The following is a summary of the Hitachi, Ltd. (HTHIY) Q2 2024 Earnings Call Transcript:

Financial Performance:

• Hitachi achieved an increase in revenues and profits across all sectors, driven by growing demand for DX (digital transformation) and modernization in the domestic IT market and GEM (green energy and mobility).

• Revenue increased by 11% year-on-year, with significant growth in GEM and DSS sectors.

• Core free cash flow improved significantly to ¥97.6 billion.

• Operating income and profit margin both increased largely due to contributions from green and digital sectors.

Business Progress:

• Hitachi's durability in Digital Systems and Services (DSS) saw revenues of ¥1.3 trillion, a 10% increase year-on-year, especially in Energy and Public Sector.

• GEM's orders increased by 42% year-on-year, reaching ¥3.1 trillion, demonstrating strong performance in HVDC (High Voltage Direct Current), railway maintenance, and energy sectors.

• Positive outcomes from strategic partnerships and expansions like collaboration with NVIDIA for digital services and agreement with Singtel.

Opportunities:

• Strong demand in the domestic IT market and a revision upward of fiscal year 2024 forecasts based on strong demand for GX, indicating potential revenue growth from new product innovations and expansions in the IT sector.

• The growth in digital services, particularly in data center domains and expanding strategic partnerships, present substantial opportunities for future growth and expansion.

Risks:

• The gradual growth in AI services as Azure AI scales could pose risks if market expectations adjust too rapidly. Additionally, fluctuations in procurement costs could also impact profitability.

• Slowdown in certain operational projects or shifts in project schedules might affect quarterly revenue recognition, posing financial volatility.

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