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© Hitachi, Ltd. 2015. All rights reserved. 1
Hitachi Rail: Business Profile and ME Strategy
Vice President and Executive Officer Global CEO, Rail Systems Business
Alistair Dormer
5th October 2015
© Hitachi, Ltd. 2015. All rights reserved.
1. Outline of Hitachi and Hitachi Rail 2. Market- Overview 3. Acquisition of AnsaldoBreda and Ansaldo STS 4. Strategy for Middle East Market
Contents
2
© Hitachi, Ltd. 2015. All rights reserved.
1. Outline of Hitachi and Hitachi Rail 2. Market- Overview 3. Acquisition of AnsaldoBreda and Ansaldo STS 4. Strategy for Middle East Market
Contents
3
© Hitachi, Ltd. 2015. All rights reserved. 4
1-1. Business Overview- Hitachi Revenue by industry segment
EMPLOYEES (CONSOLIDATED):
ANNUAL SALES (CONSOLIDATED):
333,150 US$ 81.3B
19%
4%
15%
11% 7%
14%
9%
7%
11% 3%
Information & Telecommunication Systems
Power Systems
Social Infrastructure & Industrial Systems
Electronic Systems and Equipment
Construction Machinery
High Functional Materials & Components
Automotive Systems
Smart Life & Ecofriendly Systems
Others (Logistics & Other Services)
Financial Services
*Revenues: FY2014, Employees: As of end of FY2014, 120Yen/US$
Rail Business
© Hitachi, Ltd. 2015. All rights reserved. 5
1-2. Business Overview- Hitachi
Companies: 160 Employees: 11.8 thousand Sales: US$ 7.0 B
Europe
Companies: 202 Employees: 47.4 thousand Sales: US$ 8.8 B
Asia (excl. China)
Companies: 96 Employees: 20.1 thousand Sales: US$ 8.8 B
North America
Companies: 81 Employees: 11.1 thousand Sales: US$ 3.9 B
Other areas
Companies: 275 Employees: 193.2 thousand Sales: US$ 43.1 B
Japan
Companies: 182 Employees: 49.6 thousand Sales: US$ 9.6 B
China
Companies: 996 Employees: 333.1 thousand Sales: US$ 81.3 B
*Revenues: FY2014, Companies and Employees: As of end of FY2014, 120Yen/US$
© Hitachi, Ltd. 2015. All rights reserved. 6
1-3. Business Overview- Hitachi Rail
(Overseas revenue ratio: 38%)
Source: Hitachi IR Day 2015 Presentation: http://www.hitachi.com/New/cnews/month/2015/06/150611/20150611_06e_RS_presentation.pdf
© Hitachi, Ltd. 2015. All rights reserved. 7
RS : Rolling Stock
ECML : East Coast Main Line
LRT : Light Rail Transit
CBTC : Communication-Based Train Control
Financial Close for 65 trains for
IEP ECML
England RS/Services
29 trains for First Great Western
England RS/Services
70 trains for Abellio ScotRail
Scotland RS/Services
Part of consortium for
Qatar Rail
Qatar Doha Metro
Signalling for Yangon,
Mandalay
Myanmar Signalling
Upgrade Sentosa
Monorail with CBTC
Singapore Signalling
Inverters for St Petersburg
Metro
Russia Components
N700A for Central Japan
Railway Company and West Japan Railway Company
Japan RS
Tilt trains for Taiwan Railway Administration
Taiwan RS
Signalling for LRT in Zhuhai
China Signalling
E7/W7 for East Japan Railway Company and West Japan
Railway Company
Japan RS
1-4. Orders secured in FY2014 (Countries and Regions)
Source: Hitachi IR Day 2015 Presentation: http://www.hitachi.com/New/cnews/month/2015/06/150611/20150611_ 06e_ RS_ presentation.pdf
© Hitachi, Ltd. 2015. All rights reserved. 8
1-5. Intercity Express Programme
Progress
Project Schedule
Project Overview (Largest UK Rolling Stock PPP) Customer : UK Department for Transport No. of rolling stocks : Total 866 cars with 27.5 years’ maintenance Delivery : 2017 - 2019 Procurement method : PPP (Public Private Partnership)
The first train is undergoing running test on Great Western Main Line. Testing will be undertaken in various train formations applicable to the delivery of the IEP fleet. The Newton Aycliffe factory has been awarded Gold at the 2015 Considerate Constructors Award Newton Aycliffe opening ceremony took place on 3rd September and train production starting by January 2016
2017 2018 2019
Great
Western
Main Line
East Coast
Main Line
Calender Year
Production
Site
2012 2013 2014 2015 2016
Design and production Test run in UK
Design Production
Product acceptance
Design and production Test run in UK
Design Production
Product acceptance
We are here
Construction Completed Production
Newton Aycliffe, IEP front mask mock-up
Car body: Under production at Kasado works
Newton Aycliffe, testing area
Prototype
Mass product
Prototype
Mass product
9
Daegu Urban Railway Line 3 Monorail System (Korea): Total system integration test completed and commercial operation started on April 23rd
Project Overview(1ST Monorail System in Korea)
Monorail cars
Line Length : 24 km (Elevated double track) Number of Stations : 30 Stations Car Depot : 2 Places Contract Scope : EPC for Core E&M package (Monorail cars (84 cars), track switches, signalling system)
“Urban Railway Line 1” in Ho Chi Minh City, Vietnam: Design submitted for customer approval. Production to start from 2015.
Project Overview (1st Turn-key business in Vietnam)
Customer : Management Authority for Urban Railways of the People’s Committee of Ho Chi Minh City
Line length : 19.7km (underground and elevated line) Contract scope : Prime contractor – E & M package
17 train sets (total of 51 cars) Signalling and telecommunication system Power supply system Depot facilities, etc. Maintenance: 5 years maintenance
following the start of commercial operations
Mock up displayed
1-6. Our Turn key experiences in Asia
© Hitachi, Ltd. 2015. All rights reserved.
1. Outline of Hitachi and Hitachi Rail 2. Market- Overview 3. Acquisition of AnsaldoBreda and Ansaldo STS 4. Strategy for Middle East Market
Contents
2
Percentage of People Living in Urban Areas
Urbanisation and environmental factors continue to drive growth in the rail sector
Hitachi Rail is well placed to respond to market growth
En
vir
on
me
nta
l(1
) U
rba
nis
ati
on
(2)
2011-2013 2017–2019
Accessible World Rail Market Growth – by product(3)
Services
Rolling Stock
Infrastructure
Rail Control 3.3%
3.3%
1.6%
3.7%
CAGR
Trends: Increase Steady 2011-2013 2017–2019
3.7%
0.8%
2.2%
4.2%
CAGR
Asia Pacific
Western Europe
NAFTA
CIS Eastern Europe
MEA Latin America
1.3%
CO2 emissions targets will drive the electrification of lines and the use of rail
Denser urban areas will provide opportunities for rail, such as metro, to reduce crowding and improve predictable transit times, ensuring that density works efficiently
1.4%
5.7%
Accessible World Rail Market Growth – by region(3) Hitachi Rail – Region by Region
11
Greenhouse Gas Emissions by Travel (grams of CO2 per passenger km)
150g 170g
30g – 70g
1900 | 20%
1990 | 40%
2010 | 50%
2030 | 60%
2050 | 70%
100.7
118.7
102.2
120.7
Unit: EUR Billion
Unit: EUR Billion
© Hitachi, Ltd. 2015. All rights reserved.
2-1. Market – Global Overview -WW Growth for Rail Transportation
CAGR : Compound Annual Growth Ratio
* 1 Source:http://www.chinadaily,com.ch/ * 2 Source:http://catalystreview.net * 3 Source:UNIFE World Rail Market Study
Japan Steady but highly competitive
UK Positive - increase in renewals
China Localisation and consolidation increase
Europe Flat - although still demand for double deck coaches
India Strong potential demand
South East Asia Competition limited due to ODA loans
Middle East Large projects in progress - localisation
North America Significant potential - metro and locomotive demand
Oceania Steady with a demand for specific projects
South America / Brazil Significant potential
Russia / CIS No large projects - demand for metro
Recent rail deals:
• Nov 12 – Siemens acquisition of Invensys Rail
• Oct 13 – Hyundai Rotem IPO
• Jun 14 – Alstom acquisition of GE rail signalling business
• Sep 14 – CNR / CSR Merger
• May 15 – Bombardier announced plans to IPO it’s transport division
• Jul 15 – Wabtec Corp announced plans to acquire Faiveley Transport
Near future:
1.Rail industry poised for further consolidation
2.Likely polarisation between global fully integrated rail providers and global component suppliers
12
The global rail sector is witnessing a clear trend towards consolidation (1)
Metro / Trams Locos HSR Commuter Services
Turn-key
14.8
31.7
16.9
93%
91%
95%
8.5
6.8 6.2
3.3 3.1 2.7 2.4 2.1 1.8 1.4 1.4 1.3 1.3 1.1 0.7 0.3
16%
58% 81%
n/a n/a 58%
n/a n/a n/a n/a 34% 74% 51% n/a 85% n/a
45%
68%
44%
20
14
Reve
nu
es
(Bil
lio
n E
uro
)
% Home market – Asia Pacific
% Home market – Europe
% Home market – Americas
% of sales in home market Rolling stock
Turnkey ( Full line ups)
Systems
Locomotives
Asia Rolling Stock Global Integrated Providers
Rolling stock & systems
Global Integrated Providers
(1) Source: Company Annual Reports & Hitachi Rail analysis
7.2 7.0 4.5 5.6 5.8 7.5 20.0 4.1 7.5 9.6 7.5 EB
IT (
%)
2-2. Market – Global Overview - Emergence of Huge Chinese Rail Conglomerates accelerates consolidation
CRRC CSR
CNR
Bombardier
Alstom
Siemens GE
© Hitachi, Ltd. 2015. All rights reserved.
1. Outline of Hitachi and Hitachi Rail 2. Market- Overview 3. Acquisition of AnsaldoBreda and Ansaldo STS 4. Strategy for Middle East Market
Contents
2
14
Business Segments Businesses
Signalling systems
Design and production of signalling systems and components for railways and underground infrastructure
Turn-Key Solutions
Design and production of integrated transport systems
• High Speed • Computer Based
Interlocking • Main Lines & Freight • Metros & Tramways • Planning, Supervision &
Traffic Control • Equipment & Components • Turn-Key Solutions
Businesses
Rolling Stock
AnsaldoBreda specialises in the construction of technologically advanced rolling stock.
Business Segments
• High Speed • Main Line • Mass Transit • Driverless Metros • Trams • Locos • Services
On February 24th, 2015 the Boards of Directors of Hitachi, Ltd. and Finmeccanica S.p.A. announced that they had signed binding agreements for the sale and purchase of:
•the majority of the current business of AnsaldoBreda S.p.A., with the exclusion of some revamping activities and certain historical contracts, and
•the entire interest owned by Finmeccanica in Ansaldo STS S.p.A., equal to approximately 40% of the share capital.
-Newco
Hiroaki Nakanishi & Prime Minister Renzi
Acquiring W/W customer base, Strengthen Product portfolio and Turn-Key Solution Capability
3-1. Acquisition of AnsaldoBreda and Ansaldo STS(1)
15
TO Maximize Complementary Relationship
NEW HITACHI
Expands the
Revenue
Synergy
Opportunities
Excellent
Turnkey
Track
record
Robust
World Wide
Customer
Base
Strong
Signalling
Capability
Wider RS Portfolio. Strong track record on
Driverless Metros
Cutting edge
technology for
Mining Solution
Wider Product
Portfolio
(Including
ICT, IoT)
Accessibility
of Japanese
Gov. Finance Support
Robust
Financial
Capability
High
Reputation
Japanese
Quality
3-2. Acquisition of AnsaldoBreda and Ansaldo STS(2)
16
Metro / Trams Locos HSR Commuter Services
Turn-key
14.8
31.7
16.9
93%
91%
95%
8.5
6.8 6.2
3.3 3.1 2.7 2.4 2.1 1.8 1.4 1.4 1.3 1.3 1.1 0.7 0.3
16%
58% 81%
n/a n/a 58%
n/a n/a n/a n/a 34% 74% 51% n/a 85% n/a
45%
68%
44%
20
14
Reve
nu
es
(Bil
lio
n E
uro
) % Home market – Asia Pacific
% Home market – Europe
% Home market – Americas
% of sales in home market Rolling stock
Turnkey ( Full line ups)
Systems
Locomotives
Asia Rolling Stock Global Integrated Providers
Rolling stock & systems
Global Integrated Providers
(1) Source: Company Annual Reports & Hitachi Rail analysis
7.5 20.0 4.1 7.5 9.6 EB
IT (
%)
To be an Global Integrated Rail Provider
3-3. Acquisition of AnsaldoBreda and Ansaldo STS(3)
CRRC CNR
7.2 7.0 4.5 5.6 5.8 7.5
CSR Bombardier Alstom
Siemens
© Hitachi, Ltd. 2015. All rights reserved.
1. Outline of Hitachi and Hitachi Rail 2. Market- Overview 3. Acquisition of AnsaldoBreda and Ansaldo STS 4. Strategy for Middle East Market
Contents
2
18 © Hitachi, Ltd. 2015. All rights reserved.
4-1. Strategy for Middle East Market
Istanbul(Monorail)
Izmir(Monorail)
Macca(Metro)
Jeddah(Metro)
Kuwait(Metro)
Dammam(Metro)
Doha(Metro) Abu Dhabi(Metro)
Bahrain(Mono) Dubai(Metro/Monorail)
Riyadh(Metro/Monorail)
Market trend: GCC plans Nation-wide
railway networks as well as Metro in major cities.
Each nation-wide railway network will be connected as GCC Internal operator
Our Strategy: Leverage HTC, ASTS &
AB’s footprint in ME Countries.
Leverage Hitachi Group subsystems
Seeking Localization Strategy based on Hitachi UK experience.
Strong Hitachi credit rating enable us to access superior finance source.
● Metro/Monorail Planned City ● Metro/Monorail ordered/opened City
19
Palm Jumeirah Monorail, Dubai, UAE
Doha Metro (Systems) Phase 1, Qatar
The first Monorail System in ME (2009 in use)
Symbolic & Environment Friendly Traffic Solution in World-famous resort
Delivered within tight construction period Achieved high reliability operation in tough
environment
Contribution to Tourism Industry and Environment of Dubai
The first urban metro network in Qatar (Oct.2018 in part use)
Core Infrastructure for development of Doha, the host city for FIFA 2022
Design for sustainable, energy saving by cutting edge technologies
Contribution to Core Infrastructure and Sustainability of Doha, Qatar
4-2. Leverage HTC, ASTS & AB’s footprint in ME Countries(1)
20
4-3. Leverage HTC, ASTS & AB’s footprint in ME Countries(2)
Riyadh Princess
Noura University
- 11.8 km, 14 stations - 22 trains - Capacity:5,770pphpd - Min. headway:90s - Max speed:60 km/h - Availability:99% - Breda/STS
Riyadh Line 3
- 40.7 km, 22 stations - 47 trains - Capacity:20,960pphpd - Min. headway:90s - Main equipment for Automation Train Control and Communication Based Train Control
Etihad
Rail stage 1
- 260 km - Freight transportation - ETCS L2 signalling system
© Hitachi, Ltd. 2015. All rights reserved. 21 21
Substation TMS
Turn Key Solution
Energy Save
Passenger Service
Maintenance Management
Big Data Analysis
Facility SCADA, Flow
Management, Cyber Security
Railway asset real-time
condition monitoring
Sensing
Technique
Operation Improvement Life Cycle
Engineering
Volume
Variety Velocity
Information Share
Smart Grid
PSD
Depot Radio
BS
Point
Signal
B-CHOP, Power SCADA
Train operation,
Information control, Crew
management
Smart card, E-Ticketing,
AFC, Advertisement
Digital Train Control
Capacity Enhancement,
Safety & Reliability Benefits
Signalling
ETCS&CBTC
4-4. New business
© Hitachi, Ltd. 2015. All rights reserved. 22
• Investment GBP 82 million including
GBP 4 million grant
• Production capacity is 40 vehicles per month
starting from February 2017
• The site includes R&D, Assembly and Testing
• 730 new jobs will be created
• Design & build contract awarded August 2012
• Construction April 2013 to July 2015
• Production commencement November 2015
• 1.1km test track with 25kVa power supply
• 6,500m2 of solar PV panels installed generating
1MW
• Factory footprint is 43,000m2
• IEP vehicles was the initial justification
• We needed the additional manufacturing capacity
• Redcing the risk around having only one factory in Japan
• Access to new markets, and talented labour pool
• European market eatimated 300-400 vehicles for next decade
• Excellent suppliers
• Excellent range of educational facilities
4-5-1. Seeking Localization Strategy based on Hitachi UK experience
Fit for Purpose Site Our background
© Hitachi, Ltd. 2015. All rights reserved. 23
4-5-2. Seeking Localization Strategy based on Hitachi UK experience
© Hitachi, Ltd. 2015. All rights reserved. 24
3rd Sept. 2015 UK Newton Aycliffe Factory Opening Ceremony In attendance of PM Cameron, Chancellor Osborne.
4-5-3. Newton Aycliffe opening ceremony
© Hitachi, Ltd. 2015. All rights reserved.
UK IEP project PPP(Public Private Partnership) Transaction
UK Government Department for Transport
Special Purpose Vehicle
AGILITY TRAINS
Hitachi Rail Europe • Rolling Stock • Depot Construction
Lenders
Operators (Great Western Main Line)
(East Coast Main Line)
Hitachi Rail Europe • Maintenance Service
Availability Payment Contract
Loan Agreement
Hitachi Rail Europe (HRE)
(70%)
Master Contract Usage Guarantee 27.5 yrs
Franchise Contract
Manufacturing Agreement Train Service Agreement
Finance Scheme
• Equity Providers
• Debt Providers
Contract Scheme
4-6. Strong Hitachi credit rating enable us to access superior finance source.
Approx. 4.3B GBP Debt 1.8B GBP from JBIC
25
© Hitachi, Ltd. 2015. All rights reserved. 26
4-7. Conclusion
The rail markets maintains strong
fundamental growth drivers, but Rail
industry is poised to further consolidation
“Hitachi Rail’s mission is to contribute to society through the continuous development of superior rail transport solutions”
There are many opportunities in rail
projects within Gulf countries.
Arrangements of Japanese loan by JBIC
expected
New challenges on Rail solution business; Rail + IT technologies Hitachi intends to be a major supplier in
the ME rail market