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  • 1. Presentation of Financial Results for FY2011 (Term ended March 31, 2012) May 11, 2012
  • 2. Table of contents Financial Results for FY2011 Ⅰ. Financial Results for FY2011 Business Results (Company-wide) ・・・・・・・・・・・・・・・・・・・・・・・・・・P.4 Points of FY2011 Financial Results・・・・・・・・・・・・・・・・・・・・・・・・・P.5 Profit and Loss Statement・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・P.6 Breakdown of Changes in Operating Income・・・・・・・・・・・・・・・・P.7     Balance Sheet・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ P.8 Business Results by Segments・・・・・・・・・・・・・・・・・・・・・・・・・・・・P.9 Business Review by Segments ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・P.10-16 Ⅱ. Business Forecast for FY2012   Business Forecast (Company-wide) ・・・・・・・・・・・・・・・・・・・・・・・・・・P.18 Business Review FY2012 Forecast ・・・・・・・・・・・・・・・・・・・・・・・・・ P.19 Business Forecast (1H/2H)・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ P.20     Breakdown of Changes in Operating Income・・・・・・・・・・・・・・・・・P.21     Business Forecast by Segments・・・・・・・・・・・・・・・・・・・・・・・・・・・・ P.22     Business Review by Segments ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ P.23-28 ( Reference )・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・P.30-34 2
  • 3. Ⅰ. Financial Results for FY2011 3
  • 4. ■Business Results(Company-wide) (¥1billion) FY2011 Y/y FY2010 Previous Result change forecast (Feb.) Sales 1160.3 1240.0 1218.7 105% Operating Income 75.5 78.0 81.2 108% (Percentage of income to net sales) (6.5%) (6.3%) (6.7%) Ordinary Income 74.8 75.0 81.8 109% (Percentage of income to net sales) (6.4%) (6.0%) (6.7%) Net Income 19.9 36.0 41.2 207% (Percentage of income to net sales) (1.7%) (2.9%) (3.4%) DPS ¥36 ¥36 ¥36 ― DOE 2.1% ― 2.1% ― ■ FX Rate Yen/ 1USD 86 78 79 ― Yen/ 1EUR 113 108 109 ― ■Management Indicator FY2010 FY2011 *Effects of FX (Year on year)  ROA 1.7% 3.6% On Sales: ▲45.0 billion yen ROE 4.0% 8.3% FCF +38.2 ▲35.0 On Operating Income: ▲7.5 billion yen DVA ▲17.8 ▲5.6 ※DVA=Daikin Economic Value Added 4
  • 5. ■Points of FY2011 Financial Results Increased revenue and profits were achieved for two consecutive terms despite the sudden changes in the economic environment such as the recession in Europe, the appreciation of the yen, soaring market prices, and natural disasters (Great East Japan Earthquake, massive floods in Thailand).〇Sales largely expanded for the air conditioning business in Japan and      China as well as in emerging countries including India, Vietnam, and Turkey.〇In the Chemicals business, sales expanded in all regions for all  products, and the past highest sales and operating income were achieved.〇Total cost reductions were thoroughly implemented by enacting       comprehensive pricing measures for the rapidly soaring market prices, minimizing the impact from interruptions in the supply chain by the Great East Japan Earthquake, and reducing fixed costs on a company-wide basis.○For the power shortages caused by the Great East Japan Earthquake, we constructed a business foundation for actively developing electric power conservation solutions proposals that combine energy-efficient equipment and services. 5
  • 6.  ■Profit and Loss Statement (Unit: billion yen) FY2010 FY2011 Changes from the last year 113 105 Net Sales 1,160.3 1,218.7 +58.4 Cost of sales 798.7 846.8 +48.1 (Percentage to net sales) (68.8%) (69.5%) Gross Income 361.7 372.0 +10.3 (Percentage of income to net sales) (31.2%) (30.5%) Selling General and <Special affairs> Administrative expenses 286.2 290.7 ※1 +4.5 ※1 Changes in selling,general and      (24.7%) (23.9%)   administrative expense: Operating Income 75.5 81.3 +5.8  Labor cost +4.8, (Percentage of income to net sales) (6.5%) (6.7%)  After sales service expense +1.5 Non-operating gain or losses ▲ 0.7 0.5 ※2 +1.2 ※2 Non-operating gain or losses: Ordinary Income 74.8 81.9 +7.1  Equity in earning of affiliates+1.6(1.3⇒2.9) (Percentage of income to net sales) (6.4%) (6.7%) Extraordinary gains or losses ▲ 29.1 ▲ 1.2 ※3 +27.9 ※3 Extraordinary Income Income before Income Taxes 45.7 80.6 +34.9 Securities valuation loss (Percentage of income to net sales) (3.9%) (6.6%) FY2010 ▲26.9 Corporate Taxes,etc. 22.1 35.9 +13.9 FY2011 ▲1.9 (Tax burden ratio) (48.3%) (44.6%) Minority Interest 3.8 3.4 ▲0.3 Net Income 19.9 41.2 +21.3 6
  • 7.  ■Breakdown of Changes in Operating Income(Unit:billion) Impact of Great East Japan Earthquake▲4.0 100.0 Impact of Thai flooding ▲2.0 Quality problems for air purifiers ▲3.5 Special Factors Changes from ▲9.5 last year Foreign Expanding 80.0 +5.7 exchange Sales ▲7.5 +24.4 60.0 Effect of raw material Pricing prices +28.0 ▲37.5 Reduction of Fixed 40.0 75.5 Expense, 81.2 etc Cost reductions ▲20.7 +28.5 20.0 0 FY10 Results FY11 Results(Reference) FY10 Effect of Reduction FY11 FY11 Operating Foreign raw material of Fixed Cost Expanding Special Operating Forecast Income exchange prices Expense, etc. reductions Pricing Sales Factors Income (Feb.) 75.5 ▲9.0 ▲36.5 ▲18.0 +27.5 +27.5 +20.5 ▲9.5 78.0 7
  • 8.  ■Balance Sheet (Unit: billion yen) 2011/3E 2012/3E Y/y change 2011/3E 2012/3E Y/y change Cash and cash 167.7 135.6 ▲32.1 Trade payables 116.9 110.1 ▲6.8 equivalents Receivables 63days 198.9 63days 209.1 +10.2 Interest bearing 369.1 385.8 +16.7 Inventories 63days 201.8 73days 243.6 +41.8 Lease debt 3.3 4.0 +0.7 Fixed assets 393.0 404.9 +11.9 (Interest-bearing ratio) (32.9%) (33.6%) Investment and others 97.8 88.9 ▲8.9 Others 142.2 144.6 +2.5 Others 73.3 78.5 +5.2 Total liabilities 631.6 644.6 +13.1 Total equity 487.9 502.3 +14.4 (Equity ratio) (43.1%) (43.3%) Share Warrant 1.3 1.5 +0.2 Minority interests 11.8 12.1 +0.4 Total net assets 500.9 515.9 +15.0 Total Assets 1,132.5 1,160.6 +28.1 Total 1,132.5 1,160.6 +28.1 ※Numbers on the left are rating period <Breakdown of interest-bearing debt> (1billion) 2011/3E 2012/3E Y/y change Short-term borrowings 68.9 67.4 ▲1.5 CP 5.1 23.1 +18.0 Bonds 100.0 100.0 +0.0 Long-term borrowings 195.2 195.4 +0.2 Total 369.1 385.8 +16.7 8
  • 9. ■ Business Results by Segments (¥1billion) FY2010 FY2011 Previous Result Result Forecast(Feb.) Y/y changes Sales 1,160.3 1,240.0 1218.7 105% Total Operating Income 75.5 78.0 81.2 108% (Percentage of income to net sales) (6.5% ) (6.3% ) (6.7% ) Sales 1,004.6 1,060.0 1041.4 104% Air-Conditioning Operating Income 64.7 58.0 60.2 93% (Percentage of income to net sales) (6.4% ) (5.5% ) (5.8% ) Sales 114.8 135.0 132.9 116% Chemicals Operating Income 10.9 19.0 20.2 (Percentage of income to net sales) (9.5% ) (14.1% ) (15.2% ) Sales 41.0 45.0 44.4 108% Others Operating Income ▲ 0.04 1.0 0.9 ー (Percentage of income to net sales) ― (2.2% ) (1.9% ) 9
  • 10. ■Business Review by Segments (Air-conditioning business) Japan Japan ・The impact of a parts shortage caused by the Great East Japan Earthquake was       minimized. (Recovery support for suppliers, development of alternative parts for microcomputers, and full utilization of product inventory) ・A rally in housing starts and replacement of energy efficient equipment moved forward  for residential-use, and industry demand was on par with the previous year. Daikin  worked to increase sales of high value-added products, such as the 『Ururu Sarara R Series』, that promote electric power conservation. ・Centering on replacement demand due to a greater need for electric power      conservation, industry demand surpassed the previous year for commercial-use.    Daikin promoted sales of products, such as the 『Eco-ZEAS80』, that provide high      energy efficiency and conserve electric power. ・Profitability increased for both residential-use and commercial-use from thorough      implementation of cost reductions, pricing measures for the soaring market prices of    raw materials, and structural reforms such as in the sales system, SCM, and similar  operations. <Unit sales of AC for the entire Japanese market, Daikin sales> (1000 units) FY11 Forecast Resu lts Y/ y Residential Market 7,000 81% 8,303 100% Daikin - 88% - 103% Commercial Market 730 101% 826 105% Daikin - 105% - 103% Eco-cute Market 539 95% 497 88% Daikin - 102% - 79% 10
  • 11. ■Business Review by Segments (Air-conditioning business) Europe Europe ・Sales decreased from a stagnant economy caused by the debt crisis in Europe,     unseasonable weather, and yen appreciation. ・Sales promotion measures were expanded centering on favorable regions and     products.  Meanwhile, a start was made toward structural reforms for fixed costs  (including efforts to increase efficiency of indirect departments and unify the      logics function and IT systems) in preparation for long-term demand stagnation. ・Although there were harsh conditions for residential-use centering on the main     countries  of Italy, France, and Spain, sales promotion focusing on commercial-   use equipment (VRV) increased by business promotion utilizing a strengthened    sales network in each country. ・Efforts were made primarily in France to enhance the after sales service network    for heating. Construction of a new sales network in Germany and Italy moved     forward at a  rapid pace, and sales expanded. <Increase ratio of sales units in Europe(volume-based )> ・By incorporating the sales network of Airfel, FY10 (Y/y change) FY11  which was recently acquired by Daikin, sales Residential 123% 87%  rapidly expanded in Turkey (226% Y/y). SKY 106% 79% Commercial VRV 113% 104% Heating 102% 105% Applied(Sales) 106% 119% Sales (billion yen) 213.8 97% 193.5 90% Local currency 112% 94% ※SKY・・・Middle or compact size package air conditioners ※VRV・・・Multi-split system for buildings ※The forecast of Applied is based on sales (local currency). 11
  • 12. ■Business Review by Segments (Air-conditioning business) China China ※Calendar year accounting (Jan.- Dec.) ・The air conditioning business steadily expanded against the backdrop of a    favorable business environment, and sales widely increased through the sales     promotion of a full range of products from small-sized to large-sized equipment. ・Although commercial-use was impacted by monetary tightening, sales           substantially increased by the continued development of dealers that moved from  large urban areas to suburban areas and to mid-western and interior regions. ・Although demand decreased for residential-use by discontinuation of incentives    of the government’s Home Appliance Subsidy Program and replacement demand,  sales promotion was performed focusing on volume zone inverter models that     meet stricter energy-saving regulations. Inverter market conversion accelerated. (Demand ratio in FY2011: over 60%) ・Sales for Applied Systems substantially increased by capitalizing on sales        promotion of energy-saving products and brisk demand in interior areas. < Increase ratio of sales units in China(volume-based )> ・By proceeding forward with total cost reductions  and pricing measures for the soaring market (Y/y change) FY10 FY11  prices of raw materials and rise in labor costs Residential 135% 130% (by revision in the Minimum Wage Law), past SKY 104% 120% Commercial VRV 125% 124% profit levels recovered from the second half. Applied 154% 141% Sales (billion yen) 162.1 125% 187.5 116% Local currency 131% 121% ※SKY・・・Middle or compact size package air conditioners ※VRV・・・Multi-split system for buildings ※The forecast of Applied is based on sales (local currency). 12
  • 13. ■Business Review by Segments (Air-conditioning business) Asia/Oceania Asia/Oceania ・Sales for both residential-use and commercial-use steadily grew in Singapore, where  the economic environment is bullish, and in emerging countries such as India and    Vietnam, where  dealer development is proceeding forward. However, sales were slow  in Thailand and Malaysia due to the impact of the unseasonable weather and flooding. ・For Australia, sales fell below the previous year because of stagnation in demand       caused by a sluggish construction market and a cool summer in the season period. <Sales of main countries in Asia, Oceania over the the previous year (Local Currency)> India Thailand 103% Vietnam 156% 146% Malaysia Singapore 94% Indonesia 103% 126% Australia Australia82% 103% 13
  • 14. ■Business Review by Segments (Air-conditioning business) North America North America ※ Calendar year accounting (Jan.-Dec.) for the Applied Systems business(McQuay) ・Despite harsh market conditions, sales promotion was performed for energy-saving  products (magnetic bearing centrifugal chillers, air-cooled chillers, etc.). With the    strengthening of the sales network and the after sales service system, sales        expanded for Applied Systems, and the region experienced double-digit growth. ・Sales expanded for ductless centering on the progress made in the development     and nurturing of a sales network and VRV, which enjoys an excellent reputation for  high energy efficiency. < Increase ratio of sales units in North America(volume-based )> (Y/y change) FY10 FY11 Residential 163% 91% SKY 193% 102% Commercial VRV 137% 126% Applied 115% 117% Sales (billion yen) 89.7 104% 94.3 105% Local currency 113% 114% ※SKY・・・Middle or compact size package air conditioners ※VRV・・・Multi-split system for buildings ※The forecast of Applied is based on sales (local currency). 14
  • 15. ■Business Review by Segments (Chemicals business) Chemicals Chemicals ・Within a mild recovery, sales expanded in all regions for all products.  Sales and operating income returned to past highest levels by enacting comprehensive  pricing measures for soaring market prices of raw materials and minimizing the impact  from the Great East Japan Earthquake (Kashima Plant) as well as by promoting total     cost reductions. ・From the aspect of sales, China, with its remarkable growth, has become a region of     high interest. Application development was promoted and linked to sales by         capitalizing on the change from other materials as well as investment in infrastructure  and the environment. -Sales centering on fluoropolymers and fluoroelastomers were promoted in Europe      and the United States due to the bullish demand in the automobile market and for       LAN cables. -Sales continue to substantially expand for 『OPTOOL (surface anti-fouling coating       agent)』, which is utilized in displays such as for smart phones. ・Supply to expanding demand was met by increasing manufacturing efficiency such as    utilizing “increased production without plant investment” with full operation of         production facilities and reduction of bottleneck cancellations and periodic           maintenance. < Increase ratio of sales(Sales-based)> FY10 FY11 Fluorocarbon Gas 153% 136% Polymers/Fluoroelastomers 129% 117% Fine Chemicals, etc. 134% 107% Sales (billion yen) 114.8 133% 132.9 116% Local currency 135% 120% 15
  • 16. ■Business Review by Segments (Other businesses) Others Others ・ Within the steady expansion of demand for industrial and construction equipment in     Japan, sales for the Oil Hydraulics business exceeded the previous year, and the       business achieved  a sales turnaround to profitability. ・Orders for artillery ammunition by the Japan Ministry of Defense were bullish for the     Defense Systems business, and sales were on par with the previous year. ・Although corporate IT investment decreased accompanying the recession, sales on par  with the previous year were maintained for the Electronics business due to increased    sales to large-scale electronics and machine manufacturers for R&D support systems    (visual R&D systems). 16
  • 17. Ⅱ. Business Forecast for FY2012 17
  • 18. ■Business Forecast (¥1billion) FY2011 FY2012 Actual results Forecast Y/y changes Net sales 1,218.7 1,380.0 113% Operating Income 81.2 100.0 123% (Percentage of income to net sales) (6.7% ) (7.2% ) Operating Income 81.8 97.0 119% (Percentage of income to net sales) (6.7% ) (7.0% ) Net Income 41.2 53.0 129% (Percentage of income to net sales) (3.4% ) (3.8% ) ■FX rate Yen/1USD 79 80 ― Yen/1EUR 109 105 ― *Sensibility of Foreign Exchange (Impact of change by 1 yen to operating income) FY2012 Forecast US$  *0.7billion yen EUR 0.4billion yen * Including Chinese Yuan, AUS$,THB 18
  • 19. ■Business Review of FY2012 ForecastAlthough uncertainty exists in the global economy such as for a rekindling ofthe European debt crisis, increases in both revenue and profits are to becontinued. Our aim is to achieve operating income of 100 billion yen to positionthe year as a link with quantitative targets for fiscal 2013 (operating income of130 billion yen) that were raised in Fusion 15.〇High growth is to be maintained in China. In addition to VRV and inverter volume zone  inverter models, new markets showing promise, including residential-use multi split  air conditioners and solutions for factories, are to be developed without delay.〇In the highly-competitive markets of Japan and Europe, sales promotion and         increased market share are to be driven by launch of differentiated products, and total  cost reductions are to be actively promoted.〇A volume zone strategy is to be accelerated for emerging countries. In addition to      sales promotion in Turkey and Vietnam, profitability is to be improved by also        proceeding forward with localization of product development and procurement.〇In the Chemicals business, application development is to be promoted, and sales are  to be expanded centering on sales promotion in the Chinese market. We aim to       achieve FY2013 targets (Fusion 15) by frontloading them one year in advance.〇Profitability is to be strengthened by constitutional reforms such as reductions in     fixed costs and inventory. 19
  • 20. ■Business Forecast (1H/2H) (¥1billion) FY2011 Actual results FY2012 Forecast 1H 2H Total 1H 2H Total Net sales 621.8 596.9 1218.7 700.0 680.0 1380.0 Operating Income 47.9 33.3 81.2 55.0 45.0 100.0 (Percentage of income to net sales) (7.7%) (5.6%) (6.7%) (7.9%) (6.6%) (7.2%) Operating Income 46.5 35.2 81.8 54.0 43.0 97.0 (Percentage of income to net sales) (7.5%) (5.9%) (6.7%) (7.7%) (6.3%) (7.0%) Net Income 28.1 13.1 41.2 31.0 22.0 53.0 (Percentage of income to net sales) (4.5%) (2.2%) (3.4%) (4.4%) (3.2%) (3.8%) ■FX rate Yen/1USD 80 78 79 80 Yen/1EUR 114 104 109 105 20
  • 21.  ■Breakdown of Changes in Operating Income(billion)100.0 Expanding Changes Sales from Foreign +17.8 last year exchange +18.8 80.0 ▲2.0 Pricing ▲3.0 Cost Fixed reductions Expense, +28.0 60.0 Etc. Effect of raw ▲26.0 material prices +4.0 100.0 40.0 81.2 20.0 0 FY2011 FY2012 Results Forecast 21
  • 22. ■Business Forecast by Segments (¥1billion) FY2011 FY2012 Result Forecast Y/y changes Sales 1,218.7 1,380.0 113% Total Operating Income 81.2 100.0 123% (Percentage of income to net sales) (6.7% ) (7.2% ) Sales 1,041.4 1,170.0 112% Air-Conditioning Operating Income 60.2 75.5 125% (Percentage of income to net sales) (5.8% ) (6.5% ) Sales 132.9 160.0 120% Chemicals Operating Income 20.2 23.0 114% (Percentage of income to net sales) (15.2% ) (14.4% ) Sales 44.4 50.0 113% Others Operating Income 0.9 1.5 176% (Percentage of income to net sales)       - (3.0% ) 22
  • 23. ■Business Review by Segments (Air-conditioning business) Japan Japan Although decreased demand is anticipated, we intend to substantially increase market share by actively launching differentiated products and taking an aggressive approach toward reconstruction demand. Furthermore, we intend to accelerate development of HVAC solutions that meet the needs for electric power conservation and increase earnings by adjustment of pricing measures. ・Although housing starts are bearish, a recovery in demand is expected due to         resumption of subsidies to support reconstruction and special tax measures for        housing loans. We intend to assuredly capitalize on these opportunities. ・New products that pursue ease of operation and comfort such as 『RakuAir』 air         conditioners are to be launched for residential-use. ・We will strive for product differentiation in commercial-use by adding new features      such as power-saving mode in such models as 『Eco-ZEAS』. ・In addition to high energy efficiency in air conditioners for which Daikin is famous for,    we will strengthen our solutions proposals including those for DESICA, which         simultaneously achieves energy savings and comfort by individually adjusting for      temperature and humidity, and for original energy efficiency systems that combine heat  pump-related equipment and the residential-use solar power system Sky Solar. <Unit sales of AC for the entire Japanese market, Daikin sales> <Index of market demand index > (1000units) FY12 Forecast Y/y FY12 FY10 FY11 Market (Y/y change) Forecast 7,300 89% Residential Personal spending +1.5% +0.7% +1.2% Daikin - 104% New housing starts +5.6% +2.7% +1.2% Market 800 97% Commercial Private capital investment +3.5% ±0.0% +3.8% Daikin - 102% Floor area of new commercial building Market 470 94% +8.0% +1.0% +1.5% Eco-cute construction (Less than Daikin - 106% 3000㎡) 23
  • 24. ■Business Review by Segments (Air-conditioning business) Europe Europe Despite the fear that real economy will deteriorate further and the harsh business environment will continue, we intend to thoroughly implement business operations from the dual aspect of capturing and maintaining markets by strengthening new dealers in main countries and building sales networks in emerging markets as we  proceed forward with structural reforms for fixed costs. ・We will reconsolidate operations capability in main countries. Sales promotion will be  strengthened that forms a nucleus of new dealer development and consulting business. ・New products will be launched that meet local needs. (Residential-use: Nexura, which  heats and cools by radiant heat) ・In addition to conventional high value-added models, new low cost RA, SKY, VRV     products will be launched for volume zone. ・For the heating business, dealers are to be further developed in Italy and UK where    demand expansion is expected, and the after sales service systems in France and     Germany will be strengthened. <Increase ratio of sales units in Europe(volume-based )> ・A business foundation is to be established    in Turkey where demand is rapidly expanding, FY12 (Y/y change) Market Daikin and construction of a Middle East/Africa sales   Residential 97% 101% network such as in Saudi Arabia, UAE, and   SKY 101% 102% Egypt is to be accelerated. (Sales promotion Commercial VRV 101% 110% of low cost models and strengthening in    Heating 88% 115% receiving orders for Applied Systems proposals) Applied 95% 96% ・Total cost reductions are to be further promoted to maintain short-term profits along with structural Sales (billion yen) 195.0     101% Local currency 105% reforms. ※SKY・・・Middle or compact size package air conditioners ※VRV・・・Multi-split system for buildings ※The forecast of Applied is based on sales (local currency). 24
  • 25. ■Business Review by Segments (Air-conditioning business) China China Although an impact from monetary tightening is anticipated, demand for air conditioning is expected to remain brisk. Sales promotion is to proceed forward to all regions for all products with the aim of continuing double-digit growth. ・Production of residential-use volume zone models is to start as scheduled from April    for the new Suzhou factory. Together with function strengthening of the R&D Center,    total cost reductions are to be promoted by integrated system of local production,      local procurement, and local development. ・Approximately 120 locations for base operations are to be established in China, and     development is to performed in every nook and coincide with market characteristics,    such as suburbs of large cities and interior areas. Construction of a sales network is to  be accelerated. ・In addition to commercial-use Pro Shops, Air Shops are to be constructed for         residential-use to facilitate specialized sales of residential-use equipment and are to be  developed as a new sales network. Air conditioners that can work with an iPhone are    to be launched as we work to increase degree of  recognition in the residential-use market. < Increase ratio of sales units in China(volume-based )> ・For the commercial-use, we intend to launch new FY12         products having cost competitiveness that (Y/y change) Market        Daikin  corresponds to market entry of a local Residential 94% 134%       manufacturer. Furthermore, we will also expand 102% 134%  the solutions business for buildings and factories. Commercial SKY VRV 105% 111% ・Applied Systems is to be strengthened to acquire       product bids including power generation plants, Applied (Sales) 109% 117%  oil refineries, and factories. Sales (billion yen) 230.0 123% ・To correspond to the International Financial Local currency      119%  Reporting Standards (IFRS), the settlement period ※SKY・・・Middle or compact size package air conditioners  is being changed to March. ※VRV・・・Multi-split system for buildings ※The forecast of Applied is based on sales (local currency). 25
  • 26. ■Business Review by Segments (Air-conditioning business) Asia/Oceania Asia/Oceania Expansion of the air conditioning marketing continues in the background of economic growth for both residential-use and commercial-use. We will proceed with creation of our own sales subsidiaries in each country and accelerate dealer development.・In addition to strengthening existing sales networks in Singapore, Thailand, and        Malaysia, we intend to promote sales of commercial-use by acquiring large-scale       projects and proceed with acquiring flooding reconstruction demand in Thailand.・Concerning emerging countries, production of residential-use air conditioners in India   begins from July, and we are constructing a full-range, local production system that     combines with the commercial-use products (VRV, chillers) that are already being      manufactured. In Vietnam, sales promotion is to be performed not only in large urban    cities but also in regional cities. In Indonesia, operations for a sales subsidiary begin    from June.・Although the demand environment in Australia continues to be harsh, we will attempt to recover from the drop from the previous year by reconsolidating existing sales channels. 26
  • 27. ■Business Review by Segments (Air-conditioning business) North America North America Applied Systems is not expected to grow substantially within the slow recovery of the economy and construction market. Ductless has earned a high reputation for energy-efficiency, and the market continues to expand. ・Although demand for Applied Systems is not expected to grow substantially, we are    aiming for growth that exceeds industry growth by enhancing the sales network,       increasing sales of highly-profitable products, and expanding the after sales service     and solutions businesses. ・We are working to further promote sales of our ductless products, which continue to     gain market recognition as energy-saving air conditioning systems, by strengthening    the sales network, enhancing the after sales service system, and expanding our        product lineup. < Increase ratio of sales units in North America(volume-based )> FY12 (Y/y change) Market Daikin Residential 110% 139% SKY 110% 156% Commercial VRV 127% 127% Applied (Sales) 102% 106% Sales (billion yen) 105.0 111% Local currency 110% 27
  • 28. ■Business Review by Segments (Chemicals business, Other business) Chemicals Chemicals In making an important point of expanding business in China, we intend to achieve increases in revenue and profits by promoting application development in each field, comprehensive pricing measures, and a lean business constitution as we aim to achieve FY2013 targets (Fusion 15) by frontloading them one year in advance. ・We will promote application development centered on China and the United States. In  China, we have established an application development center and are accelerating    proposals, such as those in the fields of automotives and chemicals, to local users. ・We are working to further strengthen profitability by continuation of total cost         reductions and comprehensive pricing measures for fluctuations in market conditions. ・Application development for environmental < Demands by Products(Sales)>  fields is being accelerated (including lithium  ion batteries, new refrigerants, infrared reflective FY12 coating, etc.) (Y/y changes) Market Daikin ・To achieve Fusion 15 targets, we will start For all fluorochemical products 104% 120% investments to increase production of fluoropolymers Fluorocarbon Gas 78% 75% and fluoroelastomers in China and the United States Polymers/Fluoroelastomers 105% 127% and strengthen the supply systems Fine Chemicals, etc. ― 128% Sales (billion yen) 160.0 120% Others Others Local currency 119% ・For the Oil Hydraulics business, we are promoting sales at the markets directed at    industrial machines in Japan and construction machines and will accelerate business    in China. ・For the Defense Systems business, we will increase sales by promoting sales in the     home healthcare business (oxygen concentrators) in addition to our defense industry    business. ・For the Electronics business, we will promote sales to large-scale electronics and       machine manufacturers centering on R&D support systems (visual R&D systems). 28
  • 29. III. Reference 29
  • 30.  ■Sales by Region: Air-conditioning Business FY2012 FY2007 FY2008 FY2009 FY2010 FY2011(Unit:Billion yen) Forecast Japan 106% 372.8 99% 370.7 88% 324.8 112% 364.6 107% 388.6 108% 420.0 Europe 153% 341.3 80% 272.1 81% 220.6 97% 213.8 90% 193.5 101% 195.0 China 174% 138.2 102% 140.5 93% 130.0 125% 162.1 116% 187.5 123% 230.0 Asia 234% 99.4 98% 97.7 85% 82.8 132% 109.5 102% 111.9 121% 136.0 America 1429% 102.9 103% 105.8 81% 85.9 104% 89.7 105% 94.3 111% 105.0 Oceania 134% 48.1 78% 37.4 106% 39.5 101% 39.9 85% 33.8 118% 40.0 Middle East 341% 20.1 123% 24.8 71% 17.7 101% 18.0 138% 24.9 149% 37.0 Africa 217% 9.1 114% 10.4 70% 7.3 96% 7.0 98% 6.9 102% 7.0 Total 150% 1,131.9 94% 1,059.4 86% 908.6 111% 1,004.6 104% 1,041.4 112% 1,170.0*Number on the left are year on year basisOverseas Sales ratio 67% 65% 64% 64% 63% 64%FX rate(USD/Yen) ¥114 ¥101 ¥93 ¥86 ¥79 ¥80     (EUR/Yen) ¥162 ¥143 ¥131 ¥113 ¥109 ¥105 ※Year-on-year sales in local currency FY2010 FY2011 FY2012 Forecast  Europe    112%    94% 105% China     131%   121% 119% America   113%     114% 110% 30
  • 31.  ■Sales by Region: Chemicals FY2012 FY2007 FY2008 FY2009 FY2010 FY2011 (Unit:Billion yen) Forcast Japan 100% 49.8 83% 41.5 82% 34.2 137% 46.9 103% 48.2 108% 52.0 America 86% 30.0 88% 26.5 83% 22.1 122% 27.1 113% 30.5 131% 40.0 Asia 104% 8.8 91% 8.0 89% 7.1 150% 10.7 140% 15.0 107% 16.0 China 118% 15.0 103% 15.4 88% 13.5 142% 19.2 138% 26.5 143% 38.0 Europe 116% 12.2 77% 9.4 86% 8.1 122% 9.9 116% 11.5 122% 14.0 Others 71% 0.2 669% 1.2 105% 1.2 85% 1.1 120% 1.3 - - Total 100% 116.0 88% 101.9 85% 86.2 133% 114.8 116% 132.9 120% 160.0 *Number on the left are year-on-year basis Overseas sales ratio 57% 61% 62% 59% 64% 68% FX rate (USD/Yen) ¥114 ¥101 ¥93 ¥86 ¥79 ¥80 (EUR/Yen) ¥162 ¥143 ¥131 ¥113 ¥109 ¥105 ※Year-on-year sales in local currency         FY2010 FY2011 FY2012 Forecast      America 133%    123% 130% China   150%     145% 140% Europe  142%       121% 120% 31
  • 32.  ■Foreign Exchange ■Exchange Rate FY2010 Actual Results FY2011 Actual Results 1H 2H Total 1H 2H Total Yen/US$ ¥89 ¥83 ¥86 ¥80 ¥78 ¥79 Yen/EUR ¥114 ¥112 ¥113 ¥114 ¥104 ¥109 Yen/THB ¥2.8 ¥2.8 ¥2.8 ¥2.6 ¥2.6 ¥2.6 Yen/RMB ¥13.4 ¥12.6 ¥13.0 ¥12.5 ¥12.3 ¥12.4 Yen/AUS$ ¥79 ¥83 ¥81 ¥84 ¥81 ¥83 32
  • 33.  ■Capital Expenditure, Depreciation and R&D Cost Capex and Depreciation R&D Cost(billion yen) (billion yen) Capex 60.6 61.060 Depreciation 60 R&D cost 51.550 48.3 50 43.8 38.9 38.6 40.040 38.4 38.4 40 32.1 33.0 33.0 30.5 30.8 28.4 28.8 28.230 3020 2010 10 0 0 07 08 09 10 11 12 07 08 09 10 11 12 (Forecast) (Forecast) FY07 FY08 FY09 FY10 FY11 FY12 (billion yen)  (Forecast) Capex 51.5 60.6 28.4 28.8 48.3 61.0 Depreciation 38.9 43.8 38.6 38.4 38.4 40.0 R&D Cost 32.1 30.5 28.2 30.8 33.0 33.0 33
  • 34.  ■Dividends PlanAs currently announced, a dividend of 36 yen for the fiscal year is scheduled for payout. The dividendfor the next period is undetermined at this time, and we would like to decide amount based on thetrends in results at the time the 2nd Quarter financial results (Nov) are announced. ’07 ‘08 ’09 ’10 ’11 (Forecast) Dividends Interim ¥19 ¥19 ¥16 ¥18 ¥18 per share Annual ¥38 ¥38 ¥32 ¥36 ¥36 Earnings 1H ¥176.5 ¥133.4 ¥34.7 ¥18.8 ¥96.4 per share Annual ¥262.2 ¥74.5 ¥66.4 ¥68.1 ¥141.4 Reference) FY07 FY08 FY09 FY10 FY11 The result of DOE  2.2% 2.2% 1.9% 2.1% 2.1%【Daikin Dividend Policy】As a fundamental principle, Daikin strives to maintain at least a 2.0% ratio of dividends to shareholder equity (DOE) in providingstable dividends to shareholders that takes in account such factors as consolidated performance, financial conditions, anddemand for capital. 34
  • 35.  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.

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