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CORPORATE NEWS [latest news list] June 15, 2011
Strategic Management Plan [Target year: Fiscal 2015 (ending March 2016)]
Formulation of Fusion 15
Succeeding in the Paradigm Shift to Become a Truly Global and Excellent Company

Daikin Industries, Ltd. has formulated its strategic management plan Fusion 15 for the period of FY2011 to FY2015.

1. Basic Policy of the Next-term Strategic Management Plan

In the strategic management plan Fusion 15 with a target year of FY2015, themes are positioned as a growth scenario for succeeding in the era of paradigm shift, with 11 Group-wide Core Strategy Themes (details described below) defining the development direction and strategic policy. Through the execution of these themes, Daikin aims to become a truly global and excellent company. Specifically, Daikin will make collective Group-wide efforts to implement four New Growth Strategy Themes to incorporate the changes of the era as growth, four Management Constitution Reform Themes to succeed in the new era, and three Themes to Enhance HR Capabilities Based on People-Centered Management.
Furthermore, in response to the changes in the market environment following the Great East Japan Earthquake, Daikin has included in its business plan a theme to substantiate a unique energy control business to meet needs for electricity conservation.
In the execution of Fusion 15, Daikin intends to expedite the securing, development, and deployment of human resources necessary for business development and expansion in particular, as well as expressly defining highly acceptable and clear compensation levels and standards promoting localization of Group management at global bases, and personnel exchanges transcending companies and national borders.

2. Development Direction and Quantitative Targets

Quantitatively, Daikin aims to expand its business scale by capturing demand in emerging markets to achieve over ¥2 trillion in Group-wide net sales and an operating income ratio exceeding 10% in the target year FY2015. In the mid-term implementation plan for the first three years ending FY2013, Daikin has set the quantitative targets of ¥1.6 trillion in net sales and ¥130.0 billion in operating income.

  FY2010 actual results FY2013 plan FY2015 goals
Net sales ¥1,160.3 billion ¥1,600.0 billion Over ¥2,000.0 billion
Operating income (%) ¥75.5 billion (6.5%) ¥130.0 billion (8.1%) Over 10%
Overseas business ratio 61% 65% Over 70%
   ·   Air conditioning business: Daikin aims to achieve ¥1.9 trillion in net sales and a 10% share of the HVAC&R market in FY2015.
   ·   Chemicals business: Daikin aims to become a global No. 1, excellent company that leads applications development and expands the fluorochemicals market.

3. Details of 11 Group-wide Core Strategy Themes
[Four New Growth Strategy Themes: Innovation that incorporates the changes of the era as growth]
1) Fully enter emerging markets and the volume zone
Daikin intends to rapidly launch business in India and Brazil, both of which are top priority markets, and accelerate the pace of growth in the next generation of emerging markets, including Russia/CIS, Turkey, the Middle East, and Indonesia, in line with the economic growth of each country. Daikin aims to achieve an overseas business ratio higher than 70% and net sales of ¥300.0 billion in emerging markets in FY2015.

2) Develop a solutions business that meets customer needs
Daikin plans to improve and expand its after-sales service business while also expanding equipment sales for individual applications in Japan, the United States, Europe, and China. Daikin will strive to develop its solutions business by narrowing down products, proposal content, and target customers according to the market maturity of each region. Daikin aims to achieve net sales of ¥300.0 billion in the solutions business in FY2015.

3) Expand environment-related innovation business
With an aim to become a leading corporation in environmental management through consistent development of products and technologies to realize a more environmentally conscious society, Daikin intends to develop its heating and filter businesses into major businesses on a global scale. Furthermore, Daikin will realize new environment-related businesses utilizing opportunities presented by environmental regulations in various countries.

4) Accelerate growth through alliances, partnerships, and M&A
Aiming to accelerate business development in top priority markets, including emerging markets, and create synergy through the acquisition of peripheral technologies, Daikin will actively promote alliances, partnerships, and M&A to increase its dynamic corporate value.

[Four Management Constitution Reform Themes: Sophistication of the management platform to succeed in the new era]
1) Innovate product development, production, procurement, and quality capabilities
While establishing product development capabilities to meet customer needs around the world, Daikin will ensure optimized and best quality standards that earn customers' trust and attain a high level of customer satisfaction. Moreover, Daikin will establish a flexible global supply system through an optimum balance of centralized production and localized production, which is Daikin's strength.

2) Strengthen global marketing function
By rapidly developing marketing research Group-wide, Daikin intends to dramatically enhance its global marketing capabilities to rapidly build and execute strategy a half step ahead of competitors in such areas as entering new markets and generating new products and businesses.

3) Comprehensively develop capacity to utilize IT
Daikin plans to fundamentally enhance and innovate its IT systems Group-wide to support rapid response to sudden environmental changes and further management globalization. Daikin will establish an IT system that facilitates timely access to the necessary information based on uniform management criteria and contributes to prompt and highly accurate decision-making.

4) Fundamentally reinforce profitability
Daikin will prioritize cash-flow management that enables flexible and fast management through high earning capacity and secure earning capacity that generates profit even in the volume zone by achieving a break-even point of less than 75% and continuously reducing fixed-cost and variable-cost ratios. Furthermore, Daikin aims to attain a higher stock price and stable dividends by maximizing market capitalization in conjunction with achievement of performance targets.

[Three Themes to Enhance HR Capabilities Based on People-Centered Management]
1) Implement and sophisticate People-Centered Management, a source of Daikin Group's competitiveness
As concrete measures to link Our Group Philosophy to individual employee conduct, Daikin will hold training sessions on Our Group Philosophy for Group senior management and incorporate the degree of practice and realization of Our Group Philosophy and People-Centered Management into senior management evaluations and promotions.

2) Accelerate development of measures to secure and develop quality HR that go beyond past measures
To accelerate enhancement of HR capabilities, Daikin will make a concerted Group effort to build an HR system that places equal emphasis on securing, development/deployment, and evaluation/compensation. Specifically, Daikin plans to strengthen its recruiting activities capitalizing on its brand competitiveness as a leading global air conditioning company, establish global career paths for employees, deploy HR transcending countries and regions, and establish evaluation and compensation systems attractive to quality HR.

3) Speed up management localization and promote two-way communication between the head office and local bases
Daikin will accelerate localization of strategic functions such as marketing, financial strategy, and product development to enable each Group company to rapidly implement strategy flexibly and independently.

  For more information, please contact
     Daikin Industries, Ltd.
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