Message to Shareholders and Investors

I wish to take this opportunity to express our deep appreciation to all of you for your high interest in the management of Daikin and your continued support for our company.

In addition to a greater-than-expected decline in demand, fiscal year 2025 presented an extremely challenging business environment stemming from a combination of factors, including geopolitical risks, higher tariffs, and rising costs. Despite these difficult circumstances, our company-wide efforts to prioritize profitability, strengthen sales and marketing capabilities, implement strategic selling price measures, and continuously reduce costs resulted in sales and operating profit exceeding the previous year and enabled us to achieve record-high results. Looking at individual business segments, our core air conditioning and refrigeration business improved profitability through the expansion of high value-added products, reinforcement of distribution channels, and further enhancement of solutions proposals in North America and Asia.

In fiscal year 2026, we are launching our new strategic management plan, Fusion 30. Under Fusion 30, we have set targets in fiscal year 2028 for an operating profit margin of 10% and a return on equity (ROE) of 12% and are already at work to increase earning power. This fiscal year is the first year of this plan, and we aim to achieve record-high performance by improving profitability and capital efficiency. Although uncertainties remain regarding the outlook, such as the unpredictable situation in the Middle East and tariff issues, we will further refine our corporate structure to be resilient to change by securing stable supply and responding flexibly to management challenges. Daikin regards the challenging business environment as an opportunity to re-examine our strengths and bolster our corporate structure. To ensure we capitalize on the opportunities emerging from the recovery in demand, we will work to improve our business structure and have it lead to further growth and development during the Fusion 30 period.

In recognition of a net profit for fiscal year 2025 that exceeded the publicly announced target and financial results that achieved new record highs, we are increasing the year-end dividend by 10 yen from the currently announced amount, bringing the total annual dividend to 340 yen (interim dividend of 165 yen and year-end dividend of 175 yen).
For fiscal year 2026, based on our dividend track record and mindful of the dividend payout ratio, we plan to increase the annual dividend by 20 yen to 360 yen (180 yen interim and 180 yen year-end) under our basic policy of striving to achieve continuous dividend increases while prioritizing stability.

Through further growth and development, we will enhance corporate value and further improve return of profits to shareholders.

We sincerely appreciate your continued understanding and support.

Naofumi Takenaka
Representative Director, President and COO, Member of the Board
Daikin Industries, Ltd.

May 2026