Hitachi Capital : Consolidated Third Quarter Earnings Report［IFRS］For the Nine Months Ended December 31, 2016 (PDF format, 154kBytes)

Consolidated Third Quarter Earnings Report

January 27, 2017

［［［［IFRS］］］］

For the Nine Months Ended December 31, 2016

Corporate Name: Hitachi Capital Corporation

Stock Code: 8586 URL: http://www.hitachi-capital.co.jp Stock Listing: Tokyo Stock Exchange

Representative Director: Seiji Kawabe, President and CEO Inquiries: Yoshikazu Ohashi, Executive Officer Phone: [phone]

Scheduled date of submission of financial reports: February 13, 2017 Scheduled commencement of dividend payment: -

Preparation of supplementary material for quarterly financial results: Yes Holding of quarterly financial results meeting: None

(All amounts rounded down)

1. Consolidated Financial Results for the Third Quarter Ended December 31, 2016 (April 1, 2016 - December 31, 2016)

2. Consolidated Operating Results (Cumulative)

   (year-on-year change %)

   Revenues		Operating income		Profit before tax		Net income		Net income attributable to owners of the parent		Comprehensive income
   Nine Months Ended December 31, 2016	¥ million	%	¥ million	%	¥ million	%	¥ million	%	¥ million	%	¥ million	%
   	269,102	(1.4)	32,283	(6.3)	34,244	(4.2)	24,991	(4.1)	24,106	(4.7)	21,900	(14.1)
   Nine Months Ended December 31, 2015	272,924	2.7	34,456	20.1	35,763	26.4	26,064	27.6	25,302	27.7	25,487	(19.2)

   【Important】 "Operating income" on this page represents "Adjusted operating income" which Hitachi Capital uses as an indicator for its consolidated

   operating results. "Adjusted operating income" is presented as revenues less cost of sales as well as selling, general and administrative expenses. On other pages, "Operating income" is presented as "Adjusted operating income."

   Earnings per share (basic)	Earnings per share (diluted)	ROE
   Nine Months Ended December 31, 2016 Nine Months Ended December 31, 2015	¥ 206.24 216.47	¥ ― ―	% 9.4 10.1

   (Ref.) Volume of business: Nine Months Ended December 31, 2016: ¥1,697,699 million; Nine Months Ended December 31, 2015: ¥1,695,214 million

3. Consolidated Financial Position

4. Total assets	Total equity	Total equity attributable to owners of the parent	Equity attributable to owners of the parent ratio	Equity per share attributable to owners of the parent
   As of December 31, 2016	¥ million	¥ million	¥ million	%	¥
   	3,228,807	359,636	346,629	10.7	2,965.52
   As of March 31, 2016	3,081,201	347,559	335,503	10.9	2,870.33

5. Dividends

   Dividends per share
   1st Quarter	2nd Quarter	3rd Quarter	Year End	For the Year
   Year ended March 31, 2016 Year ending March 31, 2017	¥	¥ 42.00 43.00	¥	¥ 42.00	¥ 84.00
   Year ending March 31, 2017 (Forecast)	43.00	86.00

   Note: Changes from the latest released dividend forecasts：None

6. Forecast for the Fiscal Year Ending March 31, 2017 (April 1, 2016 - March 31, 2017)

7. (% is year-on-year for the fiscal year)

   Revenues		Operating income		Profit before tax		Net income		Net income attributable to owners of the parent		Earnings per share attributable to owners of the parent (basic)
   Fiscal year	¥ million 357,800	% (2.1)	¥ million 42,700	% (5.6)	¥ million 45,000	% (3.6)	¥ million 32,500	% (3.3)	¥ million 31,500	% (3.7)	¥ 269.49

   Note: Changes from the latest released performance forecasts：None

   (Ref.) Volume of business: Fiscal year: ¥2,160,000 million

   ＊ Notes

   (For details, please refer to "2. Matters concerning Summary Information (Notes)" on page 9)

8. Major changes in among subsidiaries in the consolidated cumulative period of the period under review: None

9. Changes to accounting policies; changes to accounting estimates (ⅰ) Changes to accounting policies required by IFRS : None (ⅱ) Changes other than (ⅰ) above : None

   (ⅲ) Changes to accounting estimates : None

10. Number of outstanding shares (common shares)

(ⅰ) Shares issued at end of term (including treasury stock)

As of December 31, 2016: 124,826,552 shares As of March 31, 2016: 124,826,552 shares

(ⅱ) Treasury stock at end of term

As of December 31, 2016: 7,940,125 shares As of March 31, 2016: 7,939,936 shares

(ⅲ) Weighted average number of shares outstanding

Nine months ended December 31, 2016: 116,886,528 shares Nine months ended December 31, 2015: 116,886,770 shares

＊ Information regarding the implementation of quarterly review procedures

It is under the review procedure process based upon the Financial Instruments and Exchange Act at the time of disclosure of this report.

＊ Explanation for proper use of the forecasts, etc.

Consolidated forecasts stated herein have been prepared using information available on the date of release. Accordingly, forecasts may differ significantly from actual results due to a variety of reasons. For the assumptions for forecasts and cautions regarding the use of the forecasts, please refer to "(3) Explanation on Future Forecast Information including Consolidated Earnings Forecast" on page 8.

Contents

1. Qualitative Information Concerning Financial Results for the Third Quarter Ended

   4

   December 31, 2016

2. Explanation about Operating Results 4

3. Explanation about Consolidated Financial Position 6

4. Explanation on Future Forecast Information including Consolidated Earnings

   8

   Forecast

5. Basic Policy for Profit Sharing 9

6. Matters concerning Summary Information (Notes) 9

7. Changes in Material Subsidiaries during the Period 9

8. Changes to Accounting Policies and Estimates 9

9. Summary of Quarterly Consolidated Financial Statements 10

10. Summary of Quarterly Consolidated Statements of Financial Position 10

11. Summary of Quarterly Consolidated Statement of Profit or Loss and

    11

    Comprehensive Income

12. Summary of Quarterly Consolidated Statements of Changes in Equity 12

13. Summary of Quarterly Consolidated Statement of Cash Flows 13

14. Summary of Notes to the Quarterly Consolidated Financial Statements 14

15. Supplementary Information 16

16. Change in Quarterly Consolidated Performance 16

17. Contract Segment Information 17

18. Segmented Information by Business 18

20. Qualitative Information Concerning Financial Results for the Third Quarter Ended December 31, 2016

21. Explanation about Operating Results

22. Summary of operating results

23. Summarized results for the nine months ended December 31, 2016 were as follows.

    (¥ million, %)

    Nine Months Ended December 31, 2015	Nine Months Ended December 31, 2016	Y on Y Change
    Volume of business	1,695,214	1,697,699	0.1
    Revenues	272,924	269,102	(1.4)
    Gross profit	98,171	93,277	(5.0)
    Adjusted operating income	34,456	32,283	(6.3)
    Profit before tax	35,763	34,244	(4.2)
    Net income attributable to owners of the parent	25,302	24,106	(4.7)

    During the nine months ended December 31, 2016, while the economy showed solid growth in the U.S. and the U.K., drastic changes such as the U.K.'s Brexit decision and the moves toward the new administration in the U.S. have further increased economic and political uncertainties around the world. In Japan, despite some signs of recovery in economy, there remains uncertainty over the recovery of corporate earnings and the capital investment outlook due to unstable business environment around the world.

    Under such circumstances, Hitachi Capital aims to achieve the target through "Change" and "Growth" insusceptible to the business environment and fulfill our Mission "We will be conscientious of the global environment and aim to become a Social Values Creating Company that provides new values to realize social development and richer life for people."

    Hitachi Capital entered into a Memorandum of Understanding regarding capital and business alliance with Mitsubishi UFJ Financial Group, Inc. ("MUFG") and Mitsubishi UFJ Lease & Finance Company Limited ("MUL") in May 2016 for the purpose of strengthening the Company's financial functions and ability to provide solutions toward the Company's sustainable growth. As a result of the share transfer of a portion of common stocks of Hitachi Capital owned by Hitachi, Ltd. (Hitachi), executed on October 2016, Hitachi now holds 33.40%, MUFG holds 23.01% and MUL holds 4.20% of the voting rights of Hitachi Capital, and Hitachi Capital became an affiliate of both Hitachi and MUFG accounted for using the equity method.

    Under the FY2016-FY2018 Mid-Term Management Plan (2018 Mid-Term Management Plan) announced in June 2016, the Company is aiming to achieve ROE of 10% through ROA improvement, with Global Business (Europe, the Americas, China, ASEAN) maintaining high and systematic growth (continuing a double-digit growth) and with Japan Business improving profitability (challenging 2% ROA) by focusing on growing sectors and improving operational efficiency. Also, we will actively execute strategic investment in M&A, IT and human resources to support business growth.

    During the nine months ended December 31, 2016, Japan Business reviewed focused sectors under the 2018 Mid-Term Management Plan and redefined Social infrastructure, Eco- and energy- related, Vehicle, Local governments/public as Growing sectors to be enhanced and Food, Security and BPO as Start-up (green shoots) sectors to be developed, and promoted those sectors.