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2015 New Year Message from President Takato Nishizawa

No. 030

Yokohama, January 5, 2015 - To mark the start of the new year, Mitsubishi Hitachi Power Systems, Ltd. (MHPS) President Takato Nishizawa issued a message to all company employees. The main points of his message are described below.

"MHPS will soon celebrate its first anniversary in business, and in retrospect I believe that during our first year the mutual understanding between our two integrated companies - Mitsubishi Heavy Industries, Ltd. (MHI) and Hitachi, Ltd. - has deepened and synergy merits from their integration have definitely begun to accrue. Clear merits are being achieved with respect to orders received, technology and cost competitiveness, and in terms of comprehensive engineering synergy also, outstanding results have been achieved through early completion of restoration work enabled by the coordinated response made by our Nagasaki, Kure, Takasago and Hitachi works.

"2015, our second year in business, will be a very important year as it marks the launch of our new multi-year '2015 Business Plan'. Although we will face highly challenging conditions, both domestically and globally, affecting our business environment, we have set ambitious goals of 1.7 trillion yen in orders in fiscal 2017 and 2 trillion yen in fiscal 2020. To ensure the successful achievement of these bold goals, this year we will focus on three key objectives: reaping solid results from our synergy merits, optimizing our operating and production bases as a whole, and strengthening and expanding our servicing operations.

"With reference to the first point - reaping solid results from our synergy merits - the synergy benefits we are now beginning to see would be meaningless to MHPS as a company unless they translate directly to numerical increases in orders received and earnings. Toward that end, last year we set numerical targets for each of our SBUs [strategic business units], works and group companies. This March we will see whether those targets have been met, and if there are any areas where our targets went unachieved, we will vigorously take steps to make improvements, to make MHPS grow into an even stronger company.

"To reap solid results from our synergy merits it will also be important for us to develop core technologies and products such as our highly efficient GTCC [gas turbine combined cycle] and IGCC [integrated coal gasification combined cycle] plants and to adeptly combine these core products in order to provide customers with advanced solutions, including EPC [engineering, procurement and construction]. This is where our true strength in engineering lies, strength superior to that of our competitors, and with confidence we intend to make the very most of this strength going forward.

"Concerning the second point - optimization of our operating and production bases - in order for MHPS to be victorious in the intense competition against its competitors, we must pursue total optimization of our facilities and forge a business structure of outstanding competitive strength. To do this, we intend to consider what kind of structure will enable us to achieve total optimization, and then implement such a structure from a global perspective, including our group companies overseas. In this respect, I ask that all employees think of all company works and all group companies, both in Japan and abroad, as your own workplaces, as your own companies, and that you will give your every effort at all times to achieving overall optimization. We will also pursue total optimization by aggressively moving to integrate our domestic and overseas group companies.

"Regarding the third point - strengthening and expanding the company's servicing operations - the integration of MHI and Hitachi's operations has resulted in a doubling of our products in use at power generation plants worldwide. And while we can expect significant synergy to be reaped from the integration of the two companies' servicing operations, we also will seek to expand our servicing operations by expanding the scope of LTSAs [long-term service agreements] and promoting our services for products made by other manufacturers. By taking up this challenge, our aim is to double the volume of service-related orders and make this a 1 trillion yen business in the near future. MHPS today also performs a wide variety of maintenance and repair services via remote monitoring applying ICT [information and communications technology]. In the future, we aim to offer comprehensive services that will include remote monitoring and control, operation and maintenance/repair services, and centralized management. We also look to develop new forms of business transcending current service modes such as conventional O&M [operation and maintenance].

"These are the three areas in which we will all focus our efforts during this new year. It is in challenging times that true strength is manifested. To make this, our second year after integration, a rewarding year all around, let's move forward, together, confident in our capabilities, boldly continuing to address the challenges before us."

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