Presentation of Financial Results for FY2014 (Term ended ... · Presentation of Financial Results...

Presentation of Financial Results for FY2014

(Term ended March 31, 2015)

May 13, 2015

2

Table of Contents

Ⅰ．Financial Results for FY2014

・Business Results (Company-Wide)・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ P.4

・Profit and Loss Statement・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ P.5

・Breakdown of Changes in Operating Income・・・・・・・・・・・・・・・・・・・・・・・ P.6

・Balance Sheet・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ P.7

・Business Results by Segments・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ P.8

・Sales Results by Regions・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ P.9-10

・Business Review by Segments・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・P.11-17

Ⅱ．Business Forecast for FY2015 ・Business Forecast (Company-Wide)・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・P.19

・Business Review of FY2015 Forecast・・・・・・・・・・・・・・・・・・・・・・・・・・・・・P.20

・Business Forecast (1H/2H)・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・P.21

・Breakdown of Changes in Operating Income (Year-on-year)・・・・・・・・・P.22

・Business Forecast by Segments・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・P.23

・Business Review by Segments・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・P.24-29

Ⅲ．Supplementary Information・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・P.30-33

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Ⅰ．Financial Results for FY2014

※Accompanying a partial change in the accounting method

(that recognizes revenue upon delivery instead point of shipment)

beginning from fiscal year 2014, all financial data for fiscal year 2013

have been retroactively adjusted.

4

（億円）

Overseas business centering on China, the United States, and Asia expanded with sales and operating income eclipsing past highs. Despite facing the brunt of formidable market conditions, including a slowdown in economic growth for China, a slower than expected recovery in Europe, and a downturn in consumer spending in Japan due to the hike in consumption tax, we were able to incorporate the effect of yen depreciation and improved profitability in the air conditioning business by launching high value-added products, thoroughly performing a selling price policy, and executing total cost reductions. These efforts generated a significant increase in profits.

Consequently, the company reached its target for operating income, as expressed in the strategic management plan Fusion 15 (190.0 billion yen), a year earlier than planned.

■Business Review of FY2014 Financial Results

Foreign Exchange (Year-on-year)

Sales +86.0 billion yen

Operating Income +10.0 billion yen

(Unit: billion yen) Forecast (Nov) Results

Sales 1787.7 1950.0 1915.0 107%

Operating Income 156.5 190.0 190.6 122%(Percentage of income to net sales) (8.8%) (9.7%) (10.0%)

Ordinary Income 155.6 189.0 194.2 125%(Percentage of income to net sales) (8.7%) (9.7%) (10.1%)

Net Income 92.8 113.0 119.7 129%(Percentage of income to net sales) (5.2%) (5.8%) (6.2%)

■FX rate

Yen／1USD 100 106 110 ―

Yen／1EUR 134 137 139 ―

FY13 Y/y changeFY14

■Management IndicatorFY13 FY14

ＲＯＡ 4.9% 5.6%ＲＯＥ 13.1% 13.1%ＦＣＦ＋86.9 billion yen ＋52.1 billion yen

5

■Profit and Loss Statement

※1 Changes in Selling, General and

Administrative Expense: Labor costs +13.6

Sales promotion costs +2.4

Product shipping costs +11.3

R&D expense +2.1

Service expense +5.6

(Recall expense: +2.5）

※ 3 Extraordinary Income

Securities valuation loss +4.0

Impairment loss for tangible fixed assets ▲4.6

Loss on revaluation of investments in securities

+1.5（▲1.5 → 0 ）

※ 2 Non-operating Gains or Losses

Exchange gain or loss +2.5（+0.5 → +3.0）

Interest +2.0（▲5.1 → ▲3.1）

(Unit: billion yen)

FY2013 FY2014

147 107

Net Sales 1,787.7 1,915.0 +127.3Cost of Sales 1,219.4 1,265.1 +45.8

(Percentage to net sales) (68.2%) (66.1%)

Gross Income 568.3 649.9 +81.6

(Percentage of income to net sales) (31.8%) (33.9%)

Selling General and Administrative

Expenses 411.8 459.3 +47.5

(Percentage to net sales) (23.0%) (24.0%)

Operating Income 156.5 190.6 +34.1


Non-operating Gain or Losses ▲ 1.0 3.6 +4.6Ordinary Income 155.6 194.2 +38.7


Extraordinary Gains or Losses ▲ 1.5 ▲ 1.7 ▲0.3Income before Income Taxes 154.1 192.5 +38.4


Corporate Taxes,etc. 56.0 68.0 +12.0 Tax burden ratio (36.3%) (35.3%)

Minority Interest 5.4 4.9 ▲0.5

Net Income 92.8 119.7 +26.9

(5.2%) (6.2%)

Changes from the last year

※1

※2

※3

6

＜Reference＞

FY14

Forecast

（Nov）

FY13 Operating Income 156.5

Foreign Exchange

＋4.0

Fixed Expense, etc.

▲26.5

Cost Reductions

＋31.0 Pricing ＋8.0

FY14 Operating

Income 190.0

Sales Expansion

＋17.0

Y/y

＋３４．１

FY13 Results FY14 Results

■Breakdown of Changes in Operating Income

7

■Balance Sheet

(Unit: billion yen)

Y/y change 2014/3E 2015/3E Y/y change

Cash and Cash

equivalents257.3 286.9 +29.7 Trade payables 162.1 153.9 ▲8.1

Receivables 65days 317.6 68days 354.5 +36.9 Interest bearing 689.7 657.8 ▲31.9

Inventories 65days 317.6 68days 354.2 +36.6 Lease debt 4.3 4.6 +0.4

Fixed assets 845.5 924.5 +79.0 (Interest-bearing ratio) (34.5%) (29.3%)

Investment and others 158.6 205.8 +47.2 Others 332.0 399.3 +67.3

Others 115.4 138.1 +22.7 Total liabilities 1,188.0 1,215.7 +27.7

Total equity 801.9 1,024.7 +222.9

(Equity ratio) (39.9%) (45.3%)

Share Warrant 0.8 1.0 +0.2

Minority interests 21.2 22.6 +1.4

Total net assets 823.9 1,048.3 +224.4

Total Assets +252.1 Total 2,011.9 2,264.0 +252.1

※Breakdown of interest-bearing debt

(\1billion) 2014/3E 2015/3E Y/y change

Short-term borrowings 43.3 41.9 ▲1.4

CP 0 16.0 +16.0

Bonds 150.0 140.0 ▲10.0

Long-term borrowings 496.4 459.9 ▲36.5

Total 689.7 657.8 ▲31.9

2015/3E

2,264.0

2014/3E

2,011.9

8

■Business Results by Segments

FY13

Results Forecast (Nov) Results Y/y changes

Sales 1,787.7 1,950.0 1915.0 107%


Sales 1,597.2 1,745.0 1710.9 107%


Sales 140.6 150.0 149.6 106%


Sales 49.9 55.0 54.5 109%


Others

Total

FY14

Air-Conditioning

Chemicals

(Unit: billion yen)

9

■Sales by Region: Air Conditioning

※Includes the refrigeration and filter businesses

（Unit: billion yen）*Numbers on the left are

　year-on-year basis

Japan 112% 364.6 107% 388.6 106% 411.5 106% 437.7 94% 413.4 104% 430.0

Europe 97% 213.8 90% 193.5 95% 183.0 127% 232.2 98% 227.1 97% 220.0

China 125% 162.1 116% 187.5 111% 207.3 139% 287.5 110% 317.0 110% 350.0

Americas 104% 89.7 105% 94.3 110% 103.6 351% 363.3 121% 440.7 113% 497.0

Asia 132% 109.5 102% 111.9 122% 136.3 132% 179.4 117% 210.5 112% 235.0

Oceania 101% 39.9 85% 33.8 105% 35.6 118% 41.9 104% 43.6 101% 44.0

Middle East 101% 18.0 138% 24.9 142% 35.4 128% 45.3 106% 47.9 115% 55.0

Africa 96% 7.0 98% 6.9 106% 7.2 138% 10.0 106% 10.6 104% 11.0

Total 111% 1,004.6 104% 1,041.4 108% 1,120.0 143% 1,597.2 107% 1,710.9 108% 1,842.0

Overseas Sales ratio 64% 63% 63% 73% 76% 77%

FX rate(USD/Yen) ¥86 ¥79 ¥83 ¥100 ¥110 ¥115

　　　　 (EUR/Yen) ¥113 ¥109 ¥107 ¥134 ¥139 ¥125

　　　　 (RMB/Yen) ¥13.0 ¥12.4 ¥13.3 ¥16.4 ¥17.7 ¥18.5

FY12 FY14FY15

ForecastFY10 FY11 FY13

10

■Sales by Region: Chemicals

（Unit: billion yen）*Numbers on the left are

　year-on-year basis

Japan 137% 46.9 103% 48.2 89% 43.1 88% 37.9 104% 39.4 100% 39.5

Americas 122% 27.1 113% 30.5 102% 31.1 122% 38.0 112% 42.6 115% 49.0

China 142% 19.2 138% 26.5 96% 25.4 131% 33.2 102% 34.0 106% 36.0

Asia 150% 10.7 140% 15.0 75% 11.3 134% 15.1 111% 16.8 113% 19.0

Europe 122% 9.9 116% 11.5 101% 11.6 122% 14.1 112% 15.8 105% 16.5

Others 85% 1.1 119% 1.3 158% 2.0 116% 2.3 43% 1.0 －－

Total 133% 114.7 116% 132.9 94% 124.4 113% 140.6 106% 149.6 107% 160.0

Overseas sales ratio 59% 64% 65% 73% 74% 75%

FX rate(USD/Yen) ¥86 ¥79 ¥83 ¥100 ¥110 ¥115

(EUR/Yen) ¥113 ¥109 ¥107 ¥134 ¥139 ¥125

　　　　 (RMB/Yen) ¥13.0 ¥12.4 ¥13.3 ¥16.4 ¥17.7 ¥18.5

FY13 FY14FY15

ForecastFY10 FY11 FY12

11

Industry demand for residential use fell below the previous year due to a slow recovery in demand triggered by an unseasonable cool summer and a hike in consumption tax.

Despite the impact from the downturn caused by the consumption tax hike, industry demand for commercial use was supported by an increase in capital expenditures and government assistance measures occurring with a revision in the Rationalization in Energy Use Law as sales remained on par with the previous year.

Daikin

To offset higher costs due to yen appreciation, focus was given to sales promotion of high value-added products for both residential- and commercial-use products such as Urusara 7

and FIVE STAR ZEAS, and we thoroughly implemented a selling price policy and cost reductions to maintain profitability.

■Business Review by Segments (Air Conditioning)

Japan

＜AC unit shipments for entire Japanese market, Daikin＞

FY13 Y/y FY14 Y/y

Market 9,423 111% 8,094 86%Daikin － 100% － 84%Market 833 107% 839 101%Daikin － 100% － 96%Market 460 103% 415 90%Daikin － 90% － 87%

Residential

Commercial

Eco-cute

(1,000units)

In the backdrop of the economic recovery due to robust domestic demand, comprehensive sales measures were developed for each dealer. Sales exceeded the previous year by sales promotion of flagship residential-use unitary products and ductless products (VRV

systems) via Goodman sales outlets.

・For ductless products, Daikin utilized the Goodman sales network and strengthened capabilities in sales and business operations, including the recruitment and training of SEs. Sales substantially increased for both residential and commercial use.

・Residential-use unitary was impacted by unseasonable summer weather centering on the northeastern part of the United States; however, sales expanded greatly because of last minute demand accompanying higher energy-saving regulations (SEER13→SEER14) and the launch of premium products with inverters.

・Sales for Applied systems expanded for high value-added products centering on air handling

units, and sales exceeded the previous year.

12

North America


＜Sales increase of units in North America (volume)＞

※SKY・・・Middle or compact size package air conditioners

※VRV・・・Multi-split system for buildings

※The forecast of Applied is based on sales (local currency).

SKY

VRV

108%

FY13(Y/y change)

Applied

Ductless

FY14

126% 121%Residential

118%108%

105%

127%

128%

104%Commercial

Ducted unitary for houses

127%

13

Despite a sluggish market for new construction projects, such as in government-run and large-scale projects, consumption in general remained bullish. Daikin expanded sales by focusing on direct sales in the residential-use and commercial-use markets.

・The sales network expanded in all regions of China centering on PROSHOPS, dealers specializing in direct sales of Daikin products, and sales significantly grew centering on residential-use multi-split type air conditioners.

・Despite stagnant growth in demand for Applied systems, equipment sales expanded for such products as centrifugal chillers and air handling units along with after sales service.

・Profitability increased by raising in-house production at Daikin factories and promoting further cost reductions centering on such areas as local procurement of parts utilizing the Shanghai R&D Center.

China


※Includes residential-use multi-split type air conditioners.

＜Sales increase in China by market (local currency)＞

(Y/y change) FY13 FY14

Residential 124% 112%

Commercial 93% 93%

Applied 113% 104%

※

14

Together with a slow recovery, the EU economy was affected by the unseasonable weather occurring during peak summer demand in Southern Europe as well as the economic slump and geopolitical risks in emerging regions such as Turkey and Russia. Consequently, sales for the overall region declined against the previous year.

・Although utmost efforts were made in residential use to expand sales of high value-added products featuring stylish designs and to enhance sales of volume zone products, the impact of the cool summer in the main market of Southern Europe and the economic slowdown and cool summer in Turkey greatly hindered these efforts. ・For commercial use, we continued undertaking comprehensive follow-up and sales activities, and sales of VRV systems expanded in particular centering on the U.K. and Germany where building demand has recovered. ・In the heating business, sales significantly grew for heat pump type residential-use hot water heating systems centering on France and capitalized on greater demand spurred by stricter environment regulations.

・Efforts were made to expand sales by building a business foundation that included establishment of a subsidiary in the Middle East and preparation of a distributor network in Africa.

Europe (including the Middle and Near East, and Africa)





＜Sales increase of units in Europe (volume)＞

SKY

VRV

112% 110%Applied

Heating

113% 97%

105% 104%106% 104%

(Y/y change)

Commercial

FY13 FY14116% 89%Residential

In addition to strengthening of dealer development as the driving force of business expansion, sales grew from the launch of energy-saving differentiated products using the new refrigerant R32, and overall sales for the region substantially exceeded the previous year.

・Sales in Australia and Singapore were bullish. In Thailand, as the political situation began settling down, comprehensive sales activities, including visits to customers, were promoted, and sales increased over the previous year.

・Despite the slowdown in economic growth and currency depreciation in India, profits expanded from enhancement of the sales network, sales promotion of VRV systems, and launch of new products corresponding to local needs.

・In addition to residential use in Vietnam, Indonesia, and Malaysia, sales of commercial use also significantly grew. Daikin also became the No. 1 in sales in Vietnam.

15

Australia

102%

Thailand

114%

Singapore

102%

Vietnam

135% India

109%

Indonesia

127%

Malaysia

107%

Asia/Oceania


＜Year-on-year sales in main countries (local currency)＞

There was a general deceleration in demand for infrastructure centering on railways and communications in China, and demand slackened for fluoropolymers used in LAN cable applications in the United States, but sales shifted favorably for fluoroelastomers in the automotive industry, repellants, and anti-fouling surface coatings. Revenue and profits increased by continuing to robustly promote reductions in fixed and total costs.

・Sales for fluorocarbon gas declined over the previous year due to lower demand in Japan, China, and Asia, and efforts were made to restrain sales in accordance with Daikin’s policy to maintain selling price.

・Polymers and Fluoroelastomers

-Although sales were impacted by a deteriorating Chinese market, fluoropolymers expanded for other segments such as the automotive industry in the United States.

-Sales grew in fluoroelastomers for the automotive industry in the United States and Asia.

・In fine chemicals, sales of water and oil repellant agents expanded in Asia and Europe. Anti-fouling surface coating (OPTOOL) for smartphones significantly expanded.

16

Chemicals

■Business Review by Segments (Chemicals)

＜Sales increase by products (aggregate sales)＞

For all fluorochemical products

Fluorocarbon Gas

Polymers & Fluoroelastomers

Fine Chemicals, etc.

105%

113%

109% 117%

103%117%

FY13 FY14

78%107%

(Y/y change)

17

Oil Hydraulics: Sales for oil hydraulic equipment used in construction machinery expanded in Japan and the United States through global development that integrated manufacturing and sales. Sales for oil hydraulic equipment used in industrial machinery also greatly expanded in Japan, and sales significantly exceeded the previous year.

Defense Systems: In addition to increased orders for artillery shell development from the Japanese Ministry of Defense and orders for aircraft parts, sales for home oxygen concentrators expanded as sales exceeded the previous year.

Electronics: Sales exceeded the previous year by capturing the electrical machinery and equipment markets in R&D support systems (Visual R&D) and expanding sales of facilities design CAD.

Other

■Business Review by Segments (Other)

18

Ⅱ．Business Forecast for FY2015

19

A moderate expansion is expected for the global economy with expansion of the air conditioning business focused on the United States and Asia. In light of the risk for a downturn in the economies of China and Europe and the negative impact to profit from currency depreciation of the euro and the currencies of emerging countries (high dollar), Daikin intends to accelerate development of a solid business constitution by building a tenacious sales network, thoroughly implementing a selling price policy, and reducing fixed costs.

Even within severe business conditions, this will be the year for us to significantly increase profits in bringing Fusion 15 to its conclusion.

■Business Review of FY2015 Forecast

Foreign Exchange (Year-on-year)

Sales ± 0

Operating Income ▲ 7.0 billion yen

FY14 FY15 FUSION15

(Unit: billion yen)Results Forecast Targets

Sales 1915.0 2060.0 108% 2050.0

Operating Income 190.6 212.0 111% 190.0(Percentage of income to net sales) (10.0%) (10.3%) (9.3%)

Ordinary Income 194.2 210.0 108% ―

(Percentage of income to net sales) (10.1%) (10.2%) ―

Net Income 119.7 130.0 109% ―

(Percentage of income to net sales) (6.2%) (6.3%) ―

■FX rate

Yen／1USD 110 115 ― 95

Yen／1EUR 139 125 ― 125

Y/y change

20

〇 A sales strategy for the air conditioning business has been developed corresponding to market changes in each region.

In North America, a reaction is anticipated to stricter energy-saving regulations, and sales are expected to grow through expansion of the Goodman business, creation of synergy, and enhancement of the after sales service system, including Applied systems, as we establish a foothold to achieve the No. 1 position in North America for the year 2020.

In Asia, we will accelerate sales promotion of RA and VRV systems and establish a foundation for business expansion of Applied systems. Efforts will be made for rapid business expansion utilizing our extensive product lineup.

In China, we will build an even more comprehensive sales network and promote regional expansion. A new market will be created centering on New Lifestyle Multi that proposes various new living styles to customers.

In Japan, along with trying to increase market share by concentrating on sales promotion in metropolitan areas, we will create a new business model that extends from the sale of energy-saving equipment to the providing of peripheral services as we take advantage of stricter environmental regulations.

○ Daikin will execute large-scale prior investments such as the new Goodman factory in the United States and the Technology Innovation Center (Japan) and work to further strengthen our competitiveness.

■Business Review of FY2015 Forecast

21

■Business Forecast (1H/2H)

(Unit: billion yen) 1H 2H Total 1H 2H TotalNet sales 974.2 940.9 1,915.0 1,070.0 990.0 2,060.0

Operating Income 113.4 77.2 190.6 125.0 87.0 212.0(Percentage of income to net sales) (11.6%) (8.2%) (10.0%) (11.7%) (8.8%) (10.3%)

Ordinary Income 114.8 79.4 194.2 125.0 85.0 210.0(Percentage of income to net sales) (11.8%) (8.4%) (10.1%) (11.7%) (8.6%) (10.2%)

Net Income 75.7 44.0 119.7 82.0 48.0 130.0(Percentage of income to net sales) (7.8%) (4.7%) (6.2%) (7.7%) (4.8%) (6.3%)

■FX rate

Yen/1USD 103 117 110

Yen/1EUR 139 139 139

FY14 Results FY15 Forecast

115

125

22

2014

Results

2015

Results

Y/y

＋２１．４

■Breakdown of Changes in Operating Income

– Comparison of Year-on-Year Results –

23

■Business Forecast by Segments

FY14 FY15

Results Forecast Y/y changes

Sales 1915.0 2060.0 108%

Operating Income 190.6 212.0 111%(Percentage of income to net sales) (10.0%) (10.3%)

Sales 1710.9 1842.0 108%

Operating Income 170.5 187.0 110%(Percentage of income to net sales)

(10.0%) (10.2%)

Sales 149.6 160.0 107%


(11.1%) (13.1%)

Sales 54.5 58.0 106%


(6.6%) (6.9%)

Others

Total

Air-Conditioning

Chemicals

(Unit: billion yen)

・In residential use, we will strengthen cost competitiveness in volume zone products and aim to increase market share in addition to promoting sales of high, value-added products centering on the flagship product Urusara 7.

・In commercial use, focus will be on expanding sales of energy-saving differentiated products such as FIVE STAR ZEAS and Eco-ZEAS80. Efforts will be made to greatly expand sales in Tokyo ahead of the Olympics. Capitalizing on stricter environmental regulations (Fluorocarbons Recovery and Destruction Law and revised Rationalization in Energy Use Law), we will aim to increase market share by proposing new value extending from the sale of energy-saving equipment sales to the offering of peripheral services.

24

Even as we work to accelerate dealer and market development by strengthening regional localization and region-based marketing activities and attempt to drastically reform our sales capabilities, we will continue to thoroughly implement a selling price policy and expand sales and profits.

Japan

■Business Forecast by Segments (Air Conditioning)

＜Market demand indexes relating to AC＞＜AC unit shipments for entire Japanese market, Daikin＞

FY15 Y/y

Market 8,000 99%Daikin － 110%Market 837 100%Daikin － 105%Market 379 91%Daikin － 90%

(1,000units)

Eco-cute

Residential

Commercial

(Y/y change) FY13 FY14 FY15 ForecastPersonal spending +2.5% ▲2.9% +1.9%New housing starts +10.6% ▲11.0% +2.6%

Private capital investment +4.0% ▲0.0% +3.2%Floor areas of new

construction of commercialbuilding(Less than 3000㎡）

+6.3% ▲4.5% +2.0%

・As the ductless market continues to grow, we will aim for even further business expansion within that growth by expanding sales of VRV systems through cultivation of new sales channels and strengthening of cost competitiveness for our mini split air conditioners (RA/SkyAir).

・For residential use unitary, we will utilize Goodman’s low cost manufacturing capability and aim for higher market share in volume zone while launching differentiated, energy-saving products centering on inverter unitary products that meet the increased need for energy savings resulting from higher regulatory values.

・In Applied systems, in addition to SE training and enhancement of product lineup, we will accelerate development of the solutions business including new establishment of our own parts dealers. Business expansion will be tackled in Latin America such as in Mexico.

25

Together with expanding share in our main market of residential unitary and accelerating sales promotion of ductless products, we will implement full-fledged business development in the light commercial market. We will robustly expand business domains and create synergy in aiming for the No. 1 position in North America for year 2020.

North America





＜Sales increase of units in North America (volume)＞

Market

116%

SKY 111%

VRV 115%

100%

102%Applied

Ducted unitary for houses

116%

113%

CommercialＤｕｃｔｌｅｓｓ

118%

103%

135%

FY15Daikin

Residential

(Y/y change)

26

・We will utilize proposal and installation capabilities that are the strength of PROSHOP specialty shops for retail and direct sales, and fortify proposal-based sales with the New Lifestyle Multi

Series that proposes various lifestyles to customers.

・Despite the decline in number of projects in the commercial-use market, Daikin will increase

sales in all markets ranging from buildings to shops by implementing a dual strategy of launching

new differentiated products and volume zone products.

・Profitability will rise by reducing total costs (in-house production, local procurement, etc.) even

further.

・In addition to new dealer development focused

on regional expansion, we will create a tenacious

sales network in China through comprehensive

support that ranges from management guidance to

personnel training as we work to qualitatively

strengthen each individual dealer.

Despite the severity that exists in the AC business environment, we will utilize our own sales network comprising a system of specialty and retail sales that is expanding throughout China and promote sales of residential use multi-split air conditioners for the residential market. We will continue to increase profitability by integrating development, production, sales, and after sales service.

China


＜Sales increase in China by market (local currency)＞

※Includes residential-use multi-split type air conditioners.

Market

100%95%100%Applied 106%

FY15(Y/y change) DaikinResidential 110%Commercial 102%

・In the EU region, Daikin will continue to develop a strategy for rivals that is thoroughly implemented in each country and to strengthen the lineup of region-based products as well as improve the cost competitiveness of volume zone products.

・In Turkey, in addition to greater expansion of RA sales by strengthening the sales network, we will increase sales for heating products and promote expansion of the export business to Central Asia. In the Middle East, we will accelerate dealer development for each country and attempt to expand sales for commercial-use air conditioning.

・Sales for the heating business are expected to

increase by meeting the specific needs of each

country with the launch of new products for heat pump

type residential-use hot water heating systems

and enhancement of the product lineup for combustion

type heaters.

27

An unstable business environment persists in the slow recovery of the EU economy. However, we will execute a comprehensive sales strategy based on the competition and sales trends of each country and build a tenacious sales network. Together with fortifying our business constitution through reductions in fixed costs and lower production costs, we will work to ensure profits.

Europe (including the Middle and Near East, and Africa)





＜Sales increase of units in Europe (volume)＞

Market

103%SKY 103%VRV 104%

106%103%

(Y/y change) Daikin

109%118%

Heating

Residential 114%

FY15

124%Applied 113%

Commercial

28

・For RA, we will launch differentiated products, such as cooling-only inverter units that correspond to local needs. We intend to lead in development of volume-zone inverters and take in the expanded demand.

・We will take in demand for home construction that is rapidly expanding and centered on new emerging regions as we leverage our extensive product lineup and work to promote sales of high value-added products such as residential-use multi air conditioners.

・To further create demand of large-scale projects, we will focus on increasing “spec-in” employees, employees responsible for matching specifications to customer needs. In addition to launching new VRV systems, we will strengthen hybrid projects that utilize both VRV systems and Applied systems.

・Our product lineup of chillers and air side equipment will be enhanced as we work to establish a business foundation for Applied systems.

Together with continuing to strengthen dealer development, which has been the driving force behind our rapid business expansion these past several years, we will fully engage in creation of main stores that serve as the core for high capability in making sales proposals and work to greatly expand sales by a robust sales network.

We will aim for the No. 1 in position for sales in India and Thailand.

Asia/Oceania


・We will attempt sales expansion and application development in the favorable fields of automotive and semiconductors. In the field of information terminals, we will promote application development of other fluorine materials in addition to sales of anti-fouling surface coating (OPTOOL).

・The bases in the U.S. and Europe will collaborate and share strategy for each product. Together with further business expansion in Europe that capitalizes on acquisition of the Solvay European refrigerant business, we will also aim for a significant increase in market share in the United States and Asia by utilizing end-user marketing.

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・In Oil Hydraulics, we will expand sales in the industrial and construction markets in Japan and strengthen global development.

・In Defense Systems, orders from the Ministry of Defense will decrease, but we will work to expand sales of home oxygen concentrators in Japan and China.

・In Electronics, we will work to expand sales centering on new products of R&D support systems (Visual R&D) and facilities design CAD.

Chemicals

Other

■Business Review by Segments (Chemicals, Other)

Together with expanding sales of differentiated products in markets anticipating growth in demand, we will expand business in the United States, Europe, and Asia by reducing fixed costs, lowering costs, and eliminating inventory.

＜Increase in sales and demand by fluorochemical products＞

Market

For all fluorochemical products 102%Fluorocarbon Gas 104%Polymers & Fluoroelastomers 102%Fine Chemicals, etc. 102%

FY15Daikin(Y/y change)

107%

103%

112%91%

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Ⅲ．Supplementary Information

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FY15 Forecast

USD *1.2 billion yen

EUR 0.4 billion yen

*Changes for the THB, RMB, AUD, etc.,

are assumed to be linked to the USD.

〔Reference〕 Exchange Rate （among major currencies ）

■Foreign Exchange

■Exchange Sensitivity

■Exchange Rate

FY13 Results FY14 Results FY15 Forecast

EUR/USD 1.34 1.26 1.09

USD/INR 59.9 60.6 64.0

USD/IDR 10,916 12,036 12,500

USD/BRL 2.25 2.48 2.70

AUD/THB 29.1 28.2 26.3

1H 2H Total 1H 2H TotalUSD ¥99 ¥102 ¥100 ¥103 ¥117 ¥110 ¥115EUR ¥130 ¥139 ¥134 ¥139 ¥139 ¥139 ¥125THB ¥3.2 ¥3.2 ¥3.2 ¥3.2 ¥3.6 ¥3.4 ¥3.5RMB ¥16.1 ¥16.7 ¥16.4 ¥16.6 ¥18.8 ¥17.7 ¥18.5AUD ¥94 ¥93 ¥93 ¥96 ¥96 ¥96 ¥92

FY13 Results FY14 ResultsFY15 Forecast

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28.8

48.3 54.3

59.4

78.4

120.0

38.4 38.4 39.4

55.1 52.861.0

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

'10 '11 '12 '13 '14 '15Forecast

（billion yen）

Capex Depreciation

30.8 33.0 33.6

40.2 42.9

46.0

0.0

10.0

20.0

30.0

40.0

50.0

60.0

'10 '11 '12 '13 '14 '15Forecast

（billion yen）

R&D Cost

（billion yen） FY10 FY11 FY12 FY13 FY14 FY15 (Forecast)

Capex 28.8 48.3 54.3 59.4 78.4 120.0

Depreciation 38.4 38.4 39.4 55.1 52.8 61.0

R&D Cost 30.8 33.0 33.6 40.2 42.9 46.0

■Capital Expenditure, Depreciation and R&D Cost

Capex and Depreciation R&D Cost

Reference）Trends FY13 FY14 (Proposed) FY15 （Forecast）

DOE 2.1% 3.2% 3.1%

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FY10 FY11 FY12 FY13 FY14 (Proposed) FY15 (Forecast)

Dividend

per share

Interim ￥18 ￥18 ￥18 ￥23 ￥40 ￥55

Annual ￥36 ￥36 ￥36 ￥50 ￥100 ￥110

Earning per

share

1H ￥18.8 ￥96.4 ￥30.9 ￥203.0 ￥259.3 ￥281.0

Annual ￥68.1 ￥141.4 ￥149.7 ￥318.3 ￥410.2 ￥445.5

○Financial results shifted favorably and an annual dividend of 100 yen (ordinary dividend of 90 yen, and a 90th anniversary commemorative dividend of 10 yen) is planned for the fiscal year. This payout represents a 50 yen increase per share over the previous year and a 30 yen increase per share over the currently announced.

○Concerning the dividend for the next period, an annual dividend of 110 yen (interim 55 yen, term-end 55 yen) is planned for a dividend increase of 20 yen for ordinary dividend.

【Daikin Dividend Policy】

Together with making every effort to maintain a ratio of dividends to shareholder equity (DOE) of 3.0% based on the principle of always providing stable dividends to shareholders, we will continue striving in our mission to provide shareholders with even greater return by aiming for an increasingly higher level of dividend payout ratio.

■Dividends Plan

Notes on forecast ○This data is compiled for informational proposes and is not to be construed as a solicitation of any action. This data (includes management plan) was compiled by Daikin Industries., Ltd. (the Company) based on reliable information available at the time of compilation. It may include some risks and uncertainties. The Company is not responsible for its accuracy or completeness. ○The Company asks for your own discretion in using this data. The Company accepts no liability for any loss or damage of any kind arising out of judgment for investment made solely relying on the business forecast or target figures described in the data.

Presentation of Financial Results for FY2014 (Term ended ... · Presentation of Financial Results...

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