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Hitachi Ltd
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[Foreign Language] The time has come to start the meeting of the consolidated financial results for the third quarter ended 31st December 2017 for Hitachi, Ltd.
First of all, I would like to introduce the speakers to you. Mitsuaki Nishiyama, Senior Vice President and Executive Officer, CFO; Tomomi Kato, Deputy General Manager at Financial Strategy Division; Yasuo Hirano, Executive General Manager of Corporate Brands and Communications Division.
Regarding the results, Mr. Nishiyama will provide the presentation. Mr. Nishiyama, please.
Materials have been distributed to you and I would like to talk about the outline PowerPoint presentation for the third quarter. Please refer to 1-1 and 1-2. These are the highlights. 1-1 is the highlights for the third quarter, October to December. 1-2 are the highlights for the third quarter, April to December.
The outline information is provided in terms of the third quarter. The revenues increased by 6% and adjusted operating income increased by 22%. And net income attributable to Hitachi stockholders increased by 26%. For the -- on the 3-quarter basis, the revenues increased by 2%, adjusted operating income increased by 27%, net income increased by 35%, that is for the April to December.
For the October to December as well as April to December, a record high performance have been generated.
Now let's refer to 1-3. The consolidated statement of profit or loss. On the right-hand side, the figures for April to December. Now revenues was JPY 6,674 billion, 102%, increased by 2%. Because of realignment, reorganization as well as ForEx but in the absence of that, it will be equal to 5%. Next is the adjusted operating income. JPY 474.5 billion, that is an increase by JPY 101.4 billion or 26% or 27% increase. EBIT was JPY 472.8 billion. At the very bottom, net income attributable to Hitachi stockholders was JPY 258.5 billion, increased by 67.3% (sic)[ JPY 67.3 billion ] or increased by 35%.
Please refer to 1-4. This -- the factors for revenues and adjusted operating income waterfall chart is presented. Left-hand side is for revenues. Portfolio review includes the Hitachi Transport Systems, Hitachi Capital and Hitachi Koki. Portfolio had been subject to review. The impact of this reorganization was JPY 306 billion. Foreign exchange, weaker yen. Trend impact was JPY 160 billion. Business scale expansion was positive JPY 300.7 billion. Adjusted operating income basis is shown on the right-hand side, impact of reorganization. The impact was JPY 29 billion, negative. Foreign exchange impact was positive JPY 25 billion. Profitability improvement, et cetera, was JPY 105.4 billion, positive impact.
Moving on to the next page, which is 1-5. Revenues by market. Second line is Outside Japan, ratio was 52%. At the very right, year-over-year comparison is made: the Japan was 97%, Outside Japan, 108%. And foreign exchange as well as reorganization impact, if we subtract that, is 100% for Japan and 109% for Outside Japan. Overall is 102% and after adjustment, 105%.
We saw growth in China as well as Asia. Significantly, more than 10% growth was seen in these areas. In China, Construction Machinery as well as Automotive Systems grew. And furthermore, ASEAN, Indian and other areas, Hitachi High-Tech and Hitachi Construction Machinery grew significantly.
For Europe was at 99%. Hitachi Koki as well as Hitachi Capital reorganization had an impact. In the absence of these, increase of 8% was seen in Europe.
For North America, Hitachi Construction Machinery as well as Sullair acquisition, as a result the impact was also related to the reorganization, but Hitachi Chemical as well as Rail grew at 108%. For other areas, Hitachi Construction Machinery acquisition have had an impact.
1-6. This is the outline balance sheet as well as the cash flow. At the very top, total assets as of end of December was JPY 10,196.1 billion. That is an increase of JPY 532.2 billion from March 31, 2017. Inventories in the fourth quarter was concentrated for -- to generate revenues, increasing significantly and assets have increased because of acquisitions. And CCC, cash conversion cycle, is shown here as well, which is 68.6 days. This is a significant improvement over previous year. And Hitachi stockholder's equity ratio was 31.6%, debt-to-equity ratio at 0.28x. We have seen improvement in both these areas.
For cash flows, on the other hand. Cash flows from operating activities was JPY 473.2 billion. With profit improvement as well as CCC improvement, we have seen an increase. Regarding cash flows from investing activities was minus JPY 314.2 billion. In 2016, Capital as well as Transport Systems was subject to reorganization assignment. Revenues have fallen off Sullair as well as M&A expenditures, meant that expenditures increased but total free cash flow was JPY 158.9 billion.
Next page, let me talk about the revenues and operating income and EBIT by business segment. By business segment, operating income improvement was Information & Telecommunication Systems, Social Infrastructure & Industrial Systems and Construction Machinery. Those were the big contributors.
Starting with Information & Telecommunication System. JPY 26.6 billion up in operating income year-on-year. This is because of the profitability improvement in system integration business in Japan and effective structural reform in IT Platform & Products. And in IT Platform, products, types, storage was firm and strong. So those were the major factors.
In Social Infrastructure & Industrial Systems, we reduced the shrink of low profitable business in industry-distribution field, but railway systems in U.K. and Sullair acquisition helped the industrial products business and operating income was up by JPY 29.3 billion. In the elevator business, increase in procurement cost and decrease in sales price in elevators and escalator business in China was a negative factor, but in the industry-distribution field and profitability improvement in power and energy business and also in industrial products business were the positive factors. So we were able to enjoy a big jump in operating income.
Next 1-8, Electronic Systems & Equipment. Revenues was down by 7%. This is because of the semiconductor production equipment at Hitachi Kokusai Electric and Hitachi High-Technologies grew, but deconsolidation of Hitachi Koki was a negative factor. On the other hand, operating income. The sales decrease in clinical analyzers at Hitachi High-Technologies and deconsolidation of Hitachi Koki were negative, but sales increase in semiconductor production equipment was a positive factor, so up JPY 3.2 billion.
Construction Machinery. Overseas sales increase mainly in China and acquisition of Bradken and H-E Parts also contributed to the increase. So revenue increased by 35%. And with that, operating income was up by JPY 55.1 billion year-on-year.
Next 1-9, please. High Functional Materials & Components. Revenues, electronics and automotive-related products increased. In addition, acquisition of FIAMM Energy Technology by Hitachi Chemical was a positive factor. So revenue was up by 15%. Adjusted operating income with the increase in revenues was up by JPY 5.2 billion.
Automotive Systems. We had sales increase in China and this covered the sales decrease in North America and sales decrease of car information systems. So revenue was up by 2%. On the other hand, Clarion profitability deterioration of car information system and sales decrease in North America were negative factors. So operating income was down by JPY 1.9 billion.
Next 1-10, please. Smart Life & Ecofriendly Systems. Revenue was down by 5%. This is because of the change of accounting to net basis revenue for a part of procured products in overseas market, and sales declined slightly in home appliances in Japan. On the other hand, operating income was up by JPY 3.3 billion. This was thanks to the effect of cost reduction and structural reform, so we were able to enjoy the benefit from that.
Now Others and Financial Services segment. Operating income declined. But in Others segment, impact of reorganization of Hitachi Transport System and Financial Services, the impact of reorganization of Hitachi Capital were the negative factors.
Next page please, 1-11 shows our topics. First, progress of Lumada business. The top line revenues of the Lumada business third quarter cumulative is JPY 677 billion. Full year forecast is JPY 950 billion. So we expect to exceed this number in revenues. In various fields and with various customers, we are promoting IoT and AI deals. We have businesses and PoCs and case examples. We are continuing our exploration in many cases. What is listed here were released recently. Hitachi AI Technology, planning optimization service started in Japan. This is digitalizing the know-how of skilled experts in creating production plan using AI. We are conducting demonstration with Nippon Steel & Sumitomo Metal currently. And we started collaborative creation using AI with SBI Sumishin Net Bank aiming at significant improvement in examination accuracy for personal loan and loan for small- to medium-sized enterprises. And as you see in the release in your handout, we established a joint venture with FANUC and Preferred Networks. We are aiming to develop Intelligent Edge System for the field of Industrial & Social Infrastructure.
Next is business portfolio transformation. In health care, we acquired Mitsubishi Electric particle therapy system business and VidiStar, a U.S. company which offers solutions such as image diagnosis data analysis. Hitachi Kokusai Electric tender offer was completed by HKE Holdings. And we are transferring stocks of ALAXALA Networks, a network devices company, to Japan Industrial Partners.
And last topics is progress of Horizon project. GDA, Generic Design Assessment, process of U.K. Advanced Boiling Water Reactor completed in December 2017.
Next slide, please. 2-1. This shows the outlook for fiscal year 2017. So the forecast announced on October 26 is kept unchanged and the assumption for exchange rate is JPY 110 to the U.S. dollar and JPY 120 to the euro, and this has not changed from October. However, on a segment-by-segment basis, we made some adjustments.
Information & Telecommunication Systems and Construction Machinery are revised upward. And Social Infrastructure & Industrial Systems, Electronic Systems, Automotive Systems are revised downward and the total has remained unchanged.
Now on a segment-by-segment. As you see on 2-2, the far right column, previous forecast comparison. Information & Telecommunication Systems, JPY 9 billion-plus. Social Infrastructure & Industrial Systems, revise downward by JPY 5 billion. Construction Machinery, upward revision of operating income by JPY 20 billion. High Functional Materials & Components, down by JPY 15 billion. Automotive Systems, down by JPY 9 billion.
That concludes my explanation.
[Foreign Language] We would now like to proceed to the Q&A period.
[Operator Instructions]
First of all, regarding April to December, based on your -- compared to your internal assumptions, how is it prevailing? What about our risk expense? Is that being utilized? That's my first question.
No. Compared to internal plan, in terms of revenues compared to plan increased by JPY 40 billion and operating income JPY 15 billion improvement was made. And how much risk is taken into consideration? In terms of operating income, JPY 30 billion and nonoperating basis, JPY 30 billion. Overall, JPY 60 billion. There is no change from the October forecast.
Page 7, PowerPoint presentation. You said there is improvement of profitability of JPY 105.4 billion. Is it because of the sales as well as rationalization? Please give us the breakdown.
Out of the JPY 105 billion profitability improvement, let me give you the breakdown. M&A contribution is plus JPY 3 billion and in terms of revenue scale increase, improvement of operating income is JPY 78 billion. Business development investment as well as manpower cost as well as development cost driving up the fixed cost is to the tune of JPY 18 billion. Cost reduction impact, JPY 42 billion. That is the breakdown of the JPY 105.4 billion.
Now you have not changed the forecast for this fiscal year and exchange rate assumptions remain unchanged. But how likely are you to -- going to achieve this? Is forecast inclusive of January to March? Next fiscal year will be the last year of this current midterm business plan and I'm sure that budget will be formulated going forward, but please comment about the likely forecast.
For fiscal year 2017, the likelihood of achieving our target, although there is some downside, we have made adjustments in terms of Information & Telecommunication Systems as well as Social Infrastructure and also Construction Machinery. We believe that it will -- these will remain strong in the fourth quarter. Therefore, the likelihood of achieving the budget has increased. The values that are included in the risk, we would like to avoid as much as possible, so that we can exceed the forecast that has remained unchanged. For fiscal year 2018, IoT business is centered on the Information & Telecommunication Systems, and we must improve that. And Social Infrastructure & Industrial Systems, with -- in terms of business reorganization with industry & distributions, is having a positive impact. The portfolio will be subject to reorganization. Smart Transformation cost reduction will be promoted further. By so doing, revenue -- profit as well as cash can be earned in this structure. Therefore, for the fiscal year 2018, in the last year of the current midterm business plan, we believe that operating profit margin of 8% as well as JPY 400 billion in terms of net income are achievable. We have a good pace to achieve these targets.
Regarding IoT Lumada, what is the profit target? Please elaborate.
We would like to present the numbers only in revenues for the time being. However, in a steadfast manner, profit margin, the -- by improving the core business, we believe that operating profit margins can be further improved. Incubation cost, inclusive of development cost as well as business development cost, are being incurred still. But there are already deals that have been realized and we believe that high profit margins can be generated from these businesses. We would like to expand this business. The core business of Lumada will be further expanded going forward. For the time being, we will disclose only revenues.
I have 3 questions. First, the government is asking for a 3% wage increase. Keidanren, on conditional basis, said that it is desirable to increase the wage. What do you think about increasing your wage? And if you plan to increase, what is -- how much base up? Or will it be bonus, one-off payment? How do you plan to do this?
We have not decided on anything yet. The economic situation, performance, social situation and the request from the union will be taken into account and continue our series discussion. Needless to say, end of deflation and the good cycle of economy will be looked at and try to reform the work style so that our employees can exert their capabilities. So we would like to implement the proper measures to achieve that.
Lumada business. Compared to your forecast, you are having a bigger target in your forecast. How do you see your progress, cumulative progress up to the third quarter?
The full year forecast is JPY 950 billion and the progress rate is 71%. Third quarter cumulative basis, 71%. On the plan, usually in -- at the third quarter, we were thinking of 65% progress rate. So we are ahead of the progress plan.
Your [ Shingijutsu ] collaboration and SBI collaboration were mentioned. Will they be a key driver for your Lumada business going forward?
They're only in the demonstration proof-of-concept stage. And so there is -- it has not contributed to the revenue up to the third quarter yet. But these demonstrations and examinations are done with many companies in various fields. And so we think this will be contributing to our business in the future.
My third question is segment, the Information & Telecommunication Systems. Your positive factor is the system integration business in Japan expanded and the effect of structural reform in IT Platform & Products. So which statement or sector grew in your SI? And for the second point, could you elaborate on your structural reform?
System integration front. If you could look at the appendix, please, 24, please. Here you can see the Information & Telecommunication Systems, Front Business, SI service related and IT Platform & Products numbers are shown here. Front Business, adjusted operating income, 7% was the third quarter last year, but it is 8.7%. So we see an improvement. Finance, Social, Public, SI business are both firm. And in IT Platform & Products, this is -- was 3.3% last year; it's now up to 6.9%, a big improvement. One reason is telecommunications, which we've been doing for 2 years now. Retail communication systems business, structural reform and global storage-related business, reorganization. This is bearing fruit for cost reduction and narrowing down the product line and transformation from hardware to software, in line with the changes of the market. So the result of the transformation is now bearing fruit. And another point, IT Platform & Products, one more point is flash, especially all flash. High-end, high-profitable flash storage sales is strong. So those are the contributors.
In SI, you mentioned Finance and Social and Public were strong. So if you could elaborate on that, please.
Finance, large banks from existing business to overseas and growing business, they are shifting their IT resource to the growing business. And this shift in investment is accelerating. We want to help those clients in these fields, so we are involved in various businesses. In addition, the banks and financial institutions, management environment is changing, so big data and AI utilization, RPA, Blockchain, these technologies are being utilized. And FinTech companies and other industries are linked with banks -- collaborating with banks and with API. So we are trying to solve their problems and offering solutions. And this trend will continue. Now in Public and Social, transportation -- transportation-related areas, there's needs to utilize data. And in Power, there is deregulation of Power. So the systems need to be upgraded to deal with the deregulation, so we have some business there and the business is very strong. We think this demand will continue going forward.
I have 2 questions. First of all, regarding the results. Operating income as well as net income, I understand that you have recorded the highest ever. What are the factors? Is it based on the weakened or Construction Machinery equipment in China as well as Railway business? Are these the major factors driving the high profits?
I believe the situation is reflected in the numbers. First is information related. Profitability has been improved significantly and for the Information & Telecommunication Systems. And for Social Infrastructure & Industrial Systems, the loss-making business, low-profit business have been narrowed down, which is showing good results. Construction Machinery, on the other hand, business improvement has -- business environment has improved significantly.
The overseas business environment seems very good. Is that correct?
Overall, I believe that the business environment is very strong. In China, for Social Infrastructure & Industrial Systems, there was significant growth. However, the elevator business has been subject to material cost increase as well as price decline. So business environment is strong in China, but the number of units have increased. Therefore and furthermore, Construction Machinery in China is improving because of increase in infrastructure spending. The environment is favorable. However, regarding elevators, there was suspension of construction because of environmental regulations. These are post-regulated matters. That is the reason why we have to watch the market very carefully.
Intelligent Edge System. You have set up a new joint venture company for this purpose. So a system development company has been launched, I believe. What is the objective of this initiative? In terms of robotics and as knowledge resides in the FANUC and Preferred Systems have the OT system and IT knowledge resides in our company. So that is the reason why we would like to develop further the intelligent system -- Intelligent Edge System. We believe that this is -- can be used as a system for Social as well as Infrastructure areas, so there is strong demand.
[Foreign Language]
I will be brief. U.K. Horizon project. What is your -- the future schedule? How do you foresee this project? Now if you withdraw from Horizon right now, what will be the loss?
Basically, I mentioned in the topics, December 13 last year, GDA, the Generic Assessment was done. And with that, site license will be acquired within -- by the end of fiscal year '18; that is our prospect. And therefore, overall, we are in line with the plan. So first of all, with the U.K. government, we are working on the financial structure -- finance structure and the purchase price. So we're preparing for the negotiation and the negotiation will start soon. So there is no big change in the plan. And the impact, if we withdraw from this project, it's only hypothetical. So I will not refrain from answering that question. But at the appropriate time point, we judge the economic feasibility and the return and risks. So at the right timing, we make the right judgment so that we will be able to make the judgment before the start of the construction.
Mr. Hitoshi Ito joined the company and became the Director. What was the reason you hired Mr. Ito?
So please take a look at the news release, your handout about the executive human resources, Hitachi to strengthen business structures for global expansion of the Social Innovation Business. So the structure we are implementing this time has 3 key points. First, the front will be expanded, enhanced in Social Innovation Business using digital technologies, that's point No. 1. And second, is strengthening structures for monozukuri, quality assurance and Hitachi Smart Transportation Project. And third, activities by various people on executive officer level. So as you mentioned in your question, Mr. Hitoshi Ito is under this No. 3. The executives, those non-Hitachi people or the foreign nationals, diverse human resource will be utilized going forward. So as part of our management strategy, we are promoting diversity. So diverse human resources will be utilized. As part of that effort, we are conducting this assignment. [ Mr. Miyata ], Mr. Morita, ex-METI people.
How many ex-METI people do you have now?
Chairman Nakanishi will become the head of Keidanren.
So any structure that you are considering to support that?
We are considering that, a few executives. In this personnel transfer, we are trying to consider that. But the actual structure will be examined going forward.
I have a follow-up question regarding the HR improvement and strengthening. What about the quality improvement? Quality assurance strengthening was mentioned. There have been some quality issues, problematic quality assurance matters relating to manufacturing companies. So based on that, how does Hitachi intend to strengthen the quality assurance? And you also mentioned the chief transformation officer, this could be the answer. What will be the stance of Hitachi towards improved quality assurance? Specifically, what are you contemplating? In terms of automatic inspection testing, will you use IT as well as IoT to replace people in terms of testing? This has been mentioned by METI as well to improve quality assurance. Are you intending investment to be made to improve quality assurance? How much investment will be made? In what areas to improve quality assurance?
This is a continued effort on our part. In particular, the quality compliance is to be strengthened further. As you have rightly mentioned, we are stepping up efforts to improve our compliance in this area. So there is also software assurance systems as well, not just related to our hardware. And in IoT area, the software-based quality assurance is an area that we have to further strengthen. This will be conducted in the context of quality assurance, and quality assurance in new areas will be remodeled. And that is the purpose of strengthening structures for monozukuri quality assurance. Furthermore, in terms of quality with the utilization of AI, it will be introduced for the manufacturing process. We have already started this in the area of quality assurance. There is also internal compliance as well as internal control evaluation will be improved to detect transgressions and RPA will also be utilized for this purpose. We will formulate how much investment will be made in specific areas going forward.
Apart from specific numbers, do you believe that investment in this area will increase going forward? Is it inevitable to -- that this area will increase in terms of spending?
Yes, this is indeed an area that we have to strengthen going forward. On the other hand, in terms of quality improvement, quality improvement and cost overruns will also decline. And by so doing, we will be able to generate more funds to invest in new areas. So it doesn't mean that the increase will be significant, but basic thinking is that we must strengthen our efforts in this area.
I have 4 questions. So first simple question, MHPS Africa, the South Africa deal, could you update us on some -- the progress?
No change from last time. We are in the arbitration process, so we have a confidentiality agreement, but there is no change. In the arbitration process, we will make our assertions and in parallel, we will try to negotiate the resolution. So no change in our sense.
Do you have provision to a certain extent and that has been done last fiscal year? Or do you have provision for this year?
Yes, provision was last year.
No change this year?
No change.
Second question is about your financial results and that you said that you are -- your actual capability is improving. Do you have any risk factors that you could share with us?
In the macroeconomy, foreign exchange of currency is a concern. And the geopolitical risks, economy, political risks, there are many risks. But the direct concern is currency, foreign exchange. But in the current forecast, dollar is assumed at JPY 110 and today, it's JPY 108 to a dollar. On the other hand euro, we assume JPY 120, no change. As of today -- if we use this as of today, dollar -- we have to change from JPY 110 to JPY 108, so it will be minus, negative. On the other hand, JPY 120 to the euro compared to today is a positive factor. So if this current level stays, we will not be -- have to suffer any negative impact. But the yen is strengthening now, so we need to watch closely. Risk of JPY 30 billion is included in the operating income because of the currency factor and in the social sector, the project is concentrated in the fourth quarter, so that's a risk. And in the Chinese market, we have profit. So we are trying to prepare for the future risks.
So in business, you are improving your capability?
Yes, our reorganization is progressing. In the Social Infrastructure & Industrial Systems, the low-profit business is being reduced and in other segments, we are looking at each product to try to narrow down or reduce the low-profit products. So the profit level is improving, for sure. But going forward, to target 8% and 10%, we cannot be content. So we need to do more to improve our profitability further.
My third question is additional question on Horizon, fiscal year 2019, the final investment decision. What is your point? So you will deconsolidate, for sure. But if it's an equity method, how -- is there a percentage threshold?
First of all, it will be at least equity method affiliate. So it will be in our balance sheet. And the asset that will increase will be taken off balance. And the negotiation with the U.K. government, there are various conditions we have to talk about. First is the purchase price, acquisition price. And then the equity subscription or loan. The finance structure, whether finance structure is feasible or not. So we will look at this comprehensively and then think of the business feasibility and make the judgment accordingly.
In other words, if it's equity method associate, of course, subject to other conditions, you will give a green light?
It will be a comprehensive decision. It will not be dependent on just one condition. If we can clear one condition, it's not like that. We will look at the comprehensive conditions, take everything into account and judge the business feasibility.
Acquisition price. The higher the price, the higher the business value. But this is not really relevant to you, it's just a matter of a balance?
Depends on the project return. So this will be negotiated thoroughly so that we can achieve conditions, including the price.
Additional question on Horizon. Nakanishi-san will become the head of Keidanren, which means closer relationship with the government and you have METI people. So as you mentioned, the economic feasibility, economic rationality, there is a risk that whether this will really be an economically rational deal. In 2019, can you really say that you will withdraw in reality?
This is a big project. So there's no business rationality. We will not follow-through. So we will make a good judgment.
Mr. Nakanishi will no longer be the Representative Director. Could you elaborate on that?
He is a Director now, but he will be putting more weight on the activities outside the company. He will be in Keidanren. So the supervision as Director will continue, but will no longer be the representative, executive officer and use more of his time in Keidanren activities. President Higashihara will be the CEO and make the judgment decision as CEO, so no change there.
[Foreign Language] Any further questions?
I have 2 questions. First question is regarding Horizon. I have a follow-up question. In order to reduce your stake, you have to find more investors. For the time being, is everything proceeding well? Renewable energy is increasing penetration significantly more than expected so -- and nuclear power is losing share. So there could be concerns about finding enough investors. Please comment.
This is something we are discussing with many parties and we have -- finding candidates who may be interested. But we have to also negotiate with the U.K. government and U.K. government is indeed an important partner for us as well. Various conditions will be subject to negotiation. While we try to find investors, there is no change in this plan.
You said that U.K. government, you are expecting U.K. government to make investment as well and looking for other partners as well? You said that there are parties interested. Which parties are interested?
This will be subject to further negotiation. Therefore, I shall refrain from giving specific details.
Number two, your company's performance is very favorable but if you look overseas, these -- the so-called comprehensive manufacturers are struggling. So what is your advantage as a conglomerate?
But we have withdrawn from JV, we do not do PC. We have white goods. But it is based on IoT for the household, that is where we are seeking growth. Social Innovation Business will be our focus. We have set this to be our focus. It is not so much the company's format, but rather what is important is to have a comprehensive aligned business and be strong in the businesses we are pursuing. That will be our basic policy.
In the morning, Japan time, President Trump did the State of the Union address. He said infrastructure investment will be up to $1.5 trillion in the next 10 years. You are conducting infrastructure business very broadly in the U.S. So what did you feel about the statement?
What -- President Trump was not concrete, not a concrete investment planned. The detailed plan is not clear yet. And so we will closely watch his policy going forward. That said, U.S. market is an important market for Hitachi and that has not changed. Our big businesses are automotive-related products, IT products and IT solutions and Hitachi Vantara and Hitachi Consulting Solutions business and Sullair, the company we acquired last year. So these businesses will be the key to develop and offer solutions. So the fact that the Social Infrastructure investment increase means there will be more opportunities for us to play a role in the Social Infrastructure area. In the state of Miami, we have the rail -- railway plant. The commuter train that we deliver in Florida already started its operation in July 2017. In the state of Maryland, the rolling stock and signal system order was received. And so we can contribute to the society development going forward.
I have another question regarding Horizon. You said that DBJ and JBIC investment as well as [ loan's ] NEXI, the loan guarantee are being discussed. May I understand the negotiation is taking place with these parties?
Yes, we are consulting various parties. Basically, it's U.K. government as well as Japanese stakeholders are being consulted. We are engaged in consultation with all these parties and soliciting support. There is no change.
What about the Japanese stakeholders? Are the Japanese -- are governmental organization involved as well as are export chain organization as well?
Yes. In terms of export, we have worked with NEXI in the past. Therefore, obviously, we will be involved in discussions with these parties.
I asked whether U.K. government can make an investment? Regarding the investment by U.K. government, has that been subject to a negotiation already, specifically?
Inclusive of investment as well as conditions thereof are being subject to consultations going forward.
With this, we would like to bring this meeting to a close. Thank you very much for your kind attention.