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Within a business environment for fiscal 2012 that was even more demanding than anticipated, Daikin persevered in face of the stagnant economy in Europe, the slow pace of economic expansion in emerging markets, and the uncertainty seen in China to uphold its fundamental approach of increased revenue and profits by making concerted efforts to secure short-term profit and link these efforts to the 2013 targets (operating income of 130 billion yen) set forth in FUSION 15.
Specifically, in addition to expanding HVAC sales in Japan, China, and Asia and rapidly expanding in new emerging markets such as India, Vietnam, and Turkey, we continued to vigorously promote structural reforms such as total cost reductions that included extensive review and strict control of fixed costs and thorough implementation of a pricing policy.
As a result of these efforts, we were able to achieve increased revenue and profits for the third consecutive year and secure financial results that exceeded the latest publicly announced projections for sales and profit.
When taking account of the current global economy, cause for concern exists in the uncertainty surrounding the issue of the US government budget, the debt problems in Europe, and the delay in recovery of exports for emerging countries. However, at the same time, signs of a slight recovery in the global economy have also emerged with some even expressing the view that the economy has bottomed out and the worst is over.
In the strategic management plan FUSION 15 that makes fiscal year 2015 the target fiscal year, Daikin is fully engaged in the reform of our business constitution and the strengthening of profitability. In addition to nimbly developing short-term measures for securing short-term profit for fiscal 2012, we were able to gain a foothold for achieving targets by successively executing priority measures set forth in FUSION 15. Specifically, we acquired the US company Goodman for our goal of becoming the No. 1 air conditioning manufacturer in North America; rapidly expanded business in emerging countries (local RA production in India, expansion of the sales network in India, and establishment of a sales subsidiary in Indonesia, etc.); developed the product Urusara 7, which features the world’s first adoption of the new refrigerant R32 in an air conditioner; and shifted to energy-saving solutions based on the widespread awareness for electric power conservation.
From fiscal 2013, the financial results of the recently acquired US company Goodman will be fully consolidated. The business plan for Goodman establishes a target in local currency for a 6% sales increase compared to the previous year and a 13% increase in operating income. Targets in the overall company plan for fiscal 2013 call for sales of 206 billion yen and operating income of 13.5 billion yen (after deducting goodwill and intangible fixed costs).
At the same time, we are also making great progress toward the synergy plan between Goodman and Daikin. Integration of procurement and back office operations such as logistics are already moving forward for Goodman and McQuay. From this month, sales of ductless products (room air conditioners and building type multi split air conditioners) will start through the Goodman sales channels, and we will have full market participation in the light commercial segment when sales begin for rooftop air conditioners. In addition to these activities, we will launch a product for the ducted unitary premium market and move quickly to identify, frontload, and execute specific themes that significantly contribute to profitability.
Fiscal 2013 is the fiscal year serving as a midpoint for FUSION 15 and represents an important year for linking those results with achievement of FUSION 15. In regards to the course set forth in FUSION 15, there has been absolutely no change, and we fully intend to accelerate the implementation of measures in accordance with our growth strategy in "the volume zone of emerging countries," "the solutions business," and "environmental innovation" as we aim to challenge and achieve even higher targets.
For now and in the future, I respectively ask for your continued understanding and support of Daikin.
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May, 8
Noriyuki Inoue
Chairman & CEO |
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