It is now the scheduled time to start the conference regarding the change of president and CEO of Hitachi. Thank you very much for many of you to take the time out of your busy schedules to attend today despite our short notice. Today we are holding this conference at the Hitachi headquarters as well as participants from online, and we would like to proceed this conference in a hybrid format. Allow me to introduce myself. My name is Morita from the Corporate Public Relations. I will be serving as the emcee today. Now I would like to introduce the members on stage today. First, Katsumi Ihara, Chairman of the Board and Nominating Committee. Keiji Kojima, President and CEO, and scheduled to become the Vice Chairman as of April 1, 2025. Toshiaki Tokunaga, currently Executive Vice President and scheduled to become the President and CEO as of April 1, 2025.
Today, Ihara, Kojima, Tokunaga, in that order, are scheduled to make a speech for about 20 minutes followed by receiving questions from you. And after that, at this venue, we will conduct a photo session. We are planning this conference to end around 6:30 P.M. Japan time. Without further ado, Mr. Ihara, Chairman of the Board and Nominating Committee, would like to make his remarks.
As has been introduced, my name is Ihara. I'm Chairman of the Board as well as the Chairman of the Nominating Committee. So at the outset, first of all, I would like to explain the background that led to the change of CEO. The Nominating Committee at Hitachi has thoroughly discussed the succession of the CEO and the selection and development of top leadership candidates.
At the meeting of the Board of Directors , we have created opportunities for independent directors to actively exchange views with each other, and I myself have held one-on-one meetings with each director, and we have dedicated considerable time and effort to the CEO succession process. This change has been decided as a result of this series of initiatives, and I am confident that I am the most qualified person to provide you with the background. Once again, at today's meeting of the Board of Directors , we have decided that Keiji Kojima will be succeeded by Toshiaki Tokunaga as President and CEO of Hitachi effective April 1st next year. Dr. Kojima will assume the role of director, Vice Chairman from April 1st next year, supporting the smooth transition of leadership and further transformation of Hitachi.
I became a director of Hitachi in 2018 during the tenure of Chairman Nakanishi and President Higashihara when Hitachi's transformation was being vigorously promoted. At the time, as you know, the Hitachi Group consisted of numerous subsidiaries, but we divided them into companies to be incorporated internally and companies to pursue growth outside the group in the capital market from the perspective of promoting Social Innovation Business. At the same time, we acquired the power grid business from ABB in 2018 and GlobalLogic in 2021 as businesses that will contribute to the future growth of the group, and we have almost completed today's Hitachi portfolio. In addition, driven by these businesses, Hitachi has made significant progress in global expansion. Unfortunately, in 2021, Chairman Nakanishi fell ill, and Hitachi's leadership structure was placed under Chairman Higashihara and President Kojima.
In the three years since then, in addition to the two companies we acquired, our railway business has experienced significant growth, and we have been able to achieve substantial organic growth. Under Mr. Kojima's strong leadership, I believe that we will be able to achieve the goals of our current Midterm Management Plan 2024, which ends in fiscal year 2024. It is worth noting that these efforts have been recognized by the capital market, and Hitachi's market capitalization has made a significant leap. Dr. Kojima possesses profound insights into cutting-edge technology, honed through his career as a researcher and a deep understanding of corporate finance, enabling him to engage constructively with capital markets. We consider him a rare and exceptional individual as CEO. The Board of Directors wishes to express our utmost respect and gratitude for his significant contributions to Hitachi's growth over the past few years.
Looking ahead to Hitachi's further growth, it is important to provide services based on Hitachi's digital technology to the expanded installation base that has grown significantly in recent years. In the upcoming next midterm management plan, we believe that transforming Hitachi into a digital-centric company and accelerating organic growth will be a major pillar. With this future vision in mind, we have decided at a meeting of the Board of Directors that in order to continue Hitachi's trajectory and compete on the world stage as a global company, it is time to pass the torch of President and CEO from Dr. Kojima to Mr. Tokunaga. I have been serving as the Chairman of the Nominating Committee since 2022, but even before that, Mr. Tokunaga has always been nominated as the most promising candidate for future CEO, and we have been discussing his career in the Nominating Committee.
For the last five years, he has been leading Hitachi's overall digital strategy in the United States, and this year he has been working on the next midterm management plan, always tackling tough missions. The environment where candidates are constantly tested for their potential to become future leaders of Hitachi is extremely challenging. However, Mr. Tokunaga has demonstrated strong leadership based on conviction and determination, such as persuading the Board of Directors and realizing the acquisition of GlobalLogic through a long and tough process, yielding positive results.
In that sense, the Nominating Committee and the Board of Directors , including myself, are confident that Mr. Tokunaga is the best person in terms of both experience and ability to lead Hitachi's global growth with digital capabilities as the President and CEO. Towards the transition on April 1st next year, the Board of Directors will work in collaboration with Dr. Kojima and Mr. Tokunaga and the management team to achieve a smooth transition of leadership.
We ask for your continued support. Thank you.
Ihara-san, thank you. Kojima-san, if you could please take the floor.
My name is Kojima. Thank you very much for attending our conference today despite short notice. As Mr. Ihara just explained, I will pass the torch of President and CEO of Hitachi to Mr. Tokunaga on April 1st next year. First of all, I would like to express my gratitude to all the stakeholders. Mr. Nakanishi, who established the concept of Social Innovation Business, unfortunately fell ill in 2021, and I took office as President. Since then, I have always had constructive and serious discussions with investors, which have provided crucial insights into our management strategy and have supported our management reform efforts.
I have also worked together with our customers and partner companies to solve management and social issues, and the directors of Hitachi have always provided support for management based on their diverse knowledge. I would like to express my deep gratitude to the members of the management team who have supported me and all the Hitachi Group employees around the world. In the Midterm Management Plan 2024, I have been doing my best to improve the company's value by demonstrating organic growth based on the achievements of Hitachi's structural reform. In these three years, we have achieved annual revenue growth exceeding the target of 10% and are expected to exceed JPY 1 trillion in adjusted EBITDA this fiscal year.
In addition, as a top priority, we have focused on cash-oriented management, and the core free cash flow is expected to grow by more than 50% from the Midterm Management Plan 2021 , expanding to about JPY 1.5 trillion. As a result, we have been able to strengthen shareholder returns, and the cumulative amount of dividends and share buybacks over the past three years is expected to exceed JPY 1 trillion, more than 3x that of the Midterm Management Plan 2021 . We have also focused on sustainable management to support business growth, and we have made progress beyond the midterm targets in contributing to our customers' decarbonization, reducing CO2 emissions in Hitachi's business activities, and employee engagement scores. In terms of KPIs, we have exceeded what was set in the midterm management plan.
These efforts and their results have been recognized by the capital market, and our market capitalization has tripled in the past three years. I feel confident that I have walked the talk with the goal of demonstrating organic growth and increasing corporate value that I set when I became CEO. As I mentioned at the Investor Day in June, Hitachi's transformation journey is never ending. From now on, it's important to continue the transformation to become a more digital-centric company.
As Mr. Ihara mentioned earlier, with the prospect of achieving the Midterm Management Plan 2024 now in sight, Mr. Tokunaga was appointed at the meeting of the Board of Directors as a leader who will take Hitachi to the next stage.
The CEO of Hitachi is responsible for the entire process from planning to formulation and implementation of the Midterm Management Plan 2024 and is evaluated based on whether or not the plan is achieved. Mr. Tokunaga, who will be the new CEO, has been a core member in formulating and executing the Midterm Management Plan 2024, and I have full confidence in him. He has made significant contributions to Hitachi's growth by overseeing the digital business and leading global expansion, as well as seizing growth opportunities through Generative AI and achieving collaborations with global leaders such as NVIDIA and Microsoft. Mr. Tokunaga will take full responsibility for formulating and executing the next Midterm Management Plan and lead Hitachi to the next stage of growth as the president and CEO. I have high expectations for him.
I will continue to accelerate Hitachi's growth as President and CEO until the transition on April 1st next year. In addition, I will work together with Mr. Tokunaga, the Board of Directors , and the management team to ensure a smooth transition as Vice Chairman until the next Annual General Meeting of Shareholders . I have not yet decided what I will do next, but I would like to contribute to increasing the corporate value of Japanese companies by making use of the strengths I have gained at Hitachi, such as my understanding of cutting-edge technology through my time as a researcher and my understanding of the capital market as a CEO. Lastly, I believe that the Social Innovation Business concept is undoubtedly what is driving Hitachi's growth today. I would like to once again express my deepest respect to the late Mr. Nakanishi, who introduced this concept.
I shall conclude my speech with these words. Thank you.
Dr. Kojima, thank you very much. Next, Mr. Tokunaga, please.
I am Tokunaga, and I have been appointed as President and CEO effective April 1st next year. Thank you for attending today. Using this opportunity, I'm truly grateful for the trust of the Board of Directors who appointed me as the new President and CEO, and at the same time, I'm acutely aware of the gravity of this responsibility and feel its weight keenly upon my shoulders. Together with the 280,000 Hitachi Group employees who are working hard around the world, we aim to deliver new value to society and achieve sustainable growth as a company. I have been fortunate to work under two great leaders. Chairman Higashihara established a solid management foundation for Hitachi's management through bold portfolio reform.
President Kojima led the mode change to organic growth and achieved a significant improvement in corporate value. Since the management crisis of 2009, the torch of management has been passed from Mr. Kawamura to Mr. Nakanishi and then to the two of them. I would like to firmly accept the torch and achieve sustainable growth for the Hitachi Group . As Dr. Kojima mentioned earlier, I was born in Hitachi City, Ibaraki Prefecture, the birthplace of the Hitachi Group , and joined the company in 1990. I started my career as an assistant engineer for domestic financial institutions and have continued to build my career around IT and digital. Since 2014, I have been working on the creation of social innovation businesses that combine IT, OT, and products in the energy and railway sectors and have had the opportunity to understand Hitachi's wide range of business portfolios.
In addition, since 2017, as the head of the home appliances and air conditioning business, I have been promoting transformation through the utilization of digital technology and the renewal of the business structure. Furthermore, from 2019, I focused on expanding Hitachi's global Lumada business in Silicon Valley in the United States. The acquisition of GlobalLogic was particularly memorable. Taking on an M&A of a scale that I had never experienced before, approximately JPY 1 trillion, instilled in me my determination as a business person. And since 2021, as the head of Hitachi's digital business, I have been working on solving customer and social issues through the combination of the power of digital and Hitachi's group's capabilities under the concept of One Hitachi. Hitachi's Lumada business has been accelerating its growth globally since the acquisition of GlobalLogic in 2021.
The Lumada business is expected to account for 30% of the company's total sales revenue by the end of fiscal year 2024, and in the medium to long term, we aim for it to account for more than half of Hitachi's total sales revenue. In addition, we have launched the company-wide AI transformation project to leverage the rapidly evolving generative AI for Hitachi's growth. Starting the establishment of the Generative AI Center , we have taken various measures such as collaborations with tech giants, including NVIDIA, Microsoft, Google, and Amazon Web Services. In the upcoming next midterm management plan, of which I'm currently leading the formulation, we will accelerate our progress towards becoming a true One Hitachi with digital at its core and aim to be the global leader in social innovation business.
Specifically, we will achieve sustainable growth for the Hitachi Group by further evolving Lumada, strengthening our exploration efforts to identify growth opportunities in each global region, and accelerating our efforts to create a new business under the One Hitachi initiative. I will continue to strive to enhance corporate value by firmly inheriting the tireless portfolio reform implemented by Mr. Higashihara and the cash flow and capital efficiency focus management promoted by Mr. Kojima. In addition, I'm keenly aware that the capital markets' evaluation of the Hitachi Group has changed significantly in the recent years, and while emphasizing financial discipline and pursuing transparent management, I would like to engage in in-depth dialogue with the capital markets and various other stakeholders.
Furthermore, to achieve sustainable growth and enhance corporate value for the Hitachi Group, we believe it is essential to continuously transform our mindset and work practices by swiftly identifying and adapting to changes in the economy and society. In other words, I believe it's imperative that we stay ahead of global changes and continuously update the operating system (OS) of each individual shaping the Hitachi Group. I'm ready to take the helm in driving change. On the other hand, in a rapidly changing world, we believe that Hitachi's unwavering commitment to contributing to society through technology, passed down from the company founder, Namihei Odaira, for over 110 years, is becoming even more important. In order to continue to embody this sense of purpose into the future, Hitachi Group will confront the increasingly complex social and management issues head-on and will focus on innovation and technology to drive growth.
Together with the Board of Directors , the management team, and the Hitachi Group employees around the world, we will work to become a global leader in the Social Innovation Business through true One Hitachi, with digital at its core. Thank you very much.
[Foreign language]
Tokunaga-san, thank you very much. At this moment, we would like to move to questions and answers. First, we will take questions from the members of the media, investors, and analysts who are attending in person, and then take questions from those of you online. If you could raise your hand, our staff will bring a microphone. Please state your name and affiliation before asking questions. So I see a hand in the middle, wearing dark blue.
Miyoshi from NHK, I have a question of Tokunaga-san first. You talked about businesses that you would like to promote going forward. Now that progress is made in structural reform, what are the management challenges that Hitachi is faced with right now? What are the issues you're facing, if you could be a little more specific? This is a question to Kojima-san. So from your viewpoint, what kind of person is Tokunaga-san? What kind of existence, if you will, he has occupied and your hope for him as a new president and CEO?
Miyoshi-san, thank you very much for the questions. Let me answer your first point. Hitachi's challenges. What will be the point or the area for Hitachi's growth going forward? In other words, as I said in my message earlier, based on the structural reform pursued under Mr. Higashihara, Dr. Kojima has pursued organic growth, turned Hitachi into a profitable entity. So based on that, my role is to secure this standing and achieve sustainable growth for Hitachi.
What becomes important, of course, is digitization. Currently, Hitachi has three sectors. They are independent, and they are transformed into businesses that are profitable on their own, but we would like to provide unique value as a Hitachi. For us to grow through that, how can we provide common value through GEM and CI, the digital value that we would like to deliver? In the process of formulating the midterm business plan for the future, we had in-depth discussions with the leaders of the digital businesses. We now have in-depth understanding as to what we need to do. As we announce the next midterm management plan, we would like to provide you with the details, but sustainable growth to be achieved through One Hitachi, that's the key.
So from my perspective, what kind of person is Tokunaga-san? Well, I think it's apparent.
He's cheerful, refreshing, handsome, an envious person, a person that I envy, and I talked about the background earlier. Simply put, he's the child of the digitization, if you will, the digitization era. He's a person who's indispensable for the future of Hitachi. Everyone agrees with that, so I think he was the most preferred candidate to become CEO given our legacy since foundation. I believe that he will be a great leader, and he's cool, good-looking, and what I think is wonderful about him is that he's fluent in English, and in overseas, he engages with top-class business people. He never hesitates, and he listens to them very well. He can speak, and he really has very few shortcomings.
The fact that he has very few shortcomings perhaps is a shortcoming making you think that he's perfect, and perhaps that's something that he maybe wants to work on, but I'm sure he's the person who can take Hitachi to the next stage. I'm convinced of that. Thank you.
[Foreign language]
Any other questions? The very front row, the person who is wearing a gray jacket.
Thank you very much. Nikkan Kogyo Shimbun. My name is Ogawa. I have a question to Tokunaga-san. When were you asked to become the president and CEO? And at that time, what did you feel?
Thank you very much for your question. First of all, the timing that I was asked to become the president and CEO was at the end of October, from Ihara-san, Chairman Ihara, who's sitting next to me, directly asked me.
Immediately after I was asked, the more I think about the weight of the responsibility of that, I felt a tremendous pressure, and I thought, what should I do? That was my honest feeling. However, on the other hand, being able to have such an experience is a rare opportunity that doesn't come that often. And if that is so, I wanted to definitely take on that challenge, and I thought that I would like to put my full efforts into it, and I will accept that, is what I told him. That is all.
Oh, thank you very much. One more question. Sorry, it's quite a broad question. From President and CEO, Kojima-san, you said that he is the one that came from the founding city of Hitachi, and his father worked for Hitachi. So you are full of Hitachi in yourself. From your perspective, what does the existence of Hitachi mean to you?
At each era or times, how the Hitachi Group is perceived changes. When I was a child and lived in Hitachi City, well, the Hitachi Group was an existing group that supported everything in my life, where I ride in a taxi, on the bus, where I shop, the hospital that I go to, everything. I was receiving the service of Hitachi or the Hitachi Grou p companies. In that sense, it was a very close existence to me and was supporting the society, is what I thought. Once I entered the company, supporting the society has not changed. However, the area that I was looking at was extremely narrow, is what I felt. The world that the Hitachi Group is providing value or trying to value is very broad.
And in order to continue to do so, they're continuing to transform internally. It was the new scenery, I thought, after I joined the company. So in that sense, there's continuing to evolve Hitachi. Being able to work in such a company, I thought, once again, it's such a fortunate thing. And I may be repeating myself. However, taking the lead and navigating this company from now onwards, I feel this heavy responsibility on my shoulders. Thank you.
[Foreign language]
Thank you. Close to the stage. The second person there, please.
Hosokawa from Nikkei Newspaper. I have a question of Tokunaga-san. In the line of work that you have been engaged in so far, what's been the work that gave you the greatest sense of achievement? Or what was the work that stressed you? Have you ever cried performing work? That's a question that I often ask, but has there been such experience?
Thank you for the question. So the work that I've been able to feel a sense of achievement, of course, every work, every job gave me a sense of achievement, but in terms of work that required a very long time. When I was serving as an engineer for financial institutions, I was given a project to integrate the financial institution systems for five years, and there were 1,500 members on the project. And when the project was about to come to an end, I was able to feel a great sense of achievement being a part of the project. And I had a lot of learnings from that particular project. And what was the work that I thought was very difficult? Well, there's one domestically, another in overseas.
So in the project that gave me a sense of achievement that I talked about, because it was systems integration, the more I work, the more I experienced and witnessed the fact that the systems were migrating toward someone else's, some other company's systems. And so we had to struggle with that. And there were members on my team, but what they're doing supports Japanese society. They were there to develop the infrastructure for Japan. That was the cause, and they were working extremely hard. It was difficult, but I was able to feel how wonderful human beings could be. And in overseas, as I mentioned earlier, acquisition of GlobalLogic. So the bankers, private equity, people, it was during COVID, so we had conferences with 20 or so people. I was the only one who had to answer all the questions. Is Hitachi serious enough?
I was grilled by these people, and if I say something wrong, the acquisition would not be successful. I had to be very careful. As it turned out, it went very well, so that gave me great experience, but it was not easy. It was difficult, which I learned a great deal from, and have I ever cried doing any work? Fortunately or unfortunately, I don't know, but I don't think I've ever cried over any work. Now that I'm trying to tell you that I'm a cold person, for something else outside of work, I would cry, so it just so happens that I've never cried over work.
[Foreign language]
Thank you very much. The center row, the center section, the second row from the front with the gray jacket on.
Inagaki from Toyo Keizai. I have several questions to Ihara-san and Kojima-san, to each one of you. In Hitachi, there is a solid succession plan, exists, what I think, and there are many CEO and president candidates. And within that long list, what is the reason why Tokunaga-san was selected? Compared with the other candidates, if there's an area that he is superior to others, I would like to know.
Oh, okay, well, okay, I will say, speak first. I will be repeating myself. However, when we look at the future of Hitachi from now onwards, currently, we have a broad install base, and towards that, the solution, various solutions that are based on digital, where Hitachi has its strengths, is going to become the growth driver of Hitachi, is what we thought. And the person who has been leading the business that's related to that was Tokunaga-san.
And Kojima-san was saying that he was meant to lead the digital business or the golden child of digital business, but the knowledge or the technique and technology in this area, he himself has directly experienced that. So we can totally leave it to him with a peace of mind. So in that sense, when comparing to the other candidates, by far, he was suitable for the next CEO, and that was decided at a quite early stage. There's about 280,000 employees worldwide as Hitachi employees. And in the sense of leading those employees and attracting those employees, we can leave that up to him as well with a peace of mind. That is why we have made this decision. Kojima-san, if you have anything to add?
When selecting the next leader of Hitachi, one thing is that the core value of Hitachi, so to speak, he surely has that, and that was the point that we placed importance on. He's from the city where Hitachi started, and he has a very close relationship with the Hitachi Group , but not just from his environment, but he has this pioneer spirit, and he embodies that spirit, and he's quite keen on having that spirit. And Hitachi has become this global company, so the sense of this global arena can incorporate diversity and inclusion thoroughly. That's the second point, and the third point is that, well, Hitachi's market cap has been improved quite a bit, and the spirit of challenge too, we need to change more or transform more. That tends to become stagnant. That's a bit of a risk.
But not having any fear to further change Hitachi, he doesn't have that fear, and he has a very strong passion. So these three, I thought, were very important, and we wanted to select such a person. And he is actually embodying that.
Thank you. So Tokunaga-san, I want to ask you, you've been a candidate for an executive and president and CEO, and you have been dealing with tough assignments. Was there any time that you thought, "I'm going to quit or leave Hitachi"? Looking at your past interviews, when you were selecting the place to work at, from the start, you selected Hitachi. But you continued this far. What was the motivation, or what was the source of power to let you continue this long?
Thank you very much for your question. I'm sitting here means that I've never seriously thought of leaving Hitachi.
I think that's the proof. However, everything is not that rosy. There were some times where I hit a wall during my work, and there were things that didn't go well. And there were times that I wanted to just throw everything away. There were times that I really struggled. However, even with that, why have I been continuing to work at Hitachi? There are two main reasons. The first is, as you can see, within Hitachi, there are various types of businesses. And just being in Hitachi, you'll be able to have various experiences that will lead to your growth as a career. And from my perspective, I was able to see various different types of worlds within Hitachi. And that was very fortunate. That was very fortunate for me. And the second point is that within Hitachi, there are many wonderful people and leaders.
The joy of working with such people is something that I felt all this time. That is becoming the source for me to continue to work up to this point. Thank you.
[Foreign language]
Lady in the front row, thank you.
My name is Nakanishi from Nikkei. I would like to ask two questions regarding the background as to why you decided on this new structure. I should ask this to Ihara-san and Kojima-san. Well, Kojima-san and Higashihara-san have experienced being a CEO, but Mr. Tokunaga is becoming CEO, unlike his predecessors. What was the background to that?
Okay, allow me to answer the question. Let me answer. Thank you for the question. Under Higashihara-san's leadership, as well as mine, for about a year initially, we were engaged in formulating a midterm management plan.
When I became president for the first year, I was formulating a midterm management plan and then became CEO to implement that. That was the cycle, if you will. Well, this time, Tokunaga-san is chosen, and we have asked Tokunaga-san to draw up the midterm management plan starting from April this year. It has become firmer, but it has to be the CEO to implement the plan once formulated. If the chairman says a CEO, it will be difficult. So, it has to be the CEO to implement. So, the next midterm management plan is drawn up, but it has to be implemented next, and so he was made CEO for that.
Thank you. In relation to the first question, my second question is as follows. So, Kojima-san, instead of becoming chairman, you're going to become vice chairman. Why? Back in 2021, as you explained, Nakanishi-san, because of his condition or illness, well, that was the reason behind. But now, the three of you are going to be at the helm. Why, I would like to ask. To Higashihara-san, he's expected as one of the candidates for the Chairman of Keidanren. He will continue as Chairman of Hitachi. And so, what would be the significance? I would like to ask.
Allow me to answer the question. The personnel reshuffling that we are performing this time is completely independent of what's happening at Keidanren. Higashihara-san, the Chairman, with the government officials with respect to Hitachi's businesses and business partners outside of Hitachi, he has been working very hard to build relationships with these stakeholders quite vigorously over the years.
And in terms of the businesses and our partnerships and tie-ups with other companies, we've been able to promote all of that because of Higashihara-san's effort. And going forward, that is something that we expect him to continue going forward. So, Higashihara-san will continue serving as chairman. And Kojima-san, in the last three years, has gone through a very valuable experience himself. And within Hitachi, the internal growth that Hitachi has had, not only that, but communication with the market through that, he has accumulated various expertise and know-how. So, such know-how and expertise that he has accumulated, we hope will be transferred to the next generation of management and midterm management plan that's being formulated. And when it's implemented, we want him to provide advice to the management. So, from that viewpoint, we are asking him to become the Vice Chairman. We can't replace him with anyone.
So, that is why we have decided on him becoming Vice Chairman. Thank you very much.
[Foreign language]
We have many hands that are raising within this venue, but please allow us to switch to the online side because we have many participants online. And for those of you who have a question, please press the raise your hand icon. So, Umeda-san, please unmute and ask your question.
This is Umeda from TBS. Can you hear me?
Yes.
To the next incoming President and CEO, Tokunaga-san, I have one question. At the start of the Q&A, you were saying that because of your hometown, you feel very familiar about the Hitachi Group. And you have home appliances, the products that you handle. And that area has a severe competition with the overseas players. And there is time that Tokunaga-san, you're involved in that business as well. But moving forward, what do you think about the home appliance business?
Umeda-san, thank you very much for your question. Regarding the home appliances business, I myself have been involved in that business. Therefore, of course, I am quite aware of their strengths and weaknesses. And on the other hand, where is the next growth opportunity for the home appliances business? There are areas that we are moving forward to the directions, but I'm aware of that area as well. And when we think about the future of this business, there's one way of partnering with others, and there's another way for them to grow on their own. But either way, not determined to just one way of doing things, but rather for this business to permanently continue or gaining the opportunity to further grow is what I would like to provide this business.
To make sure of that, I would like to have a proactive dialogue with the members of the capital market. That is all. Thank you very much.
[Foreign language]
Thank you. There were two hands raised from participants online. So, Harada-san, Hirakawa-san, in that order. Harada-san, please unmute and start your questions.
Harada speaking from Goldman Sachs Securities, thank you very much for this opportunity. This time, Tokunaga-san will become the President and CEO. And around the world, Hitachi has important sites. You have the CI sector and the GEM sector. You have collaborated with these sectors. And so, once again, let me ask the following: the digital strategy of Hitachi compared to your global competitors, what is the strength of Hitachi's digital strategy? I would like to ask of Tokunaga-san. And Kojima-san has led the effort in increasing the business value of Hitachi over the years.
If business value is one metric, then in order to maximize Hitachi's business value, well, the specifics will be covered when the next midterm management plan is announced. But what is it that Tokunaga-san would like to take over from Kojima-san? And what is it that you would like to improve or change? It may be difficult for you to comment being seated next to Kojima-san, but that's my question.
Harada-san, thank you for your questions. So, in collaboration with GEM and CI, we've been pursuing Hitachi's digital strategy. What we see internally and what we can see from an external point of view, when we analyze that, what is Hitachi's strength? And where can we establish our competitive edge? We can see that through such analysis. For example, at the end of February this year, NVIDIA's Jensen Huang, I had an opportunity to speak with him.
It was great timing, schedule-wise. I was able to have a three-hour talk with him. Hitachi's OT/IT products, having all of them, is very powerful. And OT/IT products, understanding all of them and based on data, creating new value. That is a very unique capability of Hitachi's, Jensen. He said that to me. And what we announced the other day in railway business, HMAX, the maintenance solution, well, our strength has led to that solution. So, scaling up what Hitachi can uniquely do will contribute to Hitachi's digital capability going forward. And these are the areas that I would like to actively pursue and expand. On the other hand, Kojima-san, who expanded Hitachi's market cap threefold. So, what is it I'm going to stand by? And what is it that I'm going to improve or change? What is it that I would like to change or improve?
I cannot immediately answer that, but what I would like to stand by or take over from Kojima-san, as I said in my message, so, cash flow-oriented management and a focus on capital efficiency and close communication with the capital markets. Those are the things that I would like to continue going forward, and the cash generated from such activities, of course, we would like to invest in the next business, of course, with discipline. And upon doing so, can we achieve sustainable growth? That is what I am asked to demonstrate. And of course, I will work very hard to achieve that. Thank you very much.
[Foreign language]
Thank you very much. Next, Hirakawa-san. Hirakawa-san, please go ahead. Please unmute and ask your question.
BofA Securities, I'm Hirakawa. I have two questions. Two. This is to Ihara-san.
As said today, Kojima-san, during his CEO days, he has tripled the market cap and has quite a bit of trust from the equity market, is my understanding. And Kojima-san, who has gave birth to the concept of a Lumada, I can understand that he's an appropriate leader moving forward. But this time, what I would like to ask is that, wasn't there a choice of Kojima-san continuing to be the president and CEO? I want to know what kind of discussions went on regarding this.
Well, of course, the possibility as a possibility has been discussed. However, at this timing, we looked at the future state of Hitachi, and we decided that, or the Nominating Committee or the Board of Directors made the decision that it is good, it's better to change the leadership at this timing.
Okay, understood. Thank you. Then my second question. I would like to ask Kojima-san, the current President and CEO. As Tokunaga-san said, the next President and CEO, and it's about 40 years since Tokunaga-san joined Hitachi. I'm sure there were ups and downs as a company. And so, from your perspective, Kojima-san, where did the strength of Hitachi lie? And what do you want to pass on to the next generation Hitachi?
Understood. The strength of Hitachi. For about the past 10 several years, I have been working on the structural reform. And what I felt through that, what is Hitachi's strength, is that from Odaira, the founder president, with the technology applied product, we're going to sell it globally. That thought has become the purpose nowadays. And we had the structural reform after the financial crisis, after the collapse of Lehman Brothers. But after that, there was Kawamura-san, Nakanishi-san, Higashihara-san, and myself.
The torch has been passed on. However, all four of them and the same angle can continue reforms. That is quite a challenge to take on. However, starting with the founder Odaira-san, because his thoughts, his philosophy was so solid, that did not change. And the philosophy of the founder is so strong and wonderful. Therefore, even though things happen without deviating from that, reforms can continue. I think that is the strength, the largest strength that Hitachi has. And well, Tokunaga-san will be doing various things moving forward. But I believe that foundation is not going to be deviated. And I think even though Hitachi transforms moving forward, this original founder's philosophy will not change and continue. And that is the strength of Hitachi is what I think. Thank you.
[Foreign language]
Thank you very much.
We're fast approaching the time to close, but perhaps we can take one or two more questions. So, those of you raising your hand, I don't think we can take all of your questions. And please limit your question to one per person. Okay, the person seated close to the wall, please go ahead.
Takahashi from Asahi Shimbun Newspaper. I have a question for Tokunaga-san. So, non-Japanese employees are now the majority within Hitachi as a global company. I think as CEO, you'll be required to exert strong skills. But Tokunaga-san, what would you like to leverage based on what you have learned so far? And how do you intend to manage the company?
Well, thank you for the question. Non-Japanese employees now account for a little over 60% of the workforce for Hitachi. So, together with these 60%, how to run the company, it's really difficult.
But I think there are two major things that we need to perform. And I think some of that is pretty fortunate or lucky. Point number one is, Kojima-san said, actually, what Hitachi has as a company, corporate philosophy and purpose is universal. And for the non-Japanese employees, it is something that they can empathize with, sympathize with. For example, GlobalLogic, when they decided to be acquired by Hitachi in the final moment, one of the reasons was the purpose of Hitachi to contribute to society through technology. After it was decided, the CEO, Shashank, told me that it's not just the CEO who believes in that. The management of GlobalLogic told us that if that's the purpose of Hitachi, they would like to work with Hitachi.
Taking over the purpose, standing by the purpose, and spreading it will go a long way in having smooth communication with non-Japanese employees of ours. Another key word is empathy, I think. Within the team, with members who have very diverse views, for each and every one to be convinced, we have to be persuasive. I think the point is, how many employees can I convince? In order to convince them, for them to be empathetic, I think we have to focus on communication with them.
Thank you very much. I see hands, but it's time to close. If you have any additional questions, corporate PR section will be responsible for taking them.