Daikin seen cruising to fourth straight record annual profit
Japanese air conditioner maker buoyed by strong sales in Southeast Asia
OSAKA -- Japanese air conditioner maker Daikin Industries likely enjoyed a fourth consecutive year of record profit in the fiscal year ended March, thanks largely to robust sales in Asian emerging markets.
The 230 billion yen ($2.06 billion) operating profit represents a 5% increase on the year, topping the projected 2% growth. Sales are estimated at around 2.04 trillion yen, beating forecasts by some 40 billion yen.
Overseas sales drove the earnings growth, with sales in the mainstay air conditioning business rising by about 10% in China and other parts of Asia in local currencies.
In Southeast Asian countries such as Indonesia and Vietnam, where power supply is limited and costly, energy-saving air conditioners proved popular. Units that minimize energy consumption by flexibly adjusting the output of the outdoor unit according to ambient temperature and temperature setting have fared well. Low-priced products with limited functionality also performed well.
Meanwhile in China, systems that control the temperatures of multiple rooms with just one outdoor unit sold briskly to the affluent, via specialty dealerships. In Europe, shipments increased during the summer after stagnating a year earlier when particularly hot weather eroded market inventories.
As for foreign exchange rates, the yen appreciated about 10% to the dollar and 15% to the yuan in fiscal 2016, squeezing earnings in yen terms. But higher sales volume offset the negative impact. Lower costs of materials like copper used in piping also helped.
Daikin is scheduled to announce its fiscal 2016 results May 10. In the current year, the Osaka-based company will likely see a fifth straight year of record operating profit, once again driven by higher Southeast Asian air conditioner sales.