling of RO*2membranes used in seawater desalination. This is expected to reduce the cost of producing freshwater. Going forward, we will accelerate efforts toward commercialization and expand the business in Singapore,

a major center of the water treatment industry.

Wires, Cables, and

Addressing need for higher-

Related Products

performance rolling stock

Radial gap motor

Core

Teeth part

In addition, we started mass production of soft ferrite core materials with excellent high-frequency characteristics, to foster advances in miniaturization and energy efficiency of network devices, automobiles, and smartphone components.

Contributing to downsizing and cost Magnetic Materialsreduction of power module cooling

and Applications

mechanisms

Power modules are used in such fields as industrial equipment, automobiles, rolling stock, and new energy. To reduce the size and cost of power module cooling mechanisms, we developed a silicon nitride substrate with high thermal conductivity (130W/m-K) and mechanical properties. It can also handle high-temperature environments, in which silicon carbide (SiC) semiconductors are generally used.

Utilizing our unique fire safety design technology for rolling stock wires and cables, we developed a LAN cable for rolling stock that complies with the European railway fire safety standard. By adding this product to our lineup, we will meet demand for high-performance rolling stock in Europe and Asia.

*1 Clad material: A material in which two or more different metals are bonded together, giving it composite properties that cannot be obtained with a single material.

*2 RO: An abbreviation for Reverse Osmosis. Two bodies of water of different salinity are placed adjacent to each other via a membrane that allows only water molecules to permeate; if the high salinity side is pressurized, the water molecules move to the low salinity side.

IPrototype motor combining multiple Group technologies

We have made a prototype motor that incorporates multiple materials possessed by the Hitachi Metals Group. These include Metglas®amorphous metals (used in the motor core), HIDENSETMultrahigh-density bonded magnets, and enamel wires. Reflecting its high energy efficiency, this prototype motor achieved an IE5*3rating, the highest in the world for motor energy efficiency.

The aim of making the prototype was to demonstrate the superiority of amorphous metal as a motor material. Looking ahead, we will proceed with R&D to find applications in xEV drive motors and the like, while proposing new application methods for motor materials backed by demonstration data.

*3 The highest level in the guideline for motor energy efficiency under IEC60034-30-2, currently being discussed and formulated by the International Electrotechnical Commission (IEC).

Prototype motor

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The Hitachi Metals Group Report 2019 (Integrated Report) 39

Value creation

Strategies

Technology and R&D

Foundation

Message from the Chairperson of the Board

Foundation

Shinichiro Omori

Chairperson of the Board

CONTENTS

  1. Message from the Chairperson of the Board
  2. Corporate Governance

52

Promotion of Diverse Human Resources

54

Health and Safety

56

Initiative for Climate Change

  1. CSR-ConsciousProcurement
  2. Respect for Human Rights

The Hitachi Metals Group would first like to report that Koji Sato assumed the position of Representative Executive Officer, President and Chief Executive Officer in April 2019, at the start of the Fiscal Year 2021 Medium-Term Management Plan. With the change of the President and Chief Executive Officer, renewal of the executive officer system, and implementation of organizational reforms, we aim to grow as a high- performance materials company supporting sustainable societies. President Sato has deep knowledge of trends in technology and experience as the head of the Technology, Research & Development Division, as well as experience as a corporate manager, including as President of the Specialty Steel Company and President of Group companies. Deeming him the most appropriate person to carry out the Fiscal Year 2021 Medium-Term Management Plan, the Board of Directors appointed him to the position of President and Chief Executive Officer. Furthermore, in terms of organizational reforms, we transitioned from the previous four internal company system to a two business division system in order to further bolster synergies between businesses that share markets, customer needs, and elemental technologies, as well as to enhance our cross-sectional functions, and strengthen both strategy and governance. This major change in the business execution system has made the role played by the Board of Directors even more important.

Corporate governance is the foundation for realizing our Corporate Creed of being "the best enterprise," and we recognize this as an important management issue. We have, therefore, built an organizational system in which the supervisory function of management by the Board of Directors and the business execution function by the executive officers are each performed effectively and are well balanced. The analysis of the effectiveness of the Board of Directors conducted in May 2019 concluded that the selection of agenda items for the Board of Directors was appropriate, that vigorous discussion was carried out on business strategy and management issues, that important items were discussed sufficiently in advance, and that the effectiveness of the Board of Directors as a whole was ensured. However, it was also reported that the evaluation results showed a further need for timely follow-up on the progress of measures to carry out strategy and solutions to management issues, further expansion of opportunities for Directors to acquire the information needed to perform their roles, and enhancement of the governance system for the Group and all its bases. Going forward, we will provide comprehensive backup for bold and speedy execution of measures relating to management, including business restructuring and strategic investments, by promoting efforts to increase the effectiveness of the Board of Directors and actively incorporating the wide-ranging knowledge and diverse perspectives of Outside Directors.

We will continue to disclose high-quality information to all of our stakeholders in a timely manner and reflect in our corporate activities the objective evaluation and perspectives regarding our management that we receive through constructive dialogue, in an effort to achieve sustainable growth and increase our corporate value.

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The Hitachi Metals Group Report 2019 (Integrated Report) 41

Corporate Governance

Value creation

Strategies

Technology and R&D

Foundation

IBasic Views on Corporate Governance

The underlying basis for corporate governance at the Company is to ensure transparent, sound, and efficient management meet the needs of our stakeholders, and increase corporate value. We believe increasing corporate value to be one of our most important management challenges. Accordingly, it is imperative that we create an organizational structure in which management oversight and business operations function effectively and in balance. We also believe that timely, high- quality information disclosure contributes to the improvement of corporate governance. In pursuit of this philosophy, we go

beyond simple financial disclosure, regularly publishing the details of individual business segments and medium-term management plans. We acknowledge that compliance is the linchpin of corporate governance. Nonetheless, our corporate activities go beyond mere compliance with laws and internal regulations, extending to the role we must fulfill as a member of society, based on respect for social ethics and morality. The Company established the Hitachi Metals Group Code of Conduct for actions that describe the above details as specific standards of conduct for its executives and employees.

IOverview of Corporate Governance System, etc.

Corporate Governance Structure

General Meeting of Shareholders

Appointment/dismissal

Proposal to appoint/

Appointment/

Proposal to appoint/

dismiss directors

dismissal of directors

dismiss accounting

auditor

Board of Directors

Executive

Supervision of exercise

Nominating Committee

Officer

function and

Accounting

appointment/dismissal of

executive officers

Audit Committee

Auditor

Accounting

Executive

Audit of exercise function

audit

Committee

(Internal control

IOverview of the Governance Structure

Organization System

A Company with a nominating committee, etc.

Directors

Number of Directors stipulated in

10

the Articles of Incorporation

Term of office of Directors stipulated in

One year

the Articles of Incorporation

Chair of the Board of Directors

Chairperson of the Board (except when concurrently serving as President)

Number of Directors

Nine (including one female Director)

Outside Directors

Number of Outside Directors

Three

Number of Outside Directors designated as

Three

Independent Directors

Committees

Composition of Committees

The Nominating Committee, Audit Committee, and Compensation Committee

Number of Committee members

Four members each on the Nominating Committee and Compensation Committee,

and five members on the Audit Committee

Executive Officers

function)

Compensation Committee

Compensation decisions

Direction and orders

Supervisory and

control functions

Supervisory and

control functions

Business Divisions

CSR

Promoting CSR/

Management

Internal

Board of

compliance

Office

Internal

Corporate

Auditing

Directors

Companies

Communication

Office

Office

Evaluating internal control systems

(Risk management)

Business audit

(Internal control function)

Membership composition of each committee and affiliations

of chairs

Position

Name

Nominating Committee

Audit Committee

Compensation Committee

Chairperson of the Board

Shinichiro Omori

Deputy Chairperson of

Akitoshi Hiraki

the Board

Director

Makoto Uenoyama

Director

Toshiko Oka

Director

Koichi Fukuo

Director

Katsuro Sasaka

Director

Koji Sato

Director

Toyoaki Nakamura

Director

Kenichi Nishiie

Note: Chair

Committee member

Number of Executive Officers

14

Independent Directors

Number of Independent Directors

Three

The Company adopts the statutory organizational structure of a Company with a Nominating Committee, etc. This is because we concluded that this structure would contribute to the bold and speedy execution of measures relating to the Groupwide

matters as well as to designate persons to be entitled to convene a Board of Directors meeting and persons to report about the status of the Committee's execution of duties to the Board of Directors from among its Committee members.

Measures aimed at the enhancement­of corporate governance

  • Transition to a "company with a committee, etc.," as defined in the Commercial Code (June 2003)
  • Increase in the number of Outside Directors serving as Independent Directors from two to three (June 2016)

Ratio of Inside Directors and

Outside Directors

Outside

Directors

Inside

3

9

6

(including one

female Director)

management, such as business restructuring and strategic investments, and also that the transparency, soundness, and efficiency of management would be effectively improved through strengthening the decision-making and supervisory functions by Outside Directors, who are well versed in social norms and have a broader perspective, abundant experience, and in-depth knowledge, in each of the Nominating Committee, the Audit Committee, the Compensation Committee, and the Board of Directors. Under this system, nine Directors (of whom three are Outside Directors) have been appointed, and the Company has established the Board of Directors, Nominating Committee, Audit Committee, and Compensation Committee pursuant to the provisions of the Companies Act. Furthermore, the Company has established the Board of Directors Office to assist with the execution of duties by the Board of Directors and each Committee. The Board of Directors Office has persons in charge of the Board of Directors and each Committee.

The purpose of the Nominating Committee is to make decisions on matters relating to items concerning appointment and dismissal of Directors to be submitted at a General Meeting of Shareholders. The Committee is authorized to decide such

The purposes of the Audit Committee are to audit the execution of duties by Directors and Executive Officers and resolve issues such as matters relating to items concerning appointment, dismissal, and non-reappointment of the Accounting Auditor to be submitted at a General Meeting of Shareholders, in order for the Company's business to be operated lawfully and properly. The Committee is authorized to resolve such issues as well as to conduct policies for determination to dismiss or not to reappoint the Accounting Auditor or nominate persons to be entitled to convene a Board of Directors meeting from among its Committee members.

The purpose of the Compensation Committee is to determine the compensation and its details received by each Director and Executive Officer. The Committee is authorized to decide such matters as well as to determine policy on the determination of compensation and its details received by each Director and Executive Officer; also, it designates persons to be entitled to convene a Board of Directors meeting and persons to report about the status of the Committee's execution of duties to the Board of Directors from among its Committee members.

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The Hitachi Metals Group Report 2019 (Integrated Report) 43

IThe Audit Committee as an Audit Organization

Value creation

Strategies

Technology and R&D

Foundation

Career and Meeting Attendance of Directors (as of June 26, 2019)

The Audit Committee is composed of five committee members. The Audit Committee is in charge of auditing business

concurrently serve in any position at any other business operating division. The Audit Committee formulates annual

Note: Information regarding attendance at meetings held between June 2018 and May 2019 is provided.

execution by Directors or Executive Officers in accordance with laws and regulations or the Articles of Incorporation, the appropriateness of management's judgments, the adequacy of internal control systems, and accounting audit. The execution of duties by the Audit Committee is assisted by a person in charge of the Audit Committee at the Board of Directors Office. To ensure independence from Executive Officers, the person in charge of the Audit Committee does not

auditing policies and audit implementation plans, and performs audits based on said policies and plans by hearing reports on important items and having Audit Committee members visit each facility, etc., and each subsidiary to conduct audits as regular audits. In addition, the Audit Committee conducts special audits if it finds possibility of violations of laws and regulations or the Articles of Incorporation by the Directors or the Executive Officers.

Shinichiro Omori

Chairperson of the Board

Attendance at meetings Board of Directors: - Nominating Committee: - Audit Committee: - (Appointed in June 2019)

Apr 1978 Joined Hitachi, Ltd.

Sep 2008 General Manager of Corporate Procurement Division Apr 2012 Vice President and Executive Officer

Director of Hitachi Automotive Systems, Ltd. (resigned in March 2016)

Apr 2016 Senior Vice President and Executive Officer of Hitachi, Ltd. (resigned in March 2019) Director of Hitachi Appliances, Inc. (resigned in March 2017)

Director of Hitachi Consumer Marketing, Inc. (resigned in March 2017) Jun 2017 Director of Hitachi Chemical Company, Ltd. (resigned in June 2018)

Outside Director of Hitachi Capital Corporation (resigned in June 2019) Apr 2019 Associate of Hitachi Metals, Ltd.

Jun 2019 Chairperson of the Board (current position)

Reasons for appointment

Accounting Auditor

The Company determined that Mr. Omori will contribute to the management of the Company as well as the strengthening of the decision-making and monitoring functions of the Board of Directors and enhancing their effectiveness, by reflecting his abundant experience as a corporate manager at Hitachi, Ltd. and its group companies as well as in-depth knowledge gained in procurement operations, cost restructuring, and governance of global companies.

The Company's Accounting Auditor is Ernst & Young

assistants, and other personnel from Ernst & Young

ShinNihon LLC, and the certified public accountants named

ShinNihon LLC assisted with the execution of accounting

in the table below conducted accounting audits. Under the

audit duties. Seven certified public accountants and 25 other

direction of said certified public accountants, as necessary,

personnel assisted with the Company's accounting audit

certified public accountants, certified public accountant

duties.

Name of certified public accountant, etc.

Auditing firm of certified public accountant

Takashi Ouchida, Engagement partner

Ernst & Young ShinNihon LLC

Seiji Kuzunuki, Engagement partner

Ernst & Young ShinNihon LLC

IMatters Relating to Directors and Executive Officers

Akitoshi Hiraki

Deputy Chairperson of the Board

Attendance at meetings Board of Directors: 15/15 meetings Compensation Committee: 3/3 meetings

Apr 1985 Joined Hitachi Metals, Ltd.

Jun 2008 President and Director of Hitachi Setsubi Engineering Co., Ltd. (resigned in March 2010)

Apr 2010 Managing Officer, President of Specialty Steel Company, and Deputy General Manager of Corporate Export Regulation Office of Hitachi Metals, Ltd.

Apr 2012 Vice President and Managing Officer, President of High-Grade Metals Company, General Manager of Specialty Steel Division, and Deputy General Manager of Corporate Export Regulation Office

Apr 2015 Vice President and Representative Executive Officer, President of High-Grade Metals Company, and Deputy General Manager of Corporate Export Regulation Office

Jun 2015 Vice President and Representative Executive Officer, President of High-Grade Metals Company, Deputy General Manager of Corporate Export Regulation Office, and Director

Jan 2016 Vice President and Representative Executive Officer, General Manager of Technology, Research & Development Division, General Manager of Corporate Quality Assurance Division, and Director

Apr 2017 Representative Executive Officer, President and Chief Executive Officer, and Director Apr 2019 Deputy Chairperson of the Board (current position)

Reasons for appointment

The Company determined that Mr. Hiraki will contribute to the strengthening of the decision-making and monitoring functions of the Board of Directors and enhancing their effectiveness as a board member, by leveraging his abundant experience and in-depth knowledge gained as the head of the Company's Specialty Steel business, etc., as well as his thorough knowledge in the Group's

Functions and Roles of Directors

operations gained in general management of the Company's operations as President and Chief Executive Officer of the Company.

The items to be resolved by the Board of Directors are defined by the Board of Directors Rules. They consist of items that are solely to be decided by the Board of Directors under the Companies Act (decisions regarding basic management policies, basic policies related to the maintenance of internal control systems and other policies, appointment and dismissal of Executive Officers, appointment and dismissal of the

Representative Executive Officer, etc.), as well as items concerning dividends from surplus, issuance of new shares and subscription rights to shares, the acquisition, loan, and disposal of assets in excess of a specified amount, debt guarantees, reorganization, etc. Decisions on items other than those mentioned above have been delegated to the President and Chief Executive Officer.

Makoto Uenoyama

Outside Director

Attendance at meetings Board of Directors: - Nominating Committee: - Audit Committee: - Compensation Committee: - (Appointed in June 2019)

Apr 1975

Joined Matsushita Electric Industrial Co., Ltd. (currently Panasonic Corporation)

Apr 2006

Executive Officer (in charge of Accounting)

Jun 2007

Director (in charge of Accounting and Finance)

Apr 2010

Managing Director (in charge of Accounting and Finance)

Jun 2012

Managing Executive Officer (resigned in March 2013)

Apr 2013

Corporate Adviser (resigned in March 2015)

Jun 2013

Outside Audit & Supervisory Board Member of SOHGO SECURITY SERVICES CO., LTD. (Standing Audit

  • Supervisory Board Member until June 2017) (current position) Jun 2019 Outside Director of Hitachi Metals, Ltd. (current position)

Reasons for appointment

Outside Directors' Functions, Roles, and Their Relationship with the Company

The Company determined that Mr. Uenoyama will contribute to the management of the Company as well as the strengthening of the decision-making and monitoring functions of the Board of Directors and enhancing their effectiveness, by reflecting his abundant experience and in-depth knowledge in finance and accounting areas obtained through his experience in the finance and accounting operations of Panasonic Corporation over the years as well as the experience as Director in charge of

Outside Directors act as members of the Board of Directors and members of the Nominating Committee, Audit Committee, and Compensation Committee. They possess extensive

The Company has business dealings with the companies for which Mr. Makoto Uenoyama and Mr. Koichi Fukuo have formerly worked. However, the transaction amounts with these

accounting and finance, from a more objective standpoint as Outside Director.

experience and advanced knowledge, are well versed in the general norms of society, and use their broad perspectives to contribute to the enhancement of decision-making and auditing functions, and efficiency of the Company's management.

The Company considers each Outside Director to be fully independent from the Company, and has registered all of these Directors with the Tokyo Stock Exchange as Independent Directors.

companies during fiscal 2018 are substantially less than 1% of the consolidated revenues of the Company and each of those. Therefore, their former employment status is deemed to have no impact on their independence as Outside Directors.

There are no items of note regarding Outside Director Toshiko Oka.

With respect to relationships between each Outside Director and the Company, the independence of each Outside Director is judged according to the Criteria for Independence of Outside Directors, mentioned below.

Toshiko Oka

Outside Director

Attendance at meetings Board of Directors: 15/15 meetings Nominating Committee: 8/8 meetings

Audit Committee: 14/14 meetings Compensation Committee: 3/3 meetings

Apr 1986 Joined Tohmatsu Touche Ross Consulting Co., Ltd. (currently ABeam Consulting Ltd.) Jul 2000 Joined Asahi Arthur Andersen Ltd.

Sep 2002 Principal of Deloitte Tohmatsu Consulting Co., Ltd. (currently ABeam Consulting Ltd.) (resigned in August 2012)

Apr 2005 President and Representative Director of ABeam M&A Consulting Ltd. (Chief Executive Officer of the company later reorganized and renamed as PricewaterhouseCoopers Deals Advisory LLC) (resigned in March 2016)

Jun 2008 Outside Director of Netyear Group Corporation (resigned in June 2016)

Jun 2014 Outside Audit & Supervisory Board Member of Astellas Pharma Inc. (resigned in June 2018)

Jun 2015 Outside Audit & Supervisory Board Member of HAPPINET CORPORATION (resigned in June 2019) Apr 2016 Partner of PwC Advisory LLC (resigned in June 2016)

Jun 2016 CEO of Oka & Company Ltd. (current position)

Outside Director of Hitachi Metals, Ltd. (current position) Outside Director of Mitsubishi Corporation (current position)

Jun 2018 Outside Director of Sony Corporation (current position)

Jun 2019 Outside Director of HAPPINET CORPORATION (current position)

Reasons for appointment

The Criteria for Independence of Outside Directors are provided in Article 15, Criteria for Independence of Outside Directors of the Corporate Governance Guidelines of Hitachi Metals, Ltd. The guidelines are posted on our corporate website (https://www. hitachi-metals.co.jp/e/ir/ir-csr.html).

The Company determined that Ms. Oka will contribute to the management of the Company as well as the strengthening of the decision-making and monitoring functions of the Board of Directors and enhancing their effectiveness, by reflecting her abundant experience and in-depth knowledge in corporate management and accounting and finance areas obtained through her consulting experience in M&A and the creation of management strategies over the years, as well as her experience as a corporate manager of a consulting firm and as an outside director of several companies, from a more objective standpoint as Outside Director.

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The Hitachi Metals Group Report 2019 (Integrated Report) 45

Koichi Fukuo

Outside Director

Apr 1978 Joined Honda Motor Co., Ltd.

Jun 2005 Operating Officer (in charge of quality and certification)

Value creation

Strategies

Technology and R&D

Foundation

Business Execution System

Attendance at meetings Board of Directors: - Nominating Committee: - Audit Committee: - Compensation Committee: - (Appointed in June 2019)

Katsuro Sasaka

Jun 2010 Managing Officer

Apr 2014 Senior Managing Officer

Nov 2014 Executive Vice President and Director of Honda R&D Co., Ltd.

Apr 2015 President and Representative Director (resigned in March 2016)

Jun 2015 Senior Managing Officer and Director of Honda Motor Co., Ltd. (resigned in June 2016) Jun 2018 Outside Director of Seven Bank, Ltd. (current position)

Jun 2019 Outside Director of Hitachi Metals, Ltd. (current position)

Reasons for appointment

The Company determined that Mr. Fukuo will contribute to the management of the Company as well as the strengthening of the decision-making and monitoring functions of the Board of Directors and enhancing their effectiveness, by reflecting his abundant experience and in-depth knowledge in the automobile industry, to which our products are mainly supplied, obtained as the head of quality and certification of Honda Motor Co., Ltd. and as a corporate manager of the company and its group companies, from a more objective standpoint as Outside Director.

Apr 1980 Joined Hitachi Metals, Ltd.

Regarding business execution, the Board of Directors delegates a great deal of decision-making authority concerning business execution to Executive Officers to achieve prompt decision- making. The Company has established the Executive Committee to ensure that the President and Chief Executive Officer makes decisions on and executes business operations in compliance with laws and regulations and the Articles of Incorporation, as well as more efficiently based on considerations from multiple angles. The Committee deliberates on certain important

management matters that impact the Company or the Group, and makes decisions regarding these matters. Also, as of April 1, 2019, the Company shifted its corporate structure from an internal company system to a business division system with the aim to further strengthen synergies between its businesses that share the same markets, customer needs and element technologies as well as to enhance cross-sectional functions and strengthen its strategic functions and governance.

Director

Apr 2013 General Manager of Finance Dept. of Finance Center

Jun 2013 Deputy General Manager of Yasugi Works and President of HMY, Ltd. (resigned in March 2015)

Executive Officers (As of April 1, 2019)

Attendance at meetings Board of Directors: 15/15 meetings

Apr 2015 Director and President of Hitachi Metals (China), Ltd. (resigned in March 2017)

Apr 2017 Executive Officer, Deputy General Manager of Corporate Management Planning Division, and General Manager of Group Company Auditing Office of Hitachi Metals, Ltd. (resigned in March 2018)

Jun 2018 Director (current position)

Reasons for appointment

The Company determined that Mr. Sasaka will contribute to the strengthening of the decision-making and monitoring functions of the Board of Directors and enhancing their effectiveness as a board member, by leveraging his abundant experience and in-depth knowledge in accounting, finance and other areas obtained as a senior management of the Company's finance and business planning operations as well as his thorough knowledge in the Group's operations gained as President, etc. of a subsidiary controlling business operations in China.

Koji Sato

Representative Executive Officer

President and Chief Executive Officer

Overall Operations

General Management

Hiroaki Nishioka

Representative Executive Officer Vice President and Executive Officer In charge of Corporate Administration Chief Financial Officer

Hiroshi Watanabe

Vice President and Executive Officer In charge of Business

General Manager of Advanced Metals Division Deputy General Manager of Corporate Export Regulation Office

Ryouji Akada

Executive Officer

In charge of Business

Toru Taniguchi

Executive Officer

In charge of Business Deputy General Manager of Advanced Metals Division General Manager of Automotive Casting Business Unit

Masato Hasegawa

Executive Officer

In charge of Technology and Corporate

Hisaki Masuda

Executive Officer

In charge of Corporate Administration General Manager of Corporate Management Planning Division

Toru Yamamoto

Executive Officer In charge of Sales

General Manager of Business Activity & Marketing Division

Koji Sato

Director

Apr 1987 Joined Hitachi Metals, Ltd.

Jan 2011 President and Representative Director of Japan Aeroforge, Ltd. (resigned in June 2013) Oct 2014 General Manager of Metallurgical Research Laboratory of Hitachi Metals, Ltd.

General Manager of Finance Division

Naohiko Tamiya

Chairman and President of Hitachi Metals (China), Ltd.

Administration

General Manager of Technology, Research

& Development Division

Attendance at meetings Board of Directors: - Compensation Committee: - (Appointed in June 2019)

Toyoaki Nakamura

Director

Attendance at meetings Board of Directors: 15/15 meetings

Kenichi Nishiie

Director

Attendance at meetings Board of Directors: - Audit Committee: - (Appointed in June 2019)

Jan 2016 General Manager of Yasugi Works

Apr 2017 Executive Officer, President of Specialty Steel Company and Deputy General Manager of Corporate Export Regulation Office

Apr 2018 Vice President and Executive Officer, President of Specialty Steel Company, General Manager of Technology, Research & Development Division and Deputy General Manager of Corporate Export Regulation Office

Apr 2019 Representative Executive Officer, President and Chief Executive Officer

Jun 2019 Representative Executive Officer, President and Chief Executive Officer, and Director (current position)

Reasons for appointment

The Company determined that Mr. Sato will contribute to the strengthening of the decision-making functions of the Board of Directors and enhancing their effectiveness, with his experience as the head of Specialty Steel business and Technology, Research & Development Division of the Company and his current position as President and Chief Executive Officer since April 2019 in general management of the Company's operations, by sharing the information of business execution divisions at a Board of Directors as a board member, and also by leveraging his abundant experience and in-depth knowledge obtained through aforementioned experiences.

Apr 1975

Joined Hitachi, Ltd.

Jan 2006

General Manager of Finance Department I

Apr 2007

Representative Executive Officer, Senior Vice President and Executive Officer

Jun 2007

Representative Executive Officer, Senior Vice President and Executive Officer, and Director

Jun 2009

Representative Executive Officer, Senior Vice President and Executive Officer

Jun 2010

Outside Director of Hitachi Metals, Ltd. (resigned in June 2012)

Jun 2011

Director of Hitachi High-Technologies Corporation (resigned in June 2018)

Apr 2012

Representative Executive Officer, Executive Vice President and Executive Officer of Hitachi, Ltd. (resigned

in March 2016)

Jun 2012

Outside Audit & Supervisory Board Member of Sompo Japan Insurance Inc. (currently Sompo Japan

Nipponkoa Insurance Inc.) (resigned in June 2014)

Apr 2013

Director of Hitachi Consumer Electronics Co., Ltd. (resigned in March 2014)

Director of Hitachi Appliances, Inc. (resigned in March 2016)

May 2013

Director of Hitachi Consumer Marketing, Inc. (resigned in March 2016)

Jun 2015

Director of Hitachi Metals, Ltd. (Outside Director until June 2016) (current position)

Dec 2015

Board Director, Chairperson

Jun 2016

Director of Hitachi, Ltd. (current position)

Chairperson of the Board of Hitachi Metals, Ltd.

Reasons for appointment

The Company determined that Mr. Nakamura will contribute to the management of the Company as well as the strengthening of the decision-making and monitoring functions of the Board of Directors and enhancing their effectiveness, by reflecting his abundant experience and in-depth knowledge obtained as a corporate manager at Hitachi, Ltd. and its group companies, and working to build closer ties with other Hitachi Group companies.

Apr 1979

Joined Hitachi Metals, Ltd.

Apr 2012

General Manager of Internal Auditing Office

Apr 2013

Deputy General Manager of Magnetic Materials Company and General Manager of Planning Dept.

Apr 2015

Representative Executive Officer, General Manager of Procurement Center and Corporate Export

Regulation Office

Jan 2016

Representative Executive Officer, General Manager of Human Resources & General Administration

Division, Procurement & Value Engineering for Customers Division and Corporate Export Regulation Office

Apr 2016

Vice President and Executive Officer, General Manager of Human Resources & General Administration

Division and Procurement & Value Engineering for Customers Division

Apr 2017

Representative Executive Officer, Senior Vice President and Executive Officer

and

General

Manager

of

Corporate Management Planning Division

Apr 2018

Representative Executive Officer, Senior Vice President and Executive Officer

and

General

Manager

of

Corporate Management Planning Division and Group Company Auditing Office

Apr 2019

Associate

Jun 2019

Director (current position)

Reasons for appointment

Vice President and Executive Officer In charge of Corporate Administration General Manager of Human Resources

  • General Administration Division Chief Compliance Officer

Kazuya Murakami

Vice President and Executive Officer In charge of Business

General Manager of Advanced Components & Materials Division Deputy General Manager of Corporate Export Regulation Office

Norio Uemura

Executive Officer

In charge of Business

Deputy General Manager of Advanced Components & Materials Division General Manager of Power Electronics Materials Business Unit

Shigekazu Suwabe

Executive Officer

In charge of Business

Deputy General Manager of Advanced Components & Materials Division General Manager of Magnetic Materials Business Unit

Tomoyuki Hatano

Executive Officer

In charge of Business Director & President & CEO of Hitachi Metals America, Ltd.

Kenji Hirano

Executive Officer

In charge of Business Deputy General Manager of Advanced Metals Division General Manager of Yasugi Works

The Company determined that Mr. Nishiie will contribute to the strengthening of the decision-making and monitoring functions of the Board of Directors and enhancing their effectiveness as a board member, by leveraging his abundant experience and in-depth knowledge in finance, accounting and other areas obtained as General Manager of the Audit Division, the head of Procurement, Human Resources & General Administration Division, and Corporate Management Planning Division of the Company, as well as his thorough knowledge in the Group's operations.

Executive Officers

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The Hitachi Metals Group Report 2019 (Integrated Report) 47

Analysis and Evaluation of the Effectiveness of the Board of Directors

Value creation

Strategies

Technology and R&D

Foundation

(ii) Total amount of compensation, etc. for each category of Directors or Executive Officers, total amount of compensation, etc. by type, and the number of Directors and Executive Officers who received

The Company conducted a survey and individual interviews with Directors regarding the effectiveness of the Board of Directors in fiscal 2018. The main items on the survey included the composition of the Board, decision-making process, level of contributions, and operation and support systems.

At the Board of Directors meeting held in May 2019, the effectiveness of the Board of Directors was discussed and evaluated based on each Director's evaluations and opinions obtained from the survey and interviews. As a result, the Board of Directors has verified that effectiveness of the Board of Directors as a whole is ensured as agendas for the Board of Directors meetings are appropriately selected, business strategies and management issues are actively discussed, and important agendas are fully discussed in advance.

On the other hand, the Company has recognized room for further improvement in discussion on the following matters:

  1. Timelyfollow-up of the progress on measures of strategy implementation and solutions to management issues,
  2. Further expansion of opportunities to obtain information (on businesses and personnel) necessary for Directors to fulfill their roles, and
  3. Enhancement of the governance system for the whole Group companies and business sites.

We will use the above findings for operation of the Board of Directors to further enhance its effectiveness in the future.

compensation, etc.

Total amount of

Total amount of compensation, etc., by type

Number of Directors and Exec-

Director/Executive Officer category

compensation, etc.

(millions of yen)

utive Officers who received

(millions of yen)

Base compensation

Term-end bonus

compensation, etc.

Directors (excluding Outside Directors)

77

67

10

6

Executive Officers

509

375

134

13

Outside Directors and Officers

53

45

8

3

Note: Directors with concurrent post as Executive Officers are compensated as Executive Officers but not as Directors.

  1. The policy on the determination of proportion of payments asperformance-linked compensation and the other types of compensation, etc.

Main Items Discussed by the Board of Directors in Fiscal 2018

● Progress of the safety measures

● Report on the status of execution of duties of the

● Progress report on the responses to management issues

Nominating Committee, Audit Committee, and

● Fiscal Year 2021 Medium-Term Management Plan

Compensation Committee

● Determination of Executive Officers, Representative

● Response to the Corporate Governance Code

Executive Officer, President and Chief Executive Officer, etc.

● Conducting the evaluation of the effectiveness of the Board

● Appointment of members who comprise the Nominating

of Directors

Committee, Audit Committee, and Compensation Committee

Compensation for Directors and Executive Officers of the Company is comprised of a base compensation, which is a fixed compensation, and a term-end bonus, which is a performance-linked compensation. For performance-linked compensation for Executive Officers, the standard amount is set in a way that the percentage of performance-linked compensation to the total amount of compensation falls within a range of the ratios specified below according to the ranks of each Executive Officer to strengthen to the link between the business performance of the Company, considering the degree

of the responsibility of each Executive Officer for business execution. For performance-linked compensation for Directors, the standard amount is set in a way that the percentage of performance-linked compensation to the total amount of compensation falls within a range of ratios specified below in order for the Directors to fully execute the management- supervision function. Directors with a concurrent post as Executive Officers are paid a performance-linked compensation as Executive Officer, but are not paid a performance-linked compensation as Director.

ICompensation for Directors and Executive Officers, etc.

(i) Details of the policy on the determination of the amounts of compensation, etc., for Directors and Executive Officers and the calculation methods thereof, and the determination method

Standard amount of

Rank

Fixed compensation

performance-linked

Total

compensation

President and Chief Executive Officer

60%

40%

Senior Vice President and Executive Officer, and

67%-68%

32%-33%

Vice President and Executive Officer

100%

Executive Officer

70%

30%

The Compensation Committee, in accordance with the provisions of the Companies Act, sets forth the "Policies Concerning the Determination of Compensation, etc., for Directors and Executive Officers." The amounts of compensation, etc. for each Director and Executive Officer are determined by resolution of the Compensation Committee based on this policy.

The Policies Concerning the Determination of Compensation, etc., for Directors and Executive Officers state that "(a) Directors and Executive Officers assuming the management of the Company are compensated for executing management that enhances the Company's corporate value and benefits stakeholders such as shareholders by determining management policies from a long-term perspective, and formulating and executing medium-term management plans and annual business budgets; (b) To motivate Directors and Executive Officers to exercise their respective management

of base compensation and a term-end bonus; and (d) To share interests with shareholders by holding treasury stock and thereby promote sustainable growth and the enhanced corporate value of the Company over the medium to long term, Directors and Executive Officers shall, as a general rule, contribute part of their compensation to the officers' shareholding association and acquire treasury stock until such stock reaches a certain number. The acquired stock shall be held continuously during the terms of office of Directors and Executive Officers and, as a general rule, one year after retiring from their posts." The policy on base compensation is that it is to be "Determined individually in consideration of the degree of responsibility for Company management as a Director and/ or Executive Officer and for the performance of duties utilizing their extensive experience, knowledge, insight, and specialized management skills, etc., acquired from past experience. To secure appropriate human resources for the positions of

Director

86%-89%

11%-14%

(iv) Indicators for performance-linked compensation and reasons for the selection of the indicators

The indicators for performance-linked compensation for fiscal

The indicators for performance-linked compensation for

2018 are "revenues," "income before income taxes," and

fiscal 2019 are "revenues," "adjusted operating income,"

"cash flows from operating activities" on a consolidated basis

"return on invested capital (ROIC)," and "cash conversion

as the Company has focused on growth and profitability in the

cycle" on a consolidated basis as we focus on growth,

Fiscal Year 2018 Medium-Term Management Plan.

profitability, and management efficiency in the Fiscal Year 2021

Medium-Term Management Plan.

  1. Method for the determination of the amount ofperformance-linked compensation and target of the indicators for performance-linked compensation and actual results

capabilities, know-how, and skills to achieve satisfactory results, the compensation system shall reflect the Company's short-term and medium- to long-term business performance and appropriate compensation shall be paid for outstanding achievements; (c) Compensation paid by the Company consists

Director and Executive Officer, compensation levels should be comparable to those of other companies." The policy on a term-end bonus is that it is to be "Linked to the business performance of the Company."

The amount of a term-end bonus, which is a performance- linked compensation, to be paid to each Director and Executive Officer is calculated using the formula specified below based on the standard amount of performance-linked compensation set by rank. The Compensation Committee then discusses the results of calculation and finalizes them.

Amount of term-end bonus to be paid to each Director and Executive Officer = Standard amount of performance-linked compensation × ((Corporate performance factor*1× Weight assigned for corporate performance factor) + (In-charge business factor*2× Weight assigned for in-charge business factor) + (Individual target factor*2× Weight assigned for individual target factor))

*1 The "corporate performance factor" is the sum of the degrees of achievement of corporate performance related indicators multiplied by the weight assigned for each indicator (0.3 for revenues, 0.5 for income before income taxes, and 0.2 for cash flows from operating activities), where the degree of achievement of each corporate performance-related indictor is predetermined by the Company with a range from 0 to 2 so that the target for each indictor related to corporate performance is set as 1. The actual "corporate performance factor" for fiscal 2018 was 0.47.

*2 Each of the "in-charge business factor" and "individual target factor" is the sum of the degrees of achievement of the targets set for each Director and Executive Officer multiplied by the weight assigned for each target, where the degree of achievement of each target is predetermined by the Company with a range from 0 to 2 so that the target for each Director and Executive Officer is set as 1.

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The Hitachi Metals Group Report 2019 (Integrated Report) 49

  1. Name of the person with the authority to decide the compensation for Directors and Executive Officers, the details of such authority and the extent of its discretion, and an overview of the procedures of the Compensation Committee

Value creation

Strategies

Technology and R&D

Foundation

Coordination in Internal Audits, Audits by the Audit Committee and Accounting Audits, and the Relationship of These Audits with the Internal Audit Division

As the Company is a company with nominating and other

determining the compensation amounts, the Compensation

committees, it sets forth the policy on the determination of

Committee participates in a market survey on executive

compensation, etc. for each Director and Executive Officer in

compensation each year and confirms that the compensation

the Compensation Committee, with a majority of the members

levels of the Company's Directors and Executive Officers are in

being independent Outside Directors, and determines the

an appropriate range compared to other companies of the

amount of individual compensation based on the policy. In

similar size in Japan.

(vii) Activities of the Compensation Committee

During fiscal 2018, the Compensation Committee held

based on the policy. In terms of the meeting attendance of the

a total of three meetings and determined a policy on the

Committee members, Directors who had been in service during

determination of compensation, etc., for Directors and

the fiscal year under review attended all meetings of the

Executive Officers, and details of their individual compensation

Compensation Committee held during their terms of office.

The Audit Committee (a) receives explanations about audit implementation plans from the Accounting Auditor and makes a discussion on and adjustments to the details as needed, (b) receives reports on audit results and engages in an exchange of opinions with the Accounting Auditor, and (c) receives reports from the Accounting Auditor in cases where, as for the performance of duties by Executive Officers, they find any significant evidence of wrongful act or violation of related laws and regulations, or the Articles of Incorporation in the course of performing their duties. The Audit Committee also receives reports on audit implementation plans and periodic reports from the Internal Audit division. In addition, to promote coordination with audits performed by the Audit Committee, the Audit Committee may instruct the Internal Audit division to (a)

Audit division mutually share information on issues detected by each of them, and the Company promotes a "mutual check and balance system and mutual evaluation," taking a step further from a one-way evaluation from the Company to the Accounting Auditor based on the evaluation standards for Accounting Auditors. Notably, the Company considers the function of detecting risks by the Accounting Auditor as an external agency is particularly important in the entire risk detecting process of the Group. To strengthen the said function, the mutual evaluation is implemented between the Accounting Auditor and the Company's finance division or the Internal Audit division or the Audit Committee, respectively. Specifically, based on the evaluation standards for accounting auditors defined by the Audit Committee, the Audit Committee performs a

IRelationship with the Parent Company

In principle, the business operations and transactions of the Company are conducted on an autonomous basis and are independent of Hitachi, Ltd., the parent company, and its group companies. In the implementation of its business operations, however, and as a member of the Hitachi Group, the Company has a close collaborative relationship with Hitachi, Ltd. and its group companies through joint research and development and other initiatives. Based on the effective use of shared management resources, the Company aims to provide high-quality products and services.

As for personnel relationships with Hitachi, Ltd., one Director and one Executive Officer of that company also serve as Directors of the Company. By expressing opinions and voting at meetings of the Company's Board of Directors, Hitachi, Ltd. could influence management policies and other aspects of the Company. Nevertheless, the Company perceives that it is in a

position to make independent management judgments, because it has appointed three Outside Directors who are designated as Independent Directors, based on the stipulations of the stock exchange on which the Company is listed, so that a wide variety of opinions can be reflected in the discussions of the Company's Board of Directors. No Executive Officers of the Company who perform executive duties are also Directors or Executive Officers of Hitachi, Ltd.

The Company also conducts a range of transactions with Hitachi, Ltd. based on the Hitachi Group's pooling system. These include borrowing and lending as well as other activities. The Company remains convinced, however, that its business activities are not significantly dependent on transactions with Hitachi, Ltd. The Company has adopted a policy that regulates transactions with Hitachi, Ltd. so that they are carried out in a fair manner, based on market prices.

conduct a special audit for any division that the Audit Committee deems necessary and (b) set key audit items for audits performed by the Internal Audit division. As specified by the Board of Directors, for matters required for the Audit Committee to execute its duties, the Internal Auditing Office of the Internal Audit division shall assist the Audit Committee in executing its duties in accordance with the Committee's instructions. Furthermore, the Internal Auditing Office is also in charge of assessment of internal control and reports the status to the Audit Committee. Moreover, besides the Internal Audit division, the corporate divisions, etc. in charge of finance, compliance, risks, and other areas also play certain roles in internal control and report the status of performance of their duties to the Audit Committee.

The Company regards "promotion of tripartite audit function" as a paramount theme for the audit and supervision functions. The Audit Committee, the Accounting Auditor, and the Internal

comprehensive evaluation considering the following major factors evaluated by the Company: the Accounting Auditor's communications with the Audit Committee, the senior management, the Internal Audit division and others; audit quality control system; audit plans; audit team; audit reports and quarterly review reports; and consistency between audit plans and audit hours as a basis of determining the amount of auditing compensation. The Accounting Auditor, on the other hand, evaluates basic operations of the finance division, the Internal Audit division, and the Audit Committee of the Company, handling of audit requirements, cooperation, risk recognition, activity status, resources and other factors, and reports the results to the relevant counterparties. The Company utilizes the above feedback to strengthen the Company's functions. In addition, the Company has started the mutual evaluation system between the finance divisions of the Company's facilities or subsidiaries and the Accounting Auditor.

IPolicies Concerning Holding Shares of Other Companies as Cross-Shareholdings

IRisk Management

In principle, the Company shall not hold the shares of other companies as cross-shareholdings. The exception is if the Company believes these holdings contribute to the Company's corporate value. The Company would comprehensively take into consideration objectives of such holdings such as maintenance and strengthening of business relations, capital tie-ups, business alliances and joint development as well as associated returns and risks. The Company has been reducing such holdings through conducting an annual review of holding objectives by the Board of Directors on the significance of

holding and the cost of capital of such individual stock from qualitative and quantitative aspects. For other policies on our strategic shareholdings, please refer to Article 7. Policies Concerning Holding Shares of Other Companies as Strategic Shareholdings in the Corporate Governance Guidelines.

As of March 31, 2019, the number of strategic shareholdings was 26. The number has decreased from 42 as of March 31, 2015, when the corporate governance code had yet to be implemented.

With respect to risk management, each Executive Officer identifies and analyzes business risks including changes in political, economic, and social situations, currency fluctuations, rapid technological innovations, as well as changes in customer needs, examines measures against such risks, and reviews these measures whenever necessary through discussions at the Board of Directors, the Audit Committee, the Executive Committee, and other meeting bodies. In addition, each of the Group's sites has built a system to promptly share information that has become known regarding risks relating to compliance, antisocial forces, finance, procurement, the environment, disasters, quality, information security, export control, legal

Japan, and conducted the training in April 2019. The Company has constantly conducted training to respond to its safety confirmation system for cases of disaster.

The main risks that could possibly impact the management performance and financial status of the Hitachi Metals Group are as follows:

  • Risks involving economic circumstances in the market, related to product demand

• Risks involving fluctuations in raw material prices

• Risks involving financing

• Risks involving fluctuations in exchange rates

IInternal Controls

Internal Audit Organization

The Company has the Internal Auditing Office (with 10 dedicated staff members) that is in charge of internal audits. The Internal Auditing Office formulates annual audit policies and audit implementation plans for internal audits on the Group. Based on these policies and plans, the office conducts on-site audits on the status of execution of the Company's offices and subsidiaries in Japan and overseas and business management over the course of three years in principle and also collaborates with the Audit Committee and the Accounting Auditor to promote tripartite cooperation in tripartite audit function. In addition to these audits, a special audit may be conducted upon special request, etc. of the

President and Chief Executive Officer. The Internal Auditing Office also reports to the President and Chief Executive Officer and the Audit Committee its audit implementation plans in advance, and reports the audit results mostly once in a month. In addition, the Internal Auditing Office holds an audit report meeting mostly once in a month to the person in charge

of business at the respective business division and each department of the corporate division, and instructs those departments to implement improvements. If necessary, it also carries out on-site audits in collaboration with divisions in charge of the environment, safety, and systems within the Company.

affairs, etc., with each business division. Meanwhile, each corporate business division has prepared internal rules, guidelines, etc.; conducts education and enlightenment activities, preliminary checks, audits on business operations, etc.; and cooperates with the relevant business divisions to avoid, prevent, and manage risks. Furthermore, with regard to business continuity plans (BCPs), the Company has not only prepared the plans but also implements business continuity management (BCM) that periodically and continually improves BCPs in response to changes in the business structure or risks.

In fiscal 2018, for identifying and improving the issues associated with the application of the ongoing BCP, the Company was dedicated to preparing for large-scale BCP training in collaboration with the business sites of the Group in

• Risks involving fluctuations in securities prices

• Risks involving business expansion outside Japan

• Risks involving competitive advantage and the development

and commercialization of new technologies and products

• Risks involving intellectual property rights

• Risks involving environmental regulations, etc.

• Risks involving product flaws and defects

• Risks involving legal and official regulations

• Risks involving earthquakes and other natural disasters, etc.

• Risks involving information security

• Risks involving pension payment liabilities

• Risks involving relations with the parent company

• Risks involving M&A

• Risks involving securing appropriate human resources

50The Hitachi Metals Group Report 2019 (Integrated Report)

The Hitachi Metals Group Report 2019 (Integrated Report) 51

Promotion of Diverse Human Resources

Under the Fiscal Year 2021 Medium-Term Management Plan, with a vision of "building

Value creation

Strategies

Technology and R&D

Foundation

IPolicy on Promoting the Participation and Advancement of Women in the Workplace

people, building innovation, building the future," the Hitachi Metals Group positions the thorough pursuit of diversity management as its important management strategy and is working on various measures to realize our Corporate Creed of "contributing to society by being the best enterprise."

Human Resources as the Source of Competitiveness

1. Ratio of women among newly hired graduates (career- track positions)

Achieved targets Technical positions: 10% or more Administrative positions: 40% or more

2. Support for retention

  • Career support to eliminate concerns
  • Awareness-raisingfor those in management-level positions
  • Support for balancing work with housework and childcare, including Hitachi Group training
  • Promotion of diverse work styles through workstyle reform
    3. Promotion measures
  • Achieved the target ratio for women inmanagement-level

positions: 1.2% in fiscal 2017, 1.5% in fiscal 2018

  • Carried out individual development plans and training for selected employees

Main initiatives

  • Survey of actual conditions for women incareer-track positions (hearing)
  • Held a networking event for women incareer-track positions (Hitachi Metals Women's Forum)
  • Diversity training for officers (lectures)
  • Survey and analysis of participation by women in the Hitachi Group
  • Dispatched employees to various external training and seminars, including Hitachi Group career training and seminars for support before maternity leave and upon returning to work
  • Held seminars for those inmanagement-level positions who have female subordinates
  • Introduced examples of initiatives in company newsletter

Furthermore, we support exchanges among our diverse employees and the realization of diverse careers through human resource exchanges both inside and outside of the Hitachi Group and the proactive hiring of experienced personnel, in addition to the utilization of the "My Challenge" internal free agent system, which allows employees who have a desire to expand their potential to transfer across divisions or job categories, and the introduction of leave to allow employees to accompany spouses on overseas assignments.

The Hitachi Metals Group, which is moving ahead with global business expansion, recognizes human resources as the source of competitiveness. Based on this recognition, we will realize our Corporate Philosophy of "Wa sureba tsuyoshi"* by becoming a company where diverse human resources gather, test their opinions against each other, and work with enthusiasm and pride.

We have established three themes for our human

IHuman Resources Development Programs

Our communications symbol, "Materials Mag!c," incorporates the determination of each and every employee to be a key driver of growth. The Hitachi Metals Group is striving to enhance and strengthen its human resource development

resources strategy, "securing diverse human resources with diverse values," "job satisfaction," and "a comfortable work environment," while setting four KPIs, "stimulating employees," "promoting diversity management," "promoting workstyle reform," and "realizing safe and healthy workplaces."

  • Under our corporate philosophy of "Wa sureba tsuyoshi," our Group is One Force for Change.

programs linking OJT and OFF-JT, so that employees can develop their expertise enabling them to actively seek out challenges and take actions to achieve success or solve problems, and to become shining examples for the Company.

ISelected for the MSCI Japan Empowering Women Index (WIN)

Since July 2017, the Company has been included as a

to be a high evaluation of our gender diversity.

component stock on an ESG investment index, the "MSCI

*An index comprising companies from various industries selected for attaining high

Japan Empowering Women Index (WIN)*," which we consider

scores on gender diversity.

"Workstyle Reform"

The Hitachi Metals Group believes that it is indispensable to

reform" project. Positioning the first year, fiscal 2016, as the

create an environment where diverse employees can pursue

"awareness-raising" phase, followed by fiscal 2017 as the

highly productive work styles and approaches to their jobs,

"implementation" phase, and fiscal 2018 as the "instilling"

while sharing different values and ideas, and realizing a sense

phase, we carried out activities to accomplish our set target of

of fulfillment and personal growth in their work. In order to

reducing the total annual actual working hours to less than

accomplish this, in fiscal 2016, we launched a "workstyle

2,000 by fiscal 2018.

Nurturing the next generation of human resources

We identify at an early stage the human resources who will

divisional personnel rotations and tough assignments, as well

take responsibility for management in the next generation and

as training such as OFF-JT including external training.

enhance training programs for them. We complete cross-

Global recruitment and development of human resources

As our business rapidly globalizes, we are accelerating efforts

can play active roles globally, through overseas business

at global regional headquarters in Europe, the U.S., China, and

training and global training for employees in Japan, active

the rest of Asia, to employ and cultivate human resources who

hiring of foreign nationals, including international students,

will be future executive candidates. We are also pushing ahead

and promotion of locally-hired staff at Group companies

with the early cultivation of future executive candidates who

outside Japan into positions of responsibility.

Promoting Diversity Management

I"Workstyle Reform" Efforts in Fiscal 2018

In fiscal 2018, the "instilling" phase, we made efforts to improve operational efficiency and promote and establish work with no restrictions on time or location by pursuing ICT measures, and implemented activities aimed at realizing substantial workstyle reform so that all employees can have real job satisfaction and feel truly comfortable at work. In fiscal 2018, total annual actual working hours were 2,049, which unfortunately fell short of our target. However, total working hours decreased significantly compared to fiscal 2016, and highly productive work styles are being instilled through workstyle reform.

Composition of Employees (Non-consolidated)

Outline of Fiscal 2018 "Workstyle Reform" Activities

  • Improved operational efficiency
    Enhanced ICT infrastructure such as file sharing systems and communications tools
  • Promoted and established work styles with no restrictions on time or location Put in place measures and established an environment to realize highly productive work styles by relaxing restrictions on work hours and locations
  • Changed approach to taking vacation
    Considered standardizing days off at headquarters and production factories, and standardized days off at most business offices starting in fiscal 2019
  • Collaboration between business offices and Group companies
    Shared information related to operational improvements such as using RPA and shifting to paperless operations

In order to create a corporate culture based on diversity, it is vital to cultivate a structure and environment in which all human resources can broaden their potential and play active roles. We are working to strengthen our human resource base by securing diverse employees, assigning them strategically, and encouraging their active participation. We have also established the Hitachi Metals Group Diversity Promotion Council, headed by the President, in order to promote diversity

management by sharing policies and issues related to activities throughout the Group.

Furthermore, we have appointed one female Outside Director, and regularly receive her advice on diversity. In particular, we are making efforts to promote the participation and advancement of women in the workplace, based on the following policies.

FY2014

FY2015

FY2016

FY2017

FY2018

Number of employees

6,306

5,966

5,858

6,315

7,067

Male

5,660

5,339

5,241

5,654

6,277

Female

646

627

617

661

790

Ratio of female employees

10.2

10.5

10.5

10.5

11.1

Average age (years)

43.0

43.5

43.9

43.6

43.2

Average service (years)

20.0

20.6

21.0

21.0

18.4

Number of female managers

10

11

12

16

19

Employment ratio of people with disabilities*

2.24

2.34

2.40

2.31

2.21

*Including special subsidiaries

52The Hitachi Metals Group Report 2019 (Integrated Report)

The Hitachi Metals Group Report 2019 (Integrated Report) 53

Health and Safety

Value creation

Strategies

Technology and R&D

Foundation

Based on the view that "prioritizing safety and health above all else," the Hitachi Metals Group is pushing ahead the creation of safe workplaces at its manufacturing sites both in Japan and abroad, by instilling a culture of safety, creating safe organizations, and improving facilities to ensure fundamental safety. Additionally, we made the "Health Management Declaration" in June 2019, as we boost our creation of healthy workplaces throughout the Group.

Instilling a Culture of Safety

In the Group's aim to instill a culture of safety, we have held the "Safety Town Hall Meeting" continuously since December 2018, where we communicate the policies and views on safety from the President and get feedback from the Group workplaces. We plan to hold approximately 50 meetings throughout our manufacturing sites globally in fiscal 2019. We have been advancing the "2S-3F" (Sort Out, Set In Order,

Creating Safe Organizations

In April 2019, we newly created the Safety & Health Management Department, staffing up human resources in the safety division of the Human Resources & General Administration Division. The Health and Safety Promotion Department prepared the "Guidelines for Safe Organizations" defining such matters as the organizations and certified employees required at each business office in accordance with its head count and size. The Guidelines have been implemented since April. We are aiming to create organizations at each business office in accordance with the Guidelines by the end of fiscal 2019.

IHealth and Safety Audits

In addition to confirming activities regarding the Hitachi Metals Group's key health and safety measures, as well as compliance with the Company's rules and related laws and regulations, we provide health and safety training to supervisors. In fiscal 2018, we confirmed the initiatives of key health and safety measures in the health and safety promotion plan and compliance with chemical-related laws and regulations through health and safety audits of business offices, and provided health and safety training to supervisors, including training on measures to prevent human error based on accident trends.

Fixed Location, Fixed Quantity, and Fixed Item) activities at our manufacturing worksites, and, going forward, we will work to instill a culture of safety by expanding the scope of our 2S-3F activities to safety activities.

IIncreasing Sensitivity to Danger through MonozukuriPractical Safety Training

Improving Facilities to Ensure Fundamental Safety

Our Fiscal Year 2021 Medium-Term Management Plan calls

2019, we are prioritizing initiatives throughout the Group for

for investment of ¥2 billion per year on new safety-related

safety measures against being caught in spinning machinery or

construction with the aim of carrying out measures for

crushed by machinery, while at the same time implementing

improving facilities to ensure fundamental safety. In fiscal

safety measures given high priority by risk assessments.

Health Management

The Group cares for the physical and mental health of its

We made the "Health Management Declaration" in June

employees. For example, we conduct stress checks on all

2019. We regard our employees' health management as a

We have installed equipment that gives employees a simulated experience of being caught in equipment, crushed by equipment, and electrically shocked at locations including our Kyushu Works and Okegawa Works, as well as the Suita Works of the Group company Hitachi Metals Neomaterial, Ltd., with the goal of making employees more sensitive to danger. We have launched a project to enhance our monozukuripractical safety training, and are moving forward plans for a "monozukuripractical safety training facility" to instill practical safety training throughout the Group, as well as to set the foundation for building a culture of safety. We will increase awareness of safety among employees, having all Company employees undergo practical safety training.

Learning system that simulates being caught by rotating equipment

This system provides a firsthand experience of what it is like if fabric or strings are wrapped up in the rotating axis of machinery. Even a motor equivalent to a household electric fan can generate powerful pulling force when slowed down.

54The Hitachi Metals Group Report 2019 (Integrated Report)

Safety Simulation Experience Learning Center, Suita Works, Hitachi Metals Neomaterial, Ltd.

Equipment installed to increase awareness of safety among all employees

Learning system that simulates the impact force from falling objects

This system demonstrates how a 25-kilogram weight dropped from a height of one meter generates enough impact force to crush an empty drink can. This increases safety awareness when transporting steel ingots.

employees and take measures based on the results. We are

management issue and reinforce health management

also focused on creating a more dynamic working environment

measures Groupwide, advancing initiatives such as prevention

by eliminating overwork through workstyle reform.

of lifestyle diseases and supporting efforts to quit smoking.

Health Management Declaration

The Corporate Creed of Hitachi Metals, Ltd. is to contribute to society by being the "best enterprise."

The "best enterprise" is a company that "every employee is motivated to work at." In order to be a company where employees dynamically harness their abilities with smiling faces every day and are able to perceive their own growth, it is first essential that each employee be healthy.

Under the management policy that "Prioritizing safety and health above all else," we hereby declare that we will promote activities focused on employees' health, together with safety activities.

June 2019

Koji Sato

Representative Executive Officer,

President and Chief Executive Officer

Hitachi Metals, Ltd.

The Hitachi Metals Group Report 2019 (Integrated Report) 55

Initiative for Climate Change

1Environmental Vision/Basic Environmental Policies

The Hitachi Metals Group promotes a low-carbon society, resource efficient society, and harmonized society with nature as the three key pillars of the Hitachi Group's Environmental Vision. We aim to realize both higher quality lifestyles and a sustainable society by resolving environmental issues through the social innovation business in collaboration with our stakeholders. In addition, we will fulfill our required role to achieve Hitachi's long-term environmental targets called Hitachi Environmental Innovation 2050.

The Hitachi Group's Environmental Vision

Value creation

Strategies

Technology and R&D

Foundation

2Hitachi Metals Group Action Plan

The Hitachi Metals Group advances activities based on three-

Plan for fiscal 2019 to fiscal 2021 includes some revisions

year medium-term environmental plans. We largely achieved

relating to a low-carbon society, resource-efficient society, and

the targets of our Medium-Term Environmental Plan for fiscal

harmonized society with nature.

2016 to fiscal 2018. Our new Medium-Term Environmental

Results of Fiscal 2018 Initiatives and Fiscal 2021 Plans

FY2018 Measures (Planned)

FY2018 Measures (Results)

Measures Planned for FY2021

• Conduct environmental education at the Head

• Conduct environmental e-learning (100% of

• Conduct environmental e-learning (100% of

employees) and environmental auditor

employees) and environmental auditor

Office and each company (ongoing)

development training (once)

development training (once)

• Increase the sales ratio of key environmentally

• Increase the sales ratio of key environmentally

• Increase the sales ratio of key environmentally

conscious products (21% or more)

conscious products (21%)

conscious products (25%)

• Reduce energy consumption ratio per production

• Reduce energy consumption ratio per production

• Reduce CO2emissions per unit (7% compared to

unit (13.0% compared to base year FY2005)

unit (6.6% compared to base year FY2005)

base year FY2010)

• Improvement ratio of waste and valuables

• Improvement ratio of waste and valuables

• Improvement ratio of waste generation per

generated per production unit (8.0% compared to

generated per production unit (12.0% compared to

production unit (14% compared to base year

base year FY2005)

base year FY2005)

FY2010)

• Increase the recycling rate (74.0%)

• Increase the recycling rate (78.2%)

• Improve waste landfill rate (12%)

• Improvement ratio of water usage per production

• Improvement ratio of water usage per production

• Improvement ratio of water usage per production

unit (14% compared to base year FY2006)

unit (28% compared to base year FY2006)

unit (26% compared to base year FY2010)

• Implement activities to conserve ecosystems (1,600/

• Implement activities to conserve ecosystems (1,601/

• Contribute to preservation of ecosystem (cumulative

year)

year)

total of 12 projects to be implemented)

3Environmental Consideration in Products and Services

Hitachi Metals Group Basic Environmental Protection Policies

Philosophy

Hitachi Metals' Corporate Creed is to "contribute to society by being the best enterprise." In line with this, we

regard it as crucial to ensure that humanity's shared environmental resources can be passed down to future

generations in the best possible condition. Accordingly, throughout our operations we treat environmental

considerations as an issue of the highest importance and strive actively to promote environmental protection

efforts on both the global and local community levels.

Slogans

• With a deep awareness that environmental protection is a major issue for all humanity, fulfill social responsibilities by

striving to establish a sustainable society in harmony with the environment regarding it as one of the essential

aspects of corporate activity.

• Contribute to society by developing highly reliable technologies and products in response to needs for

environmental protection and the limited natural resources.

The "Business Conduct Guidelines" in the Hitachi Metals Group Basic Environmental Policies call for the promotion of global monozukurithat takes environmental impact into account throughout the product life cycle. In line with this, the Hitachi Metals Group carries out activities aimed at reducing environmental impact at each stage, including product R&D and design, production, distribution, sale, use, and disposal.

In particular, for our next-generation flagship products, we are pushing forward the development of new products with a focus on the environment and energy sectors. What is more, for the development and design of new products, we promote environmentally friendly product development based on the "Hitachi Group Eco-Design Management Guidelines" (revised version), which consider product life cycles.

R&D Case Studies

Sector

Environmental key words

Renewable energy

Highly efficient power generation

Energy

Energy-saving/electricity storing/electricity

transforming/smart grids

Material recycling

Exhaust gas

Automobiles

Reduced weight and low fuel consumption

Hybrid and electric vehicles

Material recycling

Rolling stock

More efficient and lighter

weight

More efficient, compact,

and lighter weight

Electronics

Energy-saving (household appliances,

semiconductors, LCD panels)

Reducing substances for environmental effect

Industry/

Long-life products

Infrastructure

High heat resistance and high corrosion resistance

Medical

Energy-saving and high precision

56The Hitachi Metals Group Report 2019 (Integrated Report)

The Hitachi Metals Group Report 2019 (Integrated Report) 57

Value creation

Strategies

Technology and R&D

Foundation

Increasing sales of key environmentally conscious products

We select "key environmentally conscious products" from among products expected to grow in sales, which make a significant contribution to resolving environmental issues such as climate change and effective use of resources.

In fiscal 2018, we achieved our target sales ratio of 21% for key environmentally conscious products. While sales of some key environmentally conscious products have grown, sales of others have decreased, due to factors including discontinuation of the business. Accordingly, the sales ratio increased slightly compared with the previous fiscal year. We will continue to help resolve the environmental issues facing society by

Sales and Sales Ratio of Key Environmentally Conscious Products

(Billions of yen)

(%)

250

25

200

Actual

20

Target

150

15

100

10

50

5

0

0

Energy Saving Initiatives by Waupaca Foundry, Inc.

Waupaca Foundry, Inc. ("Waupaca," located in Wisconsin, USA) spends about ¥19.8 billion per year on energy, and it is essential to reduce its energy usage through efforts to continually improve its environmental sustainability. Waupaca thus worked on initiatives including conversion to energy-efficient LED lighting and compressors in its factories, offices, and other work spaces, use of waste heat for indoor heating in winter, installation of a system enabling real-time monitoring of energy use, and reduction of coke usage through the use of alternative carbon materials. Through these measures, Waupaca reduced its costs by about ¥63 million in fiscal 2017.

Waupaca is currently advancing measures including a 25% reduction in energy usage (baseline fiscal 2009, compared to BAU*1) and introducing the best available pollution-prevention technologies, in order to reduce its environmental impact by 2020.

*1. Comparison against "business as usual" case where no measures are taken

Energy Management System Certification (Energy management under ISO 14001)

expanding sales of key environmentally conscious products based on our management strategy.

Introducing products contributing to reduced environmental loads

2015

2016

2017

2018

2019

2021

(Fiscal)

(Actual)

(Actual)

(Actual)

(Actual)

(Planned)

(Planned)

  • Sales of key environmentally conscious products

Sales ratio of key environmentally conscious products

5Effective Use of Resources toward a Resource-Efficient Society

DAC-iTM

Next-generationgeneral-purpose steel for die-cast molds with high toughness and high strength at elevated temperatures through innovations in component design and processes using 10,000-ton forging press.

Rare earth magnets for xEVs

They are used in the drive motors of electric vehicles and hybrid electric vehicles. We have established a technology to reduce the use of heavy rare earth elements (scarce rare metals), which are used to improve heat resistance. We reduce the use of elements with a limited supply, as well as help improve motor performance and make motors more compact by improving heat resistance and magnetic force.

Clad materials for batteries

Achieved optimal composite characteristics for a battery electrode material, including electric resistance, weldability, and material strength, by combining dissimilar metals such as copper, nickel, aluminum, and stainless steel.

Magnet wires for xEV inverter-fed motors

Lifetime of inverter-fed motors, greatly improve reliability.

(1) Effective Use of Resources (Waste)

The Hitachi Metals Group is working to create a resource- efficient society through in-house reuse and recycling through intermediate processing, in order to achieve the "thorough circulation of resources throughout the life cycle of goods and services" in the 4th Fundamental Plan for Establishing a Sound Material-Cycle Society.

In fiscal 2018, the resource recycling rate rose slightly from the previous fiscal year, to 78.2%, in part because more materials are difficult to recycle into resources in Japan.

Going forward, we plan to raise the bar overall through

initiatives at overseas offices,

where we believe that many

recyclable items remain.

Furthermore, in fiscal 2018

we achieved zero emissions*2at

14 business offices.

In order to advance initiatives to both reduce waste

Trends in Recycling Volume, Final Disposal Volume, and Recycling Rate

(t)

(%)

1,000,000

100

800,000

766,454

768,687

90

734,802

740,946

85.0

82.2

600,000

78.1

78.2

80

77.0

73.8

400,000

70

264,813

264,774

261,324

220,701

214,827

214,763

4Initiatives for a Low Carbon Society

In fiscal 2018, CO2emissions from the Hitachi Metals Group's business activities decreased by 148 thousand tons (5.3%) from the previous fiscal year, to 2,630 thousand tons. In terms of CO2emissions per sales unit compared to revenues, we improved by approximately 8.6% from the previous fiscal year, from 2.811 tons of CO2/million yen to 2.570 tons of CO2/ million yen, due in part to a year-on-year increase of 3.6% in sales. Factors behind the reduction of CO2emissions and improvement in per unit include the effects of energy-saving activities, increased sales, and fuel conversion.

The Hitachi Metals Group carries out energy-saving activities linked to monozukuriin order to reduce CO2emissions, including shortening processes, improving efficiency, improving yields, promoting the introduction of energy-saving equipment, and fuel conversion. We will promote the initiatives aiming to improve CO2emissions per unit as set forth in our Medium-Term Environmental Action Plan for fiscal 2019 to fiscal 2021.

Trends in CO2Emissions and CO2Emissions Per Unit

CO2emissions

CO2emissions per unit

(thousands of tons of CO2/year)

(tons of CO2/million yen)

3,000

2.935

2.811

3.0

2.724

2.570

2,500

2.5

2.324

2,000

1,136

1,070

1,163

1,112

2.0

1.7541.838

1,500

1.5

1,000

1.0

1,572

1,672

1,636

1,602

1,615

1,518

500

1,245

0.5

0

0

2012

2013

2014

2015

2016

2017

2018

(Fiscal)

CO2emissions (WFI)

CO2emissions [the Group] (except for WFI)

CO2emissions per unit (tons of CO2/million yen) *Shows CO2emissions converted from energy usage

generation and to recycle resources under our Medium-Term Environmental Plan for fiscal 2019 to fiscal 2021, we will promote activities by setting target values for waste generation per production unit and landfill rates as management indicators.

*2. As of fiscal 2011, the definition of "zero emissions" is a final disposal rate under 0.5%.

200,000

57,229

60

46,580

0

50

2013

2014

2015

2016

2017

2018

(Fiscal)

  • Recycling volume Final disposal volume Recycling rate

58The Hitachi Metals Group Report 2019 (Integrated Report)

The Hitachi Metals Group Report 2019 (Integrated Report) 59

Initiatives to Recycle Amorphous Metal Materials

Value creation

Strategies

Technology and R&D

Foundation

Reducing Water Usage through Introduction of Closed-Loop Cooling Water Systems (Waupaca)

The amorphous metal manufactured by the Company contributes significantly to energy saving, delivering excellent soft magnetic properties with high permeability and low loss, while having high saturation magnetic flux density, and having just about one-fifth the no-load loss (iron loss) of conventional soft magnetic materials like silicon steel sheets.

Our Metglas Yasugi Works is working to use resources efficiently by recovering and recycling the amorphous metal

scraps generated by the Hitachi Group's transformer manufacturing process and amorphous cores extracted from used transformers.

As a result of this initiative, approximately 120 tons of waste amorphous was used to manufacture amorphous metal materials in fiscal 2018.

Waupaca Plant 1 produces a wide range of castings, totaling more than 3,000 different kinds of products including automotive parts.

Foundries use large amounts of water to cool operating machinery and cupolas used in melting processes. Waupaca Plant 1 introduced closed-loop cooling water systems, which resulted in a reduction in water usage in fiscal 2018 by approximately 120 million gallons compared to fiscal 2015. While the company formerly used cooling water one time before discharging it as wastewater, the closed-loop cooling water systems repeatedly use non-contact cooling water, greatly improving water usage efficiency. Dramatic effects are expected from the closed-loop cooling water systems, which

A

m

Amorphous transformer

Disassembly and core extraction

o

r

p

h

Waste amorphous transformer

o

u

p

s

m

u

a

o

r

t

G

e

r

i

i

h

a

l

i

t

a

c

H

e

x

Recycling equipment

t

r

a

Amorphous transformer

c

Achieving recycling

t

i

o

n

that is energy efficient

p

r

while havingaminiscule

o

c

p

e

s

s

environmental impact

u

o

Amorphous materials

r

s

G

l

might be able to reduce water withdrawal by 80% or more, and under certain conditions can reduce wastewater from non-contact cooling water to nearly zero.

Waupaca is advancing activities aimed at reducingClosed-loopcooling water systemscompanywide water withdrawal by 80% from fiscal 2010

levels. In fiscal 2018, it reduced water withdrawal by 65.5% from fiscal 2010 levels.

7Harmonized Society with Nature: Consideration for the Preservation of Ecosystem

e

t

a

A

M

m

i

o

r

h

c

p

a

t

h

i

H

o

u

s

r

e

-

m

a

n

u

f

a

c

s

t

ur

s

ingproce

Amorphous transformer core

Amorphous ribbon

(2) Effective Use of Water Resources

The Hitachi Metals Group promotes ecosystem preservation measures that include tree planting and forest conservation activities, cleanup activities in areas surrounding factories, and environmental education.

In fiscal 2018, we carried out 1,601 projects, compared to our target of 1,600.

  1. Examples of major tree planting and forest conservation activities
    HMY, Ltd. participated in the Harmony Forest corporate participation forestation program in Shimane Prefecture, planting sawtooth oak trees to reduce CO2.
  2. Ecosystem preservation activities

Our Moka Works participated in a group cleanup activity at Shiroyama Park to protect ecosystems by removing trash. We will continue to work to protect ecosystems in our local

Participation in Harmony Forest activities

Activities to reduce CO2 in the corporate participation forestation program in Shimane Prefecture (HMY, Ltd.)

Since fiscal 2016, the Hitachi Metals Group has been advancing activities using the improvement rate of water usage per production unit*3 as an indicator, in order to promote the effective use of water resources. Although activities to raise awareness of water conservation were the initial focus, we subsequently ameliorated our water usage in production processes, and when we upgrade equipment, we introduce equipment with high water efficiency. In fiscal 2018, the improvement rate per production unit reached 28%, while we also reduced our water usage by 458 thousand m3 from the previous fiscal year, to 13,391 thousand m3. Our Medium-Term Environmental Plan for fiscal 2021 similarly establishes the improvement rate of water usage per production unit*4 as an indicator, and we will push forward even more effective use of water.

*3 Calculated based on per production unit in fiscal 2005 *4 Calculated based on per production unit in fiscal 2010

Trends in Improvement Rate of Water Usage per Production Unit

(thousand m3)

(%)

20,000

28

30

16,845

24

14,551

13,849

13,391

10,000

15

15

0

0

2015

2016

2017

2018

(Fiscal)

Water usage

Improvement rate per production unit

  • We have used the improvement rate of water usage per production unit as a management indicator since fiscal 2016.

communities.

Participation in Shiroyama Park group cleanup activity (Moka Works of Hitachi Metals, Ltd.)

60The Hitachi Metals Group Report 2019 (Integrated Report)

The Hitachi Metals Group Report 2019 (Integrated Report) 61

Value creation

Strategies

Technology and R&D

Foundation

CSR-Conscious Procurement

Respect for Human Rights

The Hitachi Metals Group procures materials from suppliers in countries and regions around the world. Conscious of social responsibility and its impact, we have formulated our procurement policy with the aim of practicing fair and impartial procurement activities and, with the cooperation of many suppliers, engage in procurement that considers CSR.

Issuance of Hitachi Metals Group Supply Chain CSR Procurement Guideline

The Hitachi Metals Group stipulates respect for human rights in the Hitachi Metals Group Code of Conduct and the supplementary Hitachi Metals Group Human Rights Policy. Our basic stance is to respect and work to refrain from infringing on the rights of all persons involved in our business operations.

The Hitachi Metals Group Human Rights Policy in Practice

Hitachi Metals revised the Hitachi Metals Group Supply Chain CSR Procurement Guideline in May 2017 and published the revised version on its website. The Guideline encompasses a wide range of CSR concepts recognized as a company's social responsibility, including respect for human rights, consideration of the environment, fair trading and ethics, occupational health and safety, product quality and safety, information security, and social contributions. We distribute

place requiring correction. When starting a new business relationship, we request compliance with the Guideline, and, at the same time, we conduct corporate surveys on bribery risks based on the Hitachi Metals Global Compliance Program (HMGCP) to reinforce supplier reviews.

We formulated the Hitachi Metals Group Human Rights Policy

Group pursues measures to observe the international principles

in December 2013. This policy recognizes the human rights

of human rights. Specifically, we will implement human rights

stated in the International Declaration of Human Rights and in

due diligence and appropriate education on the basis of the

the ILO (International Labour Organization) Declaration on

UN Guiding Principles on Business and Human Rights, together

Fundamental Principles and Rights at Work as the minimum

with strictly observing the laws of the regions and countries in

levels of those rights. It clearly states that the Hitachi Metals

which we do business.

Initiatives on Human Rights Due Diligence

our CSR Procurement Guideline and checklist to major suppliers (excluding Hitachi Group companies) that account for 80% of the transaction amounts by business offices and affiliates in Japan, and confirm the compliance of each supplier. When a clear violation is discovered, a rule is put into

Hitachi Metals Group

Supply Chain CSR Procurement Guideline

The 2nd Edition, May 2017 Hitachi Metals, Ltd. Procurement & VEC Division, CSR Management Office

Human rights due diligence refers to defining and assessing impacts on human rights, taking action to prevent and redress negative impacts, and continually validating the effects of that action. The Hitachi Metals Group will assess the actual and potential impact on human rights resulting from the business

We participate in human rights due diligence centered on Hitachi, Ltd. We study priorities and countermeasures, including assessments by the procurement division regarding the impact on human rights in our supply chain, and assessments by the human resources division regarding the

Response to Globalization

The Hitachi Metals Group strives to establish a global procurement network across Europe, North America, and Asia, while expanding

have our GPOs audit the operations of each overseas Group company once every three years, in accordance with these

activities of the Company, our value chain, and develop countermeasures based on ranking human rights risks in terms of "seriousness" and the "likelihood of occurring."

impact on human rights of employees.

its procurement base. We are working to support the optimization of procurement activities overall and reinforcement of monozukuri, while enhancing CSR risk management and increasing concentration and consolidation of purchasing across the Group. We have also set up Global Procurement Offices (GPOs) in four locations-Europe, the United States, Asia, and China-to seek excellent suppliers in order to carry out transparent procurement activities from optimal suppliers worldwide. In fiscal 2018, the Head Office held a discussion with the GPOs and established common procurement standards for overseas Group companies. Starting in fiscal 2019, we plan to

standards, and thereby strengthen governance.

Additionally, in order to make our supply chain transparent in addressing conflict mineral issues, the Hitachi Metals Group

identifies

mineral

producing countries and smelters, using the

Conflict

Minerals

Reporting Template (CMRT), which has

become an industry standard. We strive to carry out responsible procurement activities, requiring our suppliers to procure from conflict-free smelters (CFSs)* that are certified to not use conflict minerals.

* CFS (Conflict-Free Smelter): A smelter that is certified

not to be involved in regional

conflicts by the Responsible Minerals Initiative (RMI),

established by RBA/GeSI.

Human Rights Educational Activities and Harassment Prevention Efforts

We regularly use e-learning to conduct human rights

As our business activities expand rapidly on a global basis,

education and training for each level of employee to

we will enhance human rights awareness and support

systematically raise awareness of human rights (with 5,892

measures to prevent abuses of human rights based on

employees, on a consolidated basis, receiving human rights-

differences of religion or nationality, the presence or absence

related training in fiscal 2018). In addition, we established

of disabilities, gender, or other factors.

various harassment hotlines to incorporate the Hitachi Metals

Group Human Rights Policy into all of our activities.

Compliance

Believing that thorough obedience to laws, regulations, and social proprieties in our transactions with suppliers is essential, we call together our procurement specialists at business offices on a regular basis for education regarding laws and regulations. In fiscal 2018, we held a workshop for all procurers at all business offices and Group companies (27

Green Procurement

Hitachi Metals issued the "Green Procurement Guidelines" in 1998, in order to share our views on environmental consideration with our suppliers, including prevention of global warming, recycling resources, and conservation of biodiversity and ecosystems. Since then, we have revised these guidelines repeatedly in response to the latest laws and regulations and chemical regulations. Version 9.0, which was

Procurement BCP Initiatives

We engage in procurement BCP activities as preparation against risks that could halt our business, including earthquakes, wind and flood damage, and other natural disasters, as well as new strains of influenza, fires, and power

sites) in Japan, which brought together the findings of past internal audits. We also had auditors dispatched from the Head Office and other business offices perform mutual audits to further improve our management level through practical auditing, and confirmed the status of corrective actions. We are continuing these audits in fiscal 2019 onward as well.

issued in 2018, includes revisions to banned substances due to changes in EU regulations, and we notified our suppliers thereof. We work to comply with laws and regulations, respond to customer demands, and reduce environmental impact (conserving resources, saving energy, recycling, and appropriate management of chemical substances contained in products) by constantly sharing the latest information.

outages. We are working to minimize procurement risk by diversifying our sources of procurement, while asking our key suppliers to have their own BCP measures in place.

62The Hitachi Metals Group Report 2019 (Integrated Report)

The Hitachi Metals Group Report 2019 (Integrated Report) 63

Financial/Non-Financial Highlights

1USD=¥110.99

1EUR=¥124.56

Thousands of

Thousands of

Millions of yen

U.S. dollars

Euros

Fiscal

2018

2017

2016

2015

2014

2018

For the period

Operating results:

Revenues

¥

1,023,421

¥

988,303

¥

910,486

¥1,017,584

¥1,004,373

$9,220,840

€8,216,289

Cost of sales

851,029

803,607

731,153

819,433

793,517

7,667,619

6,832,282

Selling, general and administrative expenses

120,965

119,566

113,350

122,090

126,446

1,089,873

971,138

Adjusted operating income

51,427

65,130

65,983

76,061

84,410

463,348

412,869

Other income

10,667

5,401

14,070

36,416

21,303

96,108

85,637

Other expenses

19,652

24,205

11,786

12,523

21,306

177,061

157,771

Operating income

42,442

46,326

68,267

99,954

84,407

382,395

340,735

Income before income taxes

43,039

46,985

66,016

96,233

86,391

387,774

345,528

Net income attributable to owners of

31,370

282,638

251,846

the parent company

42,210

50,593

69,056

70,569

Cash flows:

Cash flows from operating activities

66,582

39,133

89,391

115,742

108,983

599,892

534,538

Free cash flows

(29,665)

(35,947)

53,527

83,595

(4,767)

(267,276)

(238,158)

Increase (decrease) in cash and cash

(13,814)

(124,462)

(110,902)

equivalents

(84,499)

19,111

41,271

(7,443)

Capital expenditure

95,389

91,786

63,843

59,602

51,474

859,438

765,808

Depreciation and amortization

50,901

46,138

43,039

42,927

39,917

458,609

408,646

Research and development

18,604

17,749

17,971

19,121

20,903

167,619

149,358

At the end of the period:

Total assets

¥1,099,252

¥1,058,832

¥1,040,390

¥1,033,311

¥1,083,450

$9,904,063

€8,825,080

Interest-bearing debt

202,098

160,844

194,457

220,376

255,350

1,820,867

1,622,495

Equity

595,211

570,192

548,746

504,675

476,176

5,362,744

4,778,508

Number of shares outstanding

427,569

-

-

(thousands of shares)

427,572

427,576

427,579

427,601

Yen

U.S. dollars

Euros

Earnings per share*1

¥

73.37

¥

98.72

¥

118.32

¥ 161.50

¥ 165.02

$

0.66

0.59

Dividends per share

34.00

26.00

26.00

26.00

23.00

0.31

0.27

Net assets per share*2

1,375.16

1,316.08

1,254.89

1,159.70

1,090.64

12.39

11.04

*1Basic earnings per share

*2Equity per share attributable to owners of the parent company

Thousands of

Thousands of

Millions of yen

U.S. dollars

Euros

2018

2017

2016

2015

2014

2018

Reference information:

Total market value of stocks

¥549,855

¥537,886

¥667,874

¥496,420

¥788,924

$4,954,094

€4,414,378

Enterprise value (EV)

710,855

643,818

722,920

596,496

965,245

6,404,675

5,706,928

EBITDA

96,116

94,864

111,299

141,644

128,212

865,988

771,644

EBITDA margin (%)

9.4

9.6

12.2

13.9

12.8

-

-

EV/EBITDA ratio (times)

7.40

6.79

6.50

4.21

7.53

-

-

Fiscal

2018

2017

2016

2015

2014

Key financial indicators:

Operating income ratio (%)

4.1

4.7

7.5

9.8

8.4

Operating cash flow margin (%)

6.5

4.0

9.8

11.4

10.9

ROS (%)

3.1

4.3

5.6

6.8

7.0

ROA (%)

4.0

4.5

6.4

9.1

8.9

ROIC (%)

4.1

5.8

7.0

9.6

11.1

ROE (%)

5.5

7.7

9.8

14.4

16.8

Total assets turnover (times)

0.93

0.93

0.88

0.98

0.93

Ratio of equity attributable to owners of the parent company (%)

53.5

53.1

51.6

48.0

43.0

D/E ratio (times)

0.34

0.29

0.36

0.44

0.55

Ratio of operating cash flow to debt (times)

3.04

4.11

2.18

1.90

2.34

Fiscal

2018

2017

2016

2015

2014

Non-financial information:

Revenue of key environmentally conscious products (million yen)

213,980

204,236

189,573

156,213

-

Sales ratio of key environmentally conscious products (%)

20.9

20.7

20.8

15.0

-

Energy consumption converted into crude oil (kl/year)

1,109,813

1,121,565

1,077,309

1,091,936

705,808

Revenue energy consumption ratio per production unit (kl/million yen)

1.08

1.14

1.18

1.07

0.78

CO2emissions (thousands of tons of CO2/year)

2,630

2,778

2,672

2,771

1,672

Revenue CO2emissions per production unit (thousands of tons of CO2/million yen)

0.0026

0.0028

0.0029

0.0027

0.0018

Number of employees

30,304

30,390

28,754

29,157

30,278

Notes: 1. The Company has adopted the International Financial Reporting Standards (IFRS) for the Consolidated Financial Statements in the Annual Securities Report since the fiscal year ended March 31, 2015.

  1. The translation of Japanese yen amounts into U.S. dollars and euros for the year ended March 31, 2019, has been made at the rates of ¥110.99=$1 and ¥124.56=€1, the exchange rates as of March 31, 2019.
  2. Diluted earnings per share is not provided as Hitachi Metals, Ltd. had no dilutive common stock outstanding.
  3. Interest-bearingdebt represents the total of short-term debt, long-term debt and corporate bonds.
  4. Earnings per share is calculated by dividing net income attributable to owners of the parent company (net income) by the average number of shares issued during the term, and equity per share attributable to owners of the parent company is calculated by dividing equity, which is total equity minusnon-controlling interests/minority interests, by the number of shares outstanding at the end of the period.
  5. Enterprise value (EV) represents the sum of total market value of stocks and netinterest-bearing debt.
  6. Earnings before interest, taxes, depreciation and amortization (EBITDA) refers to income before income taxes before deducting interest charges, depreciation and amortization.
  7. EBITDA margin refers to EBITDA divided by revenues.
  8. Return on sales (ROS) refers to net income attributable to shareholders of the parent company divided by revenues.
  9. Return on assets (ROA) is computed as the income before income taxes divided by the average total assets (the average of the beginning and ending balance of the year).
  10. Return on invested capital (ROIC) is computed as the net income attributable to owners of the parent company divided by the sum of the average totalinterest-bearing debt (the average of the beginning and ending balance of the year) and the average total equity attributable to owners of the parent company (the average of the beginning and ending balance of the year).
  11. Return on equity (ROE) is computed as the net income attributable to owners of the parent company divided by the average total equity excludingnon-controlling interests/

minority interests (the average of the beginning and ending balance of the year).

13. In Japan, the power company CO2emissions coefficient is based on the "power supplier emissions coefficient" announced by the Ministry of the Environment; outside Japan, it is based on the 2008 IEA "country-specific conversion coefficient."

Revenues

(Millions of yen) 1,250,000

1,000,000

750,000

500,000

250,000

0

2014

2015

2016

2017

2018(Fiscal)

Operating Income/Operating Income Ratio

(Millions of yen)

(%)

100,000

10

80,000

8

60,000

6

40,000

4

20,000

2

0

0

2014

2015

2016

2017

2018(Fiscal)

Operating income

Operating income ratio

Note: Adjusted operating income is provided.

Equity/Net Income Ratio to Equity Attributable to Owners of the Parent Company (ROE)

(Millions of yen)

(%)

600,000

25

480,000

20

360,000

15

240,000

10

120,000

5

0

0

2014

2015

2016

2017

2018(Fiscal)

Equity

Net income ratio to equity attributable to

owners of the parent company (ROE)

Capital Expenditure/

Research and Development Expenses

(Millions of yen) 100,000

80,000

60,000

40,000

20,000

0

2014

2015

2016

2017

2018(Fiscal)

CAPEX

R&D

64The Hitachi Metals Group Report 2019 (Integrated Report)

The Hitachi Metals Group Report 2019 (Integrated Report) 65

Financial Management

Financial Policy

Hitachi Metals, Ltd. (the "Company") makes growth investments and delivers appropriate returns of profits to shareholders over a long-term period to generate sustainable long-term growth. Management maintains a financial policy that aims to ensure a healthy and firm financial platform.

The Company thus builds on the reach of its diverse and distinctive businesses across various industries to invest strategically and flexibly, and to enhance investment and financial efficiency as well as profitability. At the same time, the Company accords top priority to accelerating the cash generation cycle to ensure a balanced financial position.

Shareholder Returns Policy

The Company's basic dividend policy is to determine profit distributions to shareholders and internal reserves by comprehensively assessing the business environment, future business developments, and business performance. Management's primary commitment is to generate robust growth over a medium- to long-term period, by strengthening international competitiveness and enhancing the corporate value of the Company, to deliver appropriate returns of profits to shareholders over a long-term period in a business environment with evolving customer needs, technology, and globalization.

The internal reserves are to be used for the development and commercialization of new materials, incubation of new businesses, and expansion and streamlining of competitive product lines by examining future business developments. The Company purchases treasury stock as appropriate to implement an agile capital policy in accordance with its needs, financial condition, stock price levels, and other factors.

Using this policy as a base, in fiscal 2018, the Company declared annual dividends of ¥34.00 per share (interim dividends of ¥17.00 per share and year-end dividends of ¥17.00 per share), taking into account business performance for the current fiscal year, future business developments and prospects, and shareholders' expectations for dividends in an integrated manner.

Moreover, management currently plans to pay annual dividends of ¥34.00 per share (interim dividends of ¥17.00 per share and year-end dividends of ¥17.00 per share) in fiscal 2019.

In the years ahead, the Company will endeavor to enhance earnings and profitability while deploying financial strategies to boost capital efficiency, thereby increasing shareholder value.

Funding

In principle, the Company covers funding for growth investments with operating cash flows generated during the normal course of business and liquid funds. For other

financing on

a larger scale, the Company implements reliable

and flexible

methods to minimize opportunity losses for

growth, including accessing financial and capital markets. In the fiscal year ended March 31, 2019, the Company

issued unsecured corporate bonds of ¥40 billion in December 2018, and the funds raised were primarily used for capital expenditures and repayments of borrowings to strengthen the platform for further growth.

Liquidity

Liquidity is a key component of the Company's overall financial management policy. For short-term obligations that have maturities of 12 months or less, the Company maintains sufficient liquidity to flexibly address unforeseen circumstances.

As of March 31, 2019, total liquid funds of the Company stood at ¥41.1 billion.

Interest-Bearing Debt

As of March 31, 2019, interest-bearing debt stood at ¥202.1 billion, an increase of ¥41.3 billion from the previous year. Short-terminterest-bearing debt was ¥83.1 billion and long- term interest-bearing debt was ¥119.0 billion. The debt-to- equity ratio rose by 0.05 percentage point from the previous year to 0.34 percentage point as of March 31, 2019.

Ratings

The Company recognizes that maintaining a high, stable credit rating is essential for its management goal of maintaining adequate liquidity and flexibility in its financing policies and to reduce financing costs. Each year, the Company acquires a credit rating for long-term corporate bonds from Rating and Investment Information, Inc., a major credit agency in Japan. As of March 31, 2019, the Company received the rating "A+" for its long-term corporate bonds and unsecured corporate bonds.

Cash Flows

The Company aims to generate cash by increasing operating income, enhancing the profit rate, and reducing working capital.

With respect to net working capital (accounts receivable, inventories, accounts payable, and advances received), the Company has set the "working capital turnover period" as a performance indicator for enhancing capital efficiency, and the Company is striving to shorten it.

The Company pays particular attention to managing and reducing inventories. To that end, the Company clarified responsibilities for each inventory category. While manufacturing departments and procurement divisions control materials, manufacturing departments and business divisions oversee manufactured products, including work-in-process and finished products. Domestic and overseas sales companies collaborate with business divisions to look after transit inventories. Thus, the Company maintains a structure to optimally control and reduce inventories in consideration of future trends over the medium to long term. The Group strives to further cut back on inventories by properly and promptly managing inventories, based on accurate consolidated revenue forecasts, with the aim of reducing the number of working capital turnover days.

The Company adopted a Group cash pooling system to help manage its own working capital and that of its subsidiaries. In principle, consolidated subsidiaries in Japan procure funds through this system, rather than taking on external debt. By consolidating surplus funds and debts across the Group, the Company has better positioned itself to become more financially efficient. Group companies in the U.S. and China also use this cash pooling system, through which funds are centrally managed to enhance financial efficiency.

Investment Efficiency

The Company invests flexibly in key businesses to drive sustainable growth. Activities include mergers and acquisitions, upgrading and streamlining of plants and equipment, increasing production capacity, establishing new bases, and investments in employee welfare benefits. In this context, the Company differentiates between regular and strategic investments by taking investment decisions, returns, and other factors into account.

The Company places emphasis on cash flow in formulating strategic investment proposals, making decisions by using the present value (i.e., net present value) based on the discounted cash flow method, rate of return on investment capital, and payback period.

66The Hitachi Metals Group Report 2019 (Integrated Report)

The Hitachi Metals Group Report 2019 (Integrated Report) 67

Stock Information

Corporate Data/Stock Price

Stock Status

(As of March 31, 2019)

Total number of shares issued

428,904,352

Total number of shares authorized

500,000,000

Number of shareholders

28,053 (including holders of shares less than one unit)

Shareholder Composition

(As of March 31, 2019)

Number of

Number of shares held

Percentage of

Segment

shareholders

(hundreds of shares)

shares held

Financial institutions

60

626,601

14.63

Financial instruments business operators

39

22,245

0.52

Other domestic corporations

531

2,343,836

54.72

Foreign nationals

503

943,579

22.03

Individuals and others

23,981

347,230

8.10

Notes: 1. Not including shares representing less than one unit.

2. Treasury shares (13,344 hundred shares) are included in "Individuals and others."

Major Shareholders

(As of March 31, 2019)

Number of shares held

Percentage of

Shareholders

(thousands of shares)

shares held

Hitachi, Ltd.

226,233

52.91

The Master Trust Bank of Japan, Ltd. (Trust account)

14,362

3.36

Japan Trustee Services Bank, Ltd. (Trust account)

11,011

2.58

Japan Trustee Services Bank, Ltd. (Trust account 9)

7,610

1.78

JPMorgan Chase Bank 385635

5,640

1.32

State Street Bank and Trust Company 505103

4,788

1.12

Goldman Sachs & Co., Regular Account

4,189

0.98

Japan Trustee Services Bank, Ltd. (Trust account 5)

4,179

0.98

Japan Trustee Services Bank, Ltd. (Trust account 7)

3,879

0.91

BNYM AS AGT/CLTS 10 PERCENT

3,481

0.81

Listed Stock Exchange

(As of March 31, 2019)

Tokyo (First Section, Code 5486)

Credit Rating

(As of July 2018)

Rating and Investment Information, Inc. (R&I)

Long-term Debt

A+

Corporate Data

Company name

Hitachi Metals, Ltd.

Head Office address

Shinagawa Season Terrace,

2-70, Konan 1-chome,Minato-ku

Tokyo 108-8224, Japan

Tel.: +81-3-6774-3001,Toll-free:0800-500-5055 (in Japan)

Established

1956

Listed stock exchange

Tokyo (First Section)

Securities code

5486

URL

https://www.hitachi-metals.co.jp/e/

Stock Price Chart

(Yen)

2,500

2,250 Stock price

2,000

1,750

1,500

1,250

1,000

750

500

250

0

90,000

Stock turnover

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0

(Thousands of shares) 2014

2015

2016

2017

2018

2019

2014

2015

2016

2017

2018

Total Shareholder Return

127.2%

82.4%

111.4%

92.5%

96.7%

(Comparative index:

(130.7%)

(116.5%)

(133.7%)

(154.9%)

(147.1%)

TOPIX Total Return Index)

Shareholders' Memo

• Fiscal year-end:

March 31

• Record date for dividend:

March 31 and September 30

• Method of public notices:

Electronic public notice

• Number of shares per one unit:

100 shares

  • Administrator of shareholder registry: Tokyo Securities Transfer Agent Co., Ltd. (Head Office)
    NMF Takebashi Building 6F,
    3-11 Kanda Nishikicho, Chiyoda-ku, Tokyo, Japan

Disclaimer regarding forward-looking statements

This report contains forward-looking statements about the Company and the Group, such as business plans, predictions, strategies, assumptions, and results forecasts. All such statements are based on analyses and judgments using information available when this report was prepared, and thus may include risks and uncertainties due to changing economic circumstances, market conditions, and the like. Please note the possibility that actual results may differ from the Company's forecasts. This report was compiled based on information deemed reliable by the Company. Accordingly, such information's accuracy and integrity cannot be guaranteed.

68The Hitachi Metals Group Report 2019 (Integrated Report)

The Hitachi Metals Group Report 2019 (Integrated Report) 69

Disclaimer

Hitachi Metals Ltd. published this content on 13 September 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 13 September 2019 10:16:02 UTC


ę Publicnow 2019
All news about HITACHI METALS, LTD.
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Financials
Sales 2021 757 B 6 879 M 6 879 M
Net income 2021 -42 356 M -385 M -385 M
Net Debt 2021 135 B 1 225 M 1 225 M
P/E ratio 2021 -21,4x
Yield 2021 0,41%
Capitalization 908 B 8 253 M 8 250 M
EV / Sales 2021 1,38x
EV / Sales 2022 1,17x
Nbr of Employees 29 805
Free-Float 46,3%
Chart HITACHI METALS, LTD.
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Hitachi Metals, Ltd. Technical Analysis Chart | MarketScreener
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Technical analysis trends HITACHI METALS, LTD.
Short TermMid-TermLong Term
TrendsBullishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 4
Average target price 1 894,25 JPY
Last Close Price 2 123,00 JPY
Spread / Highest target 2,73%
Spread / Average Target -10,8%
Spread / Lowest Target -28,6%
EPS Revisions
Managers and Directors
NameTitle
Mitsuaki Nishiyama Co-Chairman, CEO & Executive President
Hiroaki Nishioka Chief Financial Officer & Head-Administration
Kenichi Nishiie Co-Chairman
Kazuya Murakami Managing Executive Officer, General Manager-R&D
Ryoichi Aida Chief Quality Officer & Head-Technology
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