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FY16-2Q
Company Outline
and
Topics
© Hitachi Construction Machinery Co., Ltd. 2016. All rights reserved.
2016
Public Relations Strategy Office
2
・Company Name Hitachi Construction Machinery Co., Ltd.
Stock Exchange Listings:Tokyo (#6305)
・Major Operations Manufacturing , sales and service of construction machinery,
transportation machinery, and other machines and devices.
・Established 1 October, 1970
・Capital 81,576 million Yen (Hitachi, Ltd:51%)
・President Yuichi Tsujimoto
・Subsidiaries &
Affiliates
Japan: 15 companies, Overseas: 40 companies
・Number of Employees Consolidated :21,193 Non-consolidated :4,315
Company Outline
(March 31, 2016)
3
Construction
New Machine
and others
71%
Construction
Parts &
Services
14%
Mining
New
Machine
6%
Mining
Parts &
Services
9%
Double-Front Work
Machine
Hydraulic
Crawler Crane
Wheel-drive Type
Hydraulic Excavator
Mini excavator
Road
Construction
Machinery
Our Products and Revenue
Wheel Loader
Hydraulic Excavator
(Hybrid hydraulic excavator,
ICT hydraulic excavator)
Mining
Construction
Solution Business
Dump Truck Ultra-large Hydraulic Excavator
Consite Mine management system
FY2015 Revenue
758.3
(Billions of yen )
4
81.6
0
20
40
60
80
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
'70 '72 '74 '76 '78 '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14
Overseasrevenue
Domesticrevenue
Overseasrevenue ratio
( Billions of yen ) (%)
“Made in Japan”
main
Localizing Manufacturing
‘85 Plaza Accord
‘91 the bursting of
the Japan’s bubble
economy
‘97 Asian
Financial Crisis
‘08 the collapse of Lehman Brothers
‘15
Globalizing and Localizing Manufacturing
Europe &
America China Sales network
covering the Europe,
3.8 22.2 21.4 Capital( Billions of yen )
Main business: Jpan Expansion of
overseas business
Mini excavator
Wheel Loader Dump truck
1,000
900
800
700
600
500
400
300
200
100
0
5
The Americas
Manufacturing:3
Sales:4
EMEA※
Manufacturing:1
Sales:5
Southern Africa
Manufacturing:1
Sales:4
India
Manufacturing:1
Sales:1
China
Manufacturing:2
Sales:4
Asia
Manufacturing:1
Sales:5
Oceania
Sales:1
Japan
Manufacturing:5
Sales:1
Russia& CIS.
Manufacturing:1
Sales:1
HCM’s Manufacturing & Sales Bases (Major group companies)
※Europe Middle east and Africa
6 6
AC-3 rigid dump truck
・The synergy of Hitachi Group ・High-Performance Stability Control Technologies
≪Topics≫AC-3 rigid dump truck
Clarion Co., Ltd.
Infrastructure Systems Company, Hitachi Ltd.
Hitachi Research Laboratory, Hitachi, Ltd.
Power Systems Company,
Hitachi Ltd.
Power Systems Company,
Hitachi Ltd.
Infrastructure Systems
Company, Hitachi Ltd.
Hitachi Power Solutions Co., Ltd..
7 7 ≪Topics≫AC-3 rigid dump truck
AWARD - JSME(The Japan Society of Mechanical Engineer)
Medal for New Technology 2014,
We received JSME Medal for New Technology 2014 from The Japan Society of
Mechanical Engineers for “High-Performance Stability Control Technologies” installed in
the new AC-3 dump truck series.
The technologies were “Pitching restraint control” and “Sideslip prevention control”. The
former reduces pitching of the truck, resulting in better operating comfort and fewer load
spillage. The latter prevents sideslip of the truck, resulting in enabling stabilized operation
under various road conditions including slippery rutted surfaces. This award was highly
evaluated these two technologies.
Pitching restrain control
Sideslip prevention control EH5000AC-3 dump equipped with
”High-Performance Stability Control Technologies"
Without control
Without
control
With
control
With control
8 8 ≪Topics≫Fleet Management System/ Autonomous dump truck
Mining operations management system through use of the Fleet Management System (FMS)
for managing mining operations from the successful Wenco International Mining Systems
Ltd.
Currently conducting verification testing on autonomous (unmanned) dump truck driving
systems.
9 9 ≪Topics≫Solutions that resolve customer issues
We will build networks of the various personnel involved with construction equipment and
work sites using ICT to provide accurate and efficient processes.
Customer issue (1)
safety
Visualizing peripheral
Information for machinery
Expanding the on-board
“Aerial Angle” product that
displays peripheral information
for machinery on a monitor
inside the cab
Customer issue (2)
productivity
[mining]
Optimization of the operation
process
Mining operations
Management system through
use of the Fleet Management
System (FMS) for managing
mining operations from the
successful Wenco International
Mining Systems Ltd. Currently
conducting verification testing
on autonomous (unmanned)
dump truck driving systems
Customer issue (3)
productivity
[civil engineering works]
Use of information and
communication technologies
(ICT) adapted to customer
needs on work sites
Compliance with the
“i-Construction” platform
promoted by the Ministry of Land, Infrastructure, transport
and Tourism since FY2016.
Expanding solutions from
a customer perspective
Customer issue (4)
Life-cycle cost
reductions
Visualization of construction
equipment operating condition
and predictors of malfunction
Staying on top of malfunction
predictors and reducing machine
down-time through thorough
standardization of servicing
via the “ConSite” remote
monitoring system
i-Construction the ICT hydraulic excavator
The “ZX200X-5B” comes equipped with
HCM’s proprietary machine control functions
and machine guidance functions that
navigate the operator, and complies with the
“i-Construction” initiative promoted by the
Ministry of Land, Infrastructure, Transport
and Tourism. 「ZX200X-5B」
10 10
Overview of the Transaction
Acquisition price
A$ 3.25 per ordinary share (a 37.7% premium to the 1 month VWAP of Bradken shares up to 30 September) Maximum total consideration of A$ 689 million (JPY 51.6 billion JPY75=A$)
Acquisition structure
A cash takeover offer for 100% of the ordinary shares
Source of funds Existing cash reserves and external funding
Anticipated schedule*1
1 Nov. 2016: Commence takeover bid
10 Feb. 2017: Complete takeover bid
Overview of Bradken
Name Bradken Limited
Business Casting, manufacturing and distribution service of casting products
Representative Paul Zuckerman (CEO)
Headquarters Newcastle (NSW), Australia
Established 1922
No. of employees Almost 3,500
Stock listing Australian Stock Exchange (ASX: BKN)
*1 The schedule is subject to extension
Key Financials Share Performance
1,008
1,154
1,4561,317
1,138
968
82116.6% 17.0%
15.1%16.2%
15.2%14.1%
13.2%
8.0%
12.0%
16.0%
20.0%
24.0%
28.0%
0
200
400
600
800
1,000
1,200
1,400
1,600
FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
Revenue EBITDA margin
(A$ million) (A$)
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
0.0
2.0
4.0
6.0
8.0
10.0
12.0
'10 '11 '12 '13 '14 '15 '16
Share price S&P/ASX 200 Index
≪Topics≫Acquisition of Bradken
11
High-precision wear parts for
mobile mining equipment
Revenue:A$228.4mm
% total revenue:27.8%
Global leader in crawler systems,
GET
Crawler systems
GET(Ground Engaging Tools)
Industrial product for infrastructure
Mining wear parts business Specialty castings
business
Wear surface solutions for fixed
plant mining equipment
Revenue:A$349.5mm
% total revenue:42.6%
Global leader in metallic mill
liners
Metallic mill liners
Wear surface solutions
Live, remote wear monitoring technology
High-spec, specialty castings for
the industrial, energy and
defence industries
Revenue:A$227.2mm
% total revenue:27.7%
Customized specialty castings
Industrial
Energy
Defence
* Revenue and % Total Revenue based on 2016/6A.
In addition to these three businesses, Bradken’s total revenue includes Cast Metal Services (A$13.9 mm, 1.7%), Others (A$1.6mm, 0.2%).
≪Topics≫Core Products and Solutions of Bradken
12 12
Australia/NZ
North America
South America
Africa
Europe
SE Asia
China
Coal
Iron Ore
Copper
Gold
Other Minerals
Oil & Gas
ConsumableProducts
CapitalProducts
Resources
Non-Resources
REVENUE BY INDUSTRY SECTOR REVENUE BY PRODUCT
Strong presence in the resources sector
Consumable products account for c.
90% of total revenue
REVENUE BY REGION REVENUE BY COMMODITY
Strong presence in Australia and North America
Well-balanced exposure to commodities
Note: Revenue for FYE 2016/6.
15.3%
84.7%
10.6%
89.4%
45.0% 44.1%
2.9%
2.7% 2.6%
0.2% 2.5%
23.7%
19.2%
18.8%
18.1%
11.7%
8.5%
≪Topics≫Overview of Bradken~Revenue Breakdown~
13 13
Parts & services Used Rented New Equipment sales Client operation enhancement
Source: Off-Highway, Freedonia, Company Reports, IRN, Expert Interview, Team Analysis, Parkerbay, Capital IQ
@ US$1=JPY120 in 2014
≪Topics≫ Strategy to Strengthen HCM’s Value Chain
The potential market size will double through initiatives to develop the entire value chain, rather than widening the product lineup.
*1: Mining shovels, mining RDTs, mini shovels, wheel loaders, medium-sized shovels
Max. JPY24tn
Other product group
Increase revenue and
profitability through value
chain expansion with core
products (e.g. shovels)
Broadening of “Business Portfolio”
Competition in
increasing product lineup
Market Size of Core Product Group in Construction & Mining Machinery
Core product group*1
Bro
ad
en
ing
of
“G
oo
ds
”
Mining SHs
Mining Dump
Trucks
SHs
WLs
Mini SHs
Enter business of
client operation
enhancement using
IoT
ADTs
Backhoe
Loaders
Motor
Graders
Skid Steer
Loaders Max. JPY10tn
Max. JPY 9tn
14 14
Operation Services
Software & IoT
Parts
Hardware
Services
Goods
≪Topics≫ Future Growth Outlook V
alu
e C
hain
▪ Geological modeling companies
▪ Mine planning companies
▪ Field monitoring companies
▪ Maintenance planning companies
▪ Asset management companies
Fleet management
Growth Strategy
Parts supplier
Surface mining field operation
Accumulation & crush
Reinforce after-sales services business by acquiring parts suppliers in a fragmented market with many small-scale suppliers
Reinforce IoT capability through Wenco (the #1 fleet management company) as a core. Improve productivity (including planning) based on data integration
Accumulate operating know-how and data by forming alliance with operators (including mining companies). Provide solutions for productivity enhancements using IoT
HCM Strategic Field
Hardware supplier
Step 3
Step 2
Step 1
Mining companies & operators
Business strengthened by the acquisition
The acquisition of Bradken will enable HCM to provide comprehensive solutions for client productivity enhancements; a stronger after-sales business with Bradken at its core service parts supplier and effective utilization of software and IoT.
Acquire solid business field by enhancing the value chain
Extraction & transportation
15 15
Combined Market of Parts & Services
Genuine Products Non-branded Products
Landscape of Construction & Mining Machinery Parts & Services Market
≪Topics≫ Anticipated Synergies① Enhancement of Value Chain through Reinforcement of the Mining Wear Parts Business
The acquisition of Bradken will not only raise the capture rate of mining wear parts used in our
own construction machinery, but also raise those in our competitors’ machinery.
HCM genuine products
for HCM machinery
【Hardware manufacturer
(HCM)】
【Hardware manufacturer
(other companies)】
Market for genuine products
manufactured by HCM
competitors
(HCM unable to capture)
Non-branded products
for HCM machinery
【Parts manufacturer (Bradken)】
Market for non-branded
products
(Bradken already in market)
【Parts manufacturer (Bradken)】
Oth
er
OE
Ms
HC
M
Capture Rate: High
Market for non-
branded products
【Parts manufacturer
(other companies)】
Competitor’s share of
non-branded products
for HCM machinery
【Parts manufacturer
(other companies)】
Capture Rate: Low
・・
・
・・
・
Penetrate parts & services business of
competitors
Increase capture rate
Pu
rsu
e s
yne
rgy
Pu
rsu
e s
yne
rgy
16 16
Expansion of global customer coverage through the combination of the HCM and
Bradken brands
* HCM: Based on the operating unit shares of operating mining equipment. Bradken: Based on units implied by market share by revenue
≪Topics≫ Anticipated Synergies②Expand Customer Coverage
【Customer coverage by
region※】 N. America S. America Europe Africa Asia Oceania
HCM New
Equipment
Bradken
GET -
Mill Liners
Solid customer platform through new
equipment sales based on
production technology cultivated
over years and continuous
innovation
Broad customer platform based on
wide value chain comprised of
mining facility, mining consumable
and maintenance service
businesses
etc. etc.
Expanding the
customer coverage
through the proven
brand value
17 17
Upgrade productivity Reduction of life cycle cost Improve safety
Bradken’s Strength
Competitive mining consumable products
Ability to respond to sophisticated
customers’ needs
Superior casting technology
Experienced management team
Brand value based on established
relationship with customers
HCM’s Strength
New Equipment development capability
Production technology cultivated over
years
Continuous innovation (ICT・IoT, hybrid)
Large operating fleet based on high
reliability and durability
Brand value based on established
relationship with customers
Consolidated
revenue
JPY 758bn*1
Consolidated
revenue
A$821mn *1
Provide solutions to
customers
Synergies Synergies
≪Topics≫ Anticipated Synergies③Accelerate Innovation
Combining Superior Technology, Product Capability and Operational Know-How
*1 HCM: 2016/3A; Bradken: 2016/6A
18 18 ≪Topics≫ Corporate governance systems
(as of October 12, 2016)
8 D
irecto
rs
(of w
hom
3 a
re O
utsid
e D
irecto
rs)
15
15
19
END
2016
Public Relations Strategy Office
Corporate Vision
© Hitachi Construction Machinery Co., Ltd. 2016. All rights reserved.
Any forward-looking statements in the “Corporate Vision” , including
results forecasts, are based on certain assumptions that were
deemed rational as well as information currently available to the
Company at this time. However, various factors could
cause actual results to differ materially.