OSAKA -- Daikin Industries' group operating profit likely climbed 13% in the year ended March 31, lifted by brisk air conditioner sales in Southeast Asia and an ongoing slide in materials costs.
The Japanese air conditioner maker's profit is seen at more than 215 billion yen ($2.01 billion), outstripping guidance of 11% growth to 212 billion yen and marking a new record for the third straight year.
Daikin's energy-saving units took off in Southeast Asian nations such as Vietnam and Indonesia, where air conditioning is rapidly catching on among the middle class. Bolstering its worldwide network of specialty outlets offering installation also paid off. A hot summer last year in Europe gave sales a boost as well.
Sales apparently grew 7% to more than 2.05 trillion yen, but missed guidance by around 40 billion yen. Declining real estate development in China, the source of around 20% of Daikin's sales, put a dent in the commercial air conditioner business. Low-cost residential units also faced stiff price competition.
Daikin targets continued profit and sales growth in fiscal 2016 by increasing air conditioner sales in North America and Southeast Asia. Central air conditioning remains the dominant model in North America. But the company plans to roll out energy-saving room units that provide both cooling and heating there.
The strong yen could pose a headwind to earnings growth. A yen exchange rate at the current level, between 105 and 110 to the dollar, is seen weighing down operating profit by more than 20 billion yen. But large declines in the prices of copper, aluminum and other materials used in ducts and cooling systems, combined with cost-cutting efforts such as the use of a common design for core components, are seen keeping profit climbing, if less steeply than in fiscal 2015.