Presentation of Fusion 20

【The Strategic Management Plan】
FUSION 20
Co-create New Value in the Air and Environment Fields
with Wisdom and Passion
June 3, 2016
Daikin Industries, Ltd.
Contents
I.
Fusion 15 Highlights
II. Goals and Mid-term Implementation Plan
III. Group Strategies
IV. To Contribute to Society as a Company
2
Fusion 15 Achievements
• Despite a severe business environment, Daikin achieved the FY 2015 quantitative target
(operating income) in the F15 latter-half 3-year plan one year ahead of schedule
• Operating income margin improved significantly by expanding sales through fundamental
reinforcement of sales and marketing capabilities and reducing total costs Group-wide
• We also actively contributed to the resolution of global warming and other social issues through
our business operations such as the world’s first application of R32, a next-generation
refrigerant with low global warming potential. The business expanded globally with expansion
and penetration of inverter air conditioners
FY 2010
Result
(¥1B)
FY 2015
Result
Fusion 15
Target
1,160.3
2,043.7
2,050.0
Operating income
75.5
217.9
190.0
Operating income
margin
6.5%
10.7%
9.3%
ROA
1.7%
6.3%
6.0%
ROE
FCF
4.0%
13.4%
13.0%
+112.3
+217.3
+180.0
(2008–10 cumulative)
(2013–15 cumulative)
(2013–15 cumulative)
261.0
250.0
Net sales
(3-year cumulative)
Investment
(3-year cumulative)
3
AC Business Net Sales by Region
Net sales grew in all regions of the world thanks to the launch of high valueadded products and reinforced dealer development
(¥1B)
Europe
213.8
2010
251.3
Japan
Hit by a downturn in the real
estate market but expanded
sales and profit by focusing
on direct sales and launching
high value-added products in
the residential market
2015
Americas
Market recovery was
delayed, but secured
revenue by re-strengthening
sales network and reforming
fixed-cost structure
ME/Africa
25.0
2010
364.6
416.9
Entered the residential ducted market
through Goodman acquisition (2012).
Promoted differentiation by launching
inverter products. Started
construction of a new plant to
strengthen business foundation
2010
China
313.6
162.1
65.2
2010
2015
496.3
Launched industry-leading
energy-saving products.
Expanded sales in mature
market by developing powersaving solutions business to
meet customer needs
Asia/Oceania
284.7
2015
Expanded business in the Turkish and
Central Asian markets through Airfel
acquisition (2011). Established a sales
company in Saudi Arabia
2015
149.4
2010
2015
89.7
2010
2015
Expanded sales significantly by
cultivating dealers and developing
residential air conditioners that meet
the local market needs of each
country. Achieved No. 1 sales in India
(FY 2015) and Vietnam (FY 2014).
Established 2 sales companies in
Indonesia
4
AC Business Net Sales by Region
We established our business foundation through a major acquisition in the U.S.
and reinforcement of our dealer network in Asia in addition to growth in sales
and profit in China. We achieved balanced growth in earning power in the major
regions
<AC Business Net Sales Breakdown>
(¥1B)
Middle
East/
Asia/
Oceania Africa
25
149.4
(3%)
(15%)
Asia/
Oceania
Japan
364.6
(36%)
Europe FY 2010
213.8 ¥1,004.6B
(21%)
Americas
China
89.7
162.1
(9%)
(16%)
284.7
(16%)
Europe
251.3
(14%)
Middle
East/
Africa
65.2
(3%)
Japan
416.9
(23%)
FY 2015
¥1,828.0B
Americas
China
313.6
(17%)
496.3
(27%)
5
(Reference) Performance
Despite drastic changes in the economic environment, Daikin has achieved tremendous
growth and development over the past 10 years. We achieved a V-shaped recovery after
the bankruptcy of Lehman Brothers and increased sales and profit for 6 consecutive
years since FY 2010. Net sales and operating income have hit record highs for 3
consecutive years since FY 2013.
Fusion 05
Fusion 10
Fusion 15
Become an attractive
company that draws
together people, capital,
and information
Net sales
(¥1B)
Achieved the global No. 2 position
in the main business and market
capitalization target of ¥1T, thereby
building a business foundation for
future growth
25,000
2,500
20,000
2,000
15,000
1,500
■ Expanded the environmentrelated business
• Advanced the inverter strategy
• Heat Pump Heating business
■ Achievements in alliances,
partnerships, and M&A
• Acquired OYL Industries (2006)
• Acquired Rotex (2008)
• Formed an alliance with Gree
(2008)
• Acquired Nippon Muki (2009)
1,291.1
128.1
Net Sales
1,915.0
190.6
1,787.7
156.5
1,160.3
75.5
Record-high net
sales and operating
income for 3
consecutive years
792.8
66.5
10,000
1,000
531.9
39.8
'00
2,050.0
190.0 150
1,500
1,000
100
500
50
Increased sales and profit for 6
consecutive years since FY 2010
Increased sales and profit for 14
consecutive years since FY 1994
0
0
■ Fully entered emerging markets and the
volume zone
■ Solutions/environmental innovation
Operating
■ Accelerated growth through alliances,
income
partnerships, and M&A
(¥1B)
• Acquired Goodman (2012)
• Acquired Solvay’s
2,000
gas business in
200
2,043.7
Europe (2015)
217.9
■ Established the TIC
(2015)
Bankruptcy of
Lehman Brothers
in Sept. 2008
Operating income
5,000
500
Become a truly global and
excellent company
Realize global No. 1 AC
business
'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11
'12
'13
'14
'15
0
0
F15 Target
6
Contents
I.
Fusion 15 Highlights
II. Goals and Mid-term Implementation Plan
III. Group Strategies
IV. To Contribute to Society as a Company
7
Fusion 20 Goals and Mid-term Implementation Plan
 To achieve sales of ¥3.0T and an operating income margin of 12%,
• Enhance existing businesses (AC, Chemicals, Filter)
Goals
• Expand new businesses (Heating/Water Heater, Energy Solutions,
(FY 2020)
Commercial Refrigeration, Next-generation Refrigerant/Gas,
IAQ/Air Environment (AE) Engineering)
(¥1B)
Mid-term
implementation
plan for FY 2018
FY 2015
Result
Net sales
FY 2018
Target
2,043.7
2,080.0
2,500.0
Operating income
217.9
220.0
270.0
Operating income
margin
FCF (3-year cumulative)
10.7%
10.6%
10.8%
+217.3
+270.0
ROE
13.4%
13.5%
Exchange rate
Investment
plan
FY 2016
Plan
USD1=JPY120
EUR1=JPY133
RMB1=JPY18.9
• Actively make investments mainly
in North America and Asia in
prioritized order
USD1=JPY110
EUR1=JPY125
RMB1=JPY17.0
USD1=JPY110
EUR1=JPY125
RMB1=JPY17.0
Investment
plan
FY 2016–18
(3-year cumulative)
325.0
8
Contents
I.
Fusion 15 Highlights
II. Goals and Mid-term Implementation Plan
III. Group Strategies
IV. To Contribute to Society as a Company
9
12 Group Strategies
Basic approaches
Existing business
domains
(AC/Chemicals/Filter)
New business
domains/structure
(Environment/energy
IAQ/AE Engineering)
Technologies and
monozukuri
Corporate
management
Unique corporate
philosophy
12 Group strategies
1) AC in North America
3) Chemicals
2) AC in Asia
4) Filter
5) New businesses to quickly produce results
Heating/Water Heater
Energy Solutions
6) Strategic businesses in the long term
Commercial Refrigeration
Next-generation Refrigerant/Gas
IAQ/Air Environment (AE) Engineering
7) Differentiated technologies/products with the TIC
8) Enhanced monozukuri in the AC business
9) Lean and competitive fixed-cost structure
10) Optimal inventory aiming at cash flow maximization
11) Financial operations standardization and IT integration
12) Enhanced HR based on People-Centered Management
10
1) AC Business in North America
Join the top group in the world’s largest market of North America by leveraging
Daikin’s core environmental technologies and reinforcing development of
unique local products, localized production, and our sales network
<Policy by market>
Residential
 Further expand sales and improve profitability of residential
ducted unitary products
 Fully enter the premium unitary market
 Instill a new AC culture using ductless products and controls
Light
commercial
 Obtain the No. 1 share in the VRV market by winning designbuild projects
 Expand rooftop product lineup to fully enter the market
Applied
 Expand sales in the mid-size market by introducing
differentiated products such as integrated control systems
for VRV and Applied
 Develop business in the replacement market by reinforcing
owner-direct sales
<Common themes>
 Localize production in North America with the new Houston Plant and Mexico Plant
at the core
 Establish the North America R&D Center to reinforce development of unique local
products
 Provide high-quality service solutions utilizing Internet connectivity
11
2) AC Business in Asia
In the growing Asian market, maintain and expand the top market share by
implementing strategies for the 3 regions according to the development stage of
the business
<Policy by region>
Deepen the market
Expand the market
ASEAN Continents
ASEAN Emerging
Australia, Singapore, Thailand, Vietnam, etc.
Malaysia, Indonesia, Philippines, etc.
 Steadily capture the
growing middle class to
reinforce existing
business centering on
the commercial domain
 Tackle development of
new business fields such
as one-stop sales for
equipment and parts and
the Solutions business
India
 Capture the volume zone
through low-cost, speedy
development and
production at the
Malaysian factory
 Sell 1M residential air
conditioners, further
develop the VRV market,
and reinforce the Applied
business
 Horizontally develop
China’s know-how to
develop AC stores
 Expand the high-margin
Maintenance business
<Common themes>
 Reinforce cooling-only inverter products (residential multi-splits, VRV)
 Expand the Applied business in Asia with the Malaysian factory at the core
 Develop local products meeting the needs of the middle class through
marketing activities integrated with sales and development
 Enhance production capacity in ASEAN/Oceania and India in preparation for
business expansion
12
Other Regions: AC Business in China
Constantly create new markets and develop unique product and sales
strategies to accelerate business expansion. Positioning VRV (commercial
market), residential multi-split (residential market), and Applied (building
market) as strategic products, maintain overwhelming influence in all the
markets and continue growing as the top foreign brand
<Policy by market>
Residential
 Propose new lifestyle for 1.3B Chinese people with the New Life Multi
Series, which adds new functions to AC, to expand the multi-split market
 Develop PROSHOP strategy throughout China and establish our own userdirect proposal-type specialty store network centered on direct sales
 Expand sales/profit with strategy combining residential multi-split and RA
Commercial
 Capture all markets from large buildings to stores by launching new VRV
models
 Evolve heat pump heating technologies to capture cold regions with
opportunities sparked by environmental issues
 Expand sales with priority on replacement, stores, and offices, for which
demand is stable
Applied
<Common themes>
 Reinforce the large-sized heat source/refrigeration fields to become the
No. 1 Applied manufacturer
 Establish a cyclical business centering on the After Sales Service business
 Provide high-quality service and solutions based on advanced IoT
 Reinforce the Shanghai R&D Center as a global development base in addition to
product development for the Chinese market
 Expand in-house production of core parts and supply devices from China to the world
with the Shanghai and Suzhou factories at the core
13
3) Chemicals Business
Positioning promising markets such as automotive, ICT, and new energy as
priority fields, reinforce our revenue structure by promoting applications
development and commercializing hybrid and non-fluorine products
<Net sales: FY 2015: ¥162.3B → FY 2018: ¥200.0B>
Applications
development
Promote establishing de facto standards through
resource investment in developing growing markets and
adoption by industry-leading end-users
Marketing activities at key end-users
Solar cells, wind power
generation, shale gas,
new thermal
generation
Exploring future themes
Regenerative medicine, cell
treatments, unmet needs,
pharma intermediates, gas
pharmaceuticals
Applications/
trends to watch
Batteries (EV, PEHV, FCV)
lower fuel consumption,
lighter weight, self-driving
IoT devices, information
devices, displays, cable,
sensors
Priority fields
Automotive
ICT
New energy
Medical
Materials to
watch
Metal alternatives,
glass alternatives,
heat resistance, etc.
Surface modification,
encapsulant, low
dielectric constant, etc.
Weather resistance,
high strength,
acid resistance,
heat resistance, etc.
Non-adhesive,
chemical resistance, etc.
Hybrid/
non-fluorine
Enter the priority fields targeting materials with high growth
potential. Also, develop the midstream business centering on
core fluorine technology
14
4) Filter Business
Leveraging the Flanders (U.S.) acquisition, capture the pharmaceutical and other
high-end markets and strengthen our cost competitiveness to accelerate growth
of the Filter business as the third pillar of revenue following AC and Chemicals
<Net sales: FY 2015: ¥80.0B → FY 2018: ¥140.0B>
<3 main businesses and affinity>
<Air Filter business>
 Create synergy with Flanders (U.S.)
• Reinforce the U.S. high-end market with our expertise in PTFE
(Chemicals business) and equipment for pharmaceuticals
AC
• Deploy the know-how acquired in the U.S. globally utilizing AAF’s
sales network and brand power
IAQ
Refrigerants
(Indoor air quality)
3 pillars
Chemicals
Filter
Filter media
(PTFE)
• Develop cost competitiveness with wide-ranging product lineup
and mass-production efficiencies
<Power and Industry business>
 Backed by the rise of IAQ needs to remove PM2.5, etc.,
contribute to the resolution of environmental problems
such as control of air pollution
Strengthen the Aftermarket business and improve
profitability
<Ref.: Air filter equipment, etc.>
Fan filter units for pharmaceutical
Clean room filters for
semiconductors and LCD and medical clean room equipment
<Ref.: Power and Industry equipment, etc.>
Dust collection for gas turbines
Dust collection for large plants
15
5)-1 Heating/Water Heater Business
While maintaining our advantageous position in the heat pump heating market,
expand the Combustion Heating business
With Europe as our first priority due to its market size and business opportunities,
develop the Heating/Water Heater business
<Net sales: FY 2015: ¥120.0B → FY 2018: ¥160.0B>
<Europe>
<Global heating/water heater demand>
 Expand the Heat Pump + Combustion
Heating/Water Heater business
Top priority: France, UK, Germany, Italy, Turkey
 Obtain combustion products and technologies
and heating sales channels/service networks
through alliances and M&A
 Prompt market changes with hybrid heating/water
heaters
<Other regions>
グローバル暖房給湯需要
(¥100B)
20 （千億円）
2015年
15
2018年
2020年
10
5
0
Europe
China
North
Japan
America
ASEAN/
Oceania
ME/
Africa
Latin
India
America
Source: Estimates by Daikin
(not including district heating)
 NA:
Horizontally develop tankless (gas) hot water heaters
 China: Create a heat pump heating/water heater market
(provide solutions to environmental problems)
16
5)-2 Energy Solutions Business
In addition to selling stand-alone energy-saving equipment, expand business by
selling systems combining related equipment to realize further energy savings,
and cover the entire lifecycle centering on the After Sales Service business
<Net sales: FY 2015: ¥70.0B → FY 2018: ¥180.0B>
Energy-saving
systems
 Expand sales of energy-saving systems combining AC and
related equipment
• Combine our high energy-saving ventilation, AC, and controls
to achieve energy savings not possible with single pieces of
equipment
 Provide comprehensive systems relating to the heat quantity of
building frames and electrical facilities by leveraging alliances,
partnerships, and M&A
Energy Service
business
 Expand the business to earn revenue across the entire
equipment lifecycle
• Expand service products to retain customers, such as
proposals on energy use optimization and breakdown
prevention utilizing AirNet
• Demand response, ESCO, electricity aggregation, etc.
Energy Creation
business
 Take on the challenge of commercialization through verification
tests for micro-hydroelectricity generation, etc.
17
6)-1 Commercial Refrigeration Business
Leveraging our environmental and energy-saving technologies in AC, expand
business in Europe, the world’s second largest commercial refrigeration market,
where environmental regulations are being strengthened
<Net sales: FY 2015: ¥5.0B → FY 2018: ¥35.0B>
European
Commercial
Refrigeration
business
 Propose high value-added products combining energy-saving AC and
refrigeration equipment to major food chains and retail stores
 Acquire products, sales/service networks, and business know-how
• Create synergy with Zanotti*
*An Italian manufacturer of
Utilize its wide product range and sales/service networks commercial refrigeration
equipment (acquisition
in European countries
announced in Apr. 2016)
Reinforced business
foundation and
global development
 Strengthen the refrigeration technology foundation
Energy savings by inverter, technology for controlled atmospheres, etc.
 Horizontally develop experience and know-how accumulated in Europe in other
regions (China, Asia, etc.)
<<Ref.: Global refrigeration market>>
Region
breakdown (2015)
Transportation
Marine containers,
refrigerated trucks
Industrial
Food factories,
large refrigerated
warehouses
NA
Commercial
Small refrigerated
warehouses,
supermarkets,
restaurants, etc.
(24%)
Europe (19%)
China (17%)
Other
(Source: Research by Daikin)
 Approx. ¥4.0T worldwide (2015)
• Of this, the commercial market accounts
for approx. 60%
 Stricter environmental regulations in Europe
• Energy-saving regulations (from 2016)
• F-Gas Regulation (from 2020)
18
6)-2 Next-generation Refrigerant/Gas business
Achieve both environmental contributions and business growth by developing
low-GWP refrigerants to help mitigate global warming and increasing penetration
of equipment using these refrigerants
<Net sales: FY 2015: ¥16.0B → FY 2018: ¥20.0B>
 Select the most suitable refrigerant for each application and promote its market
penetration
Promote penetration of R32 for AC (split-type air conditioners, etc.)
evaluation items to research, develop,
 R&D for next-generation refrigerants and equipment Comprehensive
and select refrigerants
 Globally expand the Gas business in the Chemicals
Division (for automotive, AC, cold chain,
and other applications)
6)-3 IAQ/Air Environment (AE) Engineering business
Expand the business domain from air conditioning to AE engineering, create
spaces that meet the diverse air quality needs of customers, and initiate the
IAQ/AE Engineering business development with earnings from equipment,
systems, and services/engineering, moving away from stand-alone equipment
sales
<Net sales: FY 2015: ¥5.0B → FY 2018: ¥20.0B>
 Combined equipment sales (AC, ventilation, filter, etc.) meeting existing air quality needs
 Engineering business that realizes air environment promising safety/security
• Realize bioclean environments needed for the advanced biopharmaceutical market, etc.
 Create spatial value related to health/comfort
19
7) Differentiated Technologies/Products with the TIC
Strengthen collaboration inside and outside the company and create
technologies and differentiated products to drive expansion of existing and new
businesses. Deploy technologies developed at the TIC globally and quickly
create differentiated products at local bases close to the customer to meet
regional needs
 Develop differentiated products such as next-generation VRV. Explore energy-saving, reliable, and
low-cost basic technologies
 Acquire technologies and resources we lack from outside the company in the environment/energy,
IAQ/AE engineering, and hybrid/non-fluorine fields
• AC system for zero energy buildings (ZEB)
• Energy management and failure prediction with next-generation AirNet
China
that utilizes IoT and Artificial Intelligence (AI)
• Establish sensing technologies and evaluation methods to measure
correlations between air environment and human physiology
TIC
NA
Asia
 Strengthen the global AC development system
Japan
• Focus on strengthening development bases in China and NA
NA R&D Center
where engineering HR is abundant
• Strengthen marketing and product development capabilities at each base
Europe
8) Enhanced Monozukuri in the AC Business
Introduce IoT, Big Data analysis, and other advanced technologies to increase
productivity
 Establish highly efficient manufacturing that enables profitable small-scale production to meet
diverse needs
 With a base of localized production, establish a division of production operations to ensure global
total optimization
20
Contents
I.
Fusion 15 Highlights
II. Goals and Mid-term Implementation Plan
III. Group Strategies
IV. To Contribute to Society as a Company
21
To Contribute to Society as a Company
 世界の動き
Realize both solutions to social issues and business growth and development
 Achieve sustainable growth at Daikin and in society by creating social value
through business
 Conduct company activities with integrity through interactive communication
with society
World trends
Global cooperation
to fight climate
change
Paris Agreement
All countries agreed to
work together to restrain
climate change
Sustainable
development goals
United Nations
SDGs
Aim to secure healthy living
for everyone and realize
sustainable cities and
housing
Our business activities
 Environment/energy field
•Energy Solutions business
•Next-generation
Refrigerant/Gas business
 IAQ/AE Engineering field
•Filter business
•IAQ/AE Engineering business
 Fundamental efforts
to support value creation
• Enhance group governance
and risk management
• Further improve transparency
and soundness
• Enhance HR capabilities and
coexistence with communities
Create value for society
 Contribute to mitigating climate
change
• Reduce CO2 emissions from AC use,
which will increase with development
in emerging countries
• Reduce greenhouse effect of
refrigerants
Contribution of a 60-million-ton CO2/year
reduction (FY 2020 target)
 Contribute to the development of
sustainable cities
• AC and energy creation systems to
realize zero energy buildings (ZEB)
 Contribute to human health and
comfort
• Provide healthy living environments by
reducing hazardous chemical
substances and air pollution
22
Notes on forecast
This data is compiled for informational proposes and is not to be construed as a solicitation of any action.
This data (includes management plan) was compiled by Daikin Industries., Ltd. (the Company) based on reliable
information available at the time of compilation. It may include some risks and uncertainties. The Company is not
responsible for its accuracy or completeness.
The Company asks for your own discretion in using this data. The Company accepts no liability for any loss or
damage of any kind arising out of judgment for investment made solely relying on the business forecast or target
figures described in the data.