Happy New Year to everyone.
The Hitachi Systems Group consists of employees actively working in various places, and I am glad to celebrate the new year with each of you. I would also like to express my appreciation to the employees who responded to customer needs in their workplaces over the year-end and New Year's holiday. I would like those who worked during the holiday to thoroughly rest now, refreshing yourself both physically and mentally as we move into the new year.
Now, I would like to share some thoughts with you at the start of 2025.
Looking back on 2024, we can see that it was a year with a harsh macro-economic environment, due to factors such as increasing geopolitical risk, rapid depreciation of the Japanese yen, and surging prices for raw materials. Despite this, we achieved our group consolidated budget goals in the first half of FY2024 for sales, operating profit, Adj. EBITA, and core FCF. During this important period that marks the last fiscal year for our 2024 Mid-term Management Plan, we achieved growth through the expansion of Lumada and our digitalization services, primarily in the public and manufacturing sectors. I would like to express my sincere appreciation for the hard work done by all executives and employees.
Also, recovery measures for various natural disasters such as earthquakes, heavy rains, and major typhoons as well as other efforts were handled with special support. I would like to express my appreciation for these efforts as well.
Hitachi Systems includes the phrase "respect for humanity and its infinite potential" in our corporate philosophy, that is, the significance of our existence in society. There are not many other examples of this even within the Hitachi Group, and I believe it is an extremely characteristic point. Our "SMILE∞2.0" human capital strategy is based on the two pillars of "growth opportunities" for supporting the autonomous growth of employees and "safety and peace of mind" for indicating a workplace environment where employees can maintain their physical and mental health. We aim to fuse these two pillars together so that both the individual employee and the company can grow.
To that end, there are three things that I would like to ask of you.
Every January, I make an annual visit to Ise Jingu Shrine to receive a blessing from the Shinto priest there. I can pray for only one thing as the President of Hitachi Systems, and without a doubt, I always pray not for prosperity in business, but for safety. When everyone is healthy and there are no accidents or the like, then business will naturally improve and prosper. Above all else, the most important thing is the health and happiness of each individual. I ask that you think about your own health management seriously and always act with the awareness that "you are responsible for your own health" so that you may live a fulfilling life with family and friends.
While there are only three months left in our 2024 Mid-term Management Plan, I ask that you remain focused, applying resources where they are needed to streamline your work. Furthermore, I also ask that you strive to enhance your project management and quality management, identifying the risks involved in each project to prevent the occurrence of loss cost.
April of this year will mark the start to our new 2027 Mid-term Management Plan.
I believe that, in order to continue to achieve "happiness for each and every individual" for our employees, it is important that our company keep growing.
In the 2027 Mid-term Management Plan, we will shift the style of our management to one where we coexist with generative AI and maximize the value of our human capital. We aim to use optimal workstyles and autonomous styles of working to create workplaces that are fulfilling and motivating for each and every employee. We will continue to augment our staff, improving our productivity through the use of generative AI and other tools as well as increasing the value provided by our services. At the same time, we will promote investments in accordance with our growth strategy.
Also, by expanding our DX and GX services that lead to work reform and more robust supply chains for our customers, enhancing our managed services that accelerate One Hitachi initiatives, and carrying out other efforts, we aim to achieve both sustainable growth and increased profitability.
In April, the domestic data center service business for the Hitachi Group will be integrated into Hitachi Systems. Through this organizational restructuring, we will promote our response to markets growing rapidly due to the increased demand for generative AI as well as create and expand new services related to DX and GX.
During the first half of this year, we carried out the "FY2024 Compliance Awareness Survey" for employees in the Hitachi Group. The results showed that the aspirations of management, such as S (Safety) >> Q (Quality) > D (Delivery time) > C (Cost), right and wrong before profit and loss, and safety and health, were "not sufficiently conveyed to employees," and that "workplaces put pressure on employees to ignore regulations and the like in order to achieve targets."
One must have a certain degree of pressure when being entrusted with work and responsibility, as well as determination to achieve targets for growth. However, this does not call for illicit actions through "lies" or "manipulation" such as false work completion reports, cost reassignment, or underreporting of work hours, nor does it call for working to the point of damaging one's health. Above all, your safety and health are most important.
When some problem occurs in your work, please do not hesitate to promptly consult with your superior or the relevant parties. Illicit actions have a larger impact on our business than failure to achieve budget goals because, for instance, they can lead to customers stopping transactions due to a loss of social trust.
The founder of Hitachi, Ltd., Namihei Odaira, left us with the phrase, "An Honest Person." I also cherish these words in my daily work. I ask that you take a moment to reflect on these words as members of the Hitachi Group before acting.
I also ask that executives and managers thoroughly practice anger management and listen closely to your subordinates to see if they are troubled. Also, when giving explanations for budget policies, sending start of term messages, or at other such times in each workplace, please take the opportunity to explain not only business performance but also matters such as S >> Q > D > C, right and wrong before profit and loss, and safety and health directly to your coworkers in your own words.
We will also continue the "901" campaign to prevent accidents and trouble including harassment due to alcohol consumption, and to maintain good health. Alcohol consumption once again led to the loss of information devices at the end of last year, and we have not eliminated "information security incidents." Please observe the rules and avoid drinking in excessive amounts or for long periods of time.
I would like to conclude my message by offering my best wishes for a healthy, bright, and fulfilling year, in both your professional and private affairs, to our customers, partners, Hitachi Systems Group employees and their families, and all other stakeholders.
January 22, 2025
Setsuo Shibahara
President and CEO
Hitachi Systems, Ltd.
* This translation is a message shared with the employees of Hitachi Systems, Ltd. on January 6, 2025.
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