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CORPORATE NEWS [latest news list] May 25, 2001
Daikin Industries, Ltd.
Sauer-Danfoss Inc.

Daikin Industries, Ltd. (President: Noriyuki Inoue; Headquarters: Osaka City) and Sauer-Danfoss Inc. (Chairman: Klaus Murmann; Headquarters: Neumunster (Germany), Ames (Iowa, US), and Nordborg (Denmark) ) agreed to establish two joint venture companies, each for manufacturing and sales functions, in Japan (at Yodogawa Plant of Daikin Industries, Ltd.) to benefit from the synergies of the strengths of both partners, to expand the business and enhance the management constitution, and to better serve the customers in the Asian market (including Japan) in the field of mobile oil hydraulics. Both parties will examine details in order to establish the joint venture companies on October 1, 2001.

Daikin Industries, Ltd. concluded a license and technical assistance agreement for the hydrostatic transmission (hereinafter "HST") with Sauer-Danfoss Inc. (then Sundstrand Corporation) in 1968 and has sold products in Japan and Asia. With the establishment of the joint venture companies, both parties aim to further develop this business by uniting the functions as a group based upon the good relationship cultivated over many years.

Daikin Industries, Ltd. and Sauer-Danfoss Inc. will effectively utilize the customer base mainly in Japan, accumulated capability to service systems, and Yodogawa Plant as a supply base, which will be contributed by Daikin Industries, Ltd., as well as the capability for the product development and marketing, local sales bases in Asia, and Shanghai Factory, which will be contributed by Sauer-Danfoss Inc. With the establishment of the joint venture companies supported by the strengths of both partners, we aim to become the No. 1 player in the mobile oil hydraulic market in Japan and Asia by obtaining 30% market share in 2005.

Furthermore, the two joint venture companies will be closely related with other global bases (mainly in Europe and US) of Sauer-Danfoss Inc. By facilitating the two-way cooperation and integration, we aim to take an overwhelming lead and strongly win the severe competition of the global mobile oil hydraulic market. Especially, the Manufacturing Joint Venture aims to become "one of the global supply base" and supply products to the global market in the future.

1. Outline of Joint Venture Companies
    1) Manufacturing JV Company

    2) Sales JV Company

    3) JV structure

    4) Aiming business scale

    We aim to achieve Net sales 15 billion Yen and to obtain 30% market share in 2005.

2. Market Situations and Aim of alliance

    HST and motors for work function, which are the main products of the mobile oil hydraulic business, have the relatively limited market of approx. 40 billion Yen (in 2000) in Asia including Japan today. However, there is still a possibility that with proper strategies, utilizing its merit of "easy operation" (unskilled workers can operate the mobile oil hydraulic equipment), we can develop new markets and new applications. At the same time, a rapid growth in demand is expected in Chine, Korea and other Asian nations along with their improvement of national infrastructure.
    Therefore, two most important strategies to expand the business in the future are (1) to develop new markets by strengthening our capability to service total system of mobile oil hydraulics, and (2) to develop its business in China and in the global arena. By combining the strength of the two partners, we can address these issues and obtain competitive superiority. In short, the target of this alliance is to further and strongly develop our business.

3. Outline of Sauer-Danfoss Inc.

    Sauer-Danfoss Inc. is a global leader in the oil hydraulic business with approximately 7,000 employees worldwide and sales of about 114 billion Yen, ($950 million), particularly the first worldwide manufacturer of HST and motors for work function for use primarily in applications of off-highway mobile equipment.

Note : Following is only for the news release in English.

Outline of Daikin Industries, Ltd.

    Daikin Industries, Ltd. is a global leader in the manufacture of commercial-
    and industrial use air conditioning systems and holds more than one-third of the market share in Japan. The Company is also one of the leaders in fluorochemicals industry, with approximately 20% share of the world market.
    Daikin boasts an unparalleled combination of mechanical, electronic, and chemical expertise as well as robust R & D capabilities. The Company is continued to leverage these strengths to create new, innovative products and flexible, highly efficient production systems.
    Daikin is a dynamic global company with a well-established presence in five major areas; Japan, China, Southeast Asia, Europe, and North America. Thus, Daikin is poised to excel in an increasingly borderless business environment.

  For more information, please contact
     Daikin Industries, Ltd.
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