Annual Report 2017Fiscal Year Ended March 31, 2017
Our Group Philosophy/ Process of Value Creation ...................... 1
Financial Highlights .................................. 2
At a Glance ............................................... 3
A Message from the CEO ......................... 4
Interview with the CEO ............................ 6
Review of Operations
Air Conditioning .................................... 10
Chemicals ............................................. 14
Oil Hydraulics ........................................ 16
Defense ................................................. 17
Corporate Governance ........................... 18
Directors, Audit and Supervisory Board Members, and Executive Officers ................................ 21
ESG Summary .......................................... 22
CSR (Corporate Social Responsibility) .... 24
Financial Section
Eleven-Year Financial Highlights ............... 32
Financial Review .................................... 34
Consolidated Balance Sheet .................. 42
Consolidated Statement of Income ........ 44
Consolidated Statement of Comprehensive Income ....................... 45
Consolidated Statement of Changes in Equity ............................... 45
Consolidated Statement of Cash Flows .......................................... 46
Notes to Consolidated Financial Statements ............................ 47
Independent Auditors Report ............... 73
Corporate Data ..................................... 74
Meeting Your Expectations and Earning Your Trust by Both Solving Problems of
Society and Expanding Our Business
Focusing on the air-conditioning and fluorochemicals business, Daikin Industries, Ltd. operates in more than 150 countries,
contributing to healthy and comfortable lives through the providing of air conditioners and a wide range of other products and services.
Constantly refining the atmosphere- and environment-related technologies that it has developed since its founding,
Daikin strives to both solve problems of society and expand its business. That is how Daikin Industries corporate value is born.
Under the FUSION 20 strategic management plan started in fiscal 2017, Daikin Industries is working to meet your expectations and earn your trust by contributing to the sustainable development
of global society through new value co-created by bringing together not only internal expertise of our Group
but also external expertise obtained via open innovation.
Forward-Looking Statements
This annual review contains statements regarding the future plans and strategies of Daikin Industries, Ltd. (the Company), as well as the Companys future performance. These statements are not statements of past facts but are based on judgments made by the Company on the basis of information known at the time. Therefore, readers should refrain from drawing conclusions based only on these statements regarding the future performance of the Company. The actual future performance of the Company may be influenced by economic trends, strong competition in the industrial sectors where it conducts its operations, foreign currency exchange rates, and changes in taxation and other systems. For these reasons, these forward-looking statements are subject to latent risk and uncertainty.
Contents
Strengths Heat pump technology
Inverter technology
Refrigerant control technology
Sales and service network
Development and production closest to market
Weaknesses Sales skewed towards
main products (air conditioners)
Opportunities Global cooperation on
climate change (Paris Agreement)
Setting of sustainable development goals (UN SDGs)
Threats Changes in de facto
standards for air conditioning
Our Group Philosophy
Process of Value Creation
Contribute to solving problems of customers and society while working to achieve sales of 3.0 trillion and an operating income margin of 12%
An enterprise
group that will
"Co-Create New
Value in the Air
and Environment
Fields"Create new value and contribute to the sustainable development of society through our business
Basic Approaches
ESG
Existing business domains(AC, Chemicals, Filters)
New business domains/structure(Environment/Energy, IAQ/AE Engineering)
Technologies and monozukuri
Corporate management
Unique corporate philosophy
1. AC in North America 2. AC in Asia3. Chemicals 4. Filters
5. New businesses to quickly produce results Heating/Water Heaters, Energy Solutions
6. Strategic business in the long-term Commercial Refrigeration, Next-generation Refrigerants/Gas, IAQ/Air Environment (AE) Engineering
7. Differentiated technologies/products with the Technology and Innovation Center
8. Enhanced monozukuri in the AC business
9. Lean and competitive fixed-cost structure10. Optimal inventory aiming at cash flow
maximization11. Financial operation standardization and IT
integration
12. Enhanced HR based on people-centered management
Corporate Governance, Environment, New Value Creation, Customer Satisfaction, Human Resources, Compliance Risk Management, Risk Management, CSR Promotion System, Respect for Human Rights, Supply Chain Management, Stakeholder Engagement, Regional Society
Air conditioning as
a part of societys infrastructure
enables the creation of comfortable
lives.
1. Create New Value by Anticipating the Future Needs of Customers 2. Contribute to Society with World-Leading Technologies 3. Realize Future Dreams by Maximizing Corporate Value 4. Think and Act Globally 5. Be a Flexible and Dynamic Group
1. Flexible Group Harmony 2. Build Friendly yet Competitive Relations with Our Business Partners to Achieve Mutual Benefit
6. Be a Company that Leads in Applying Environmentally Friendly Practices 7. With Our Relationship with Society in Mind, Take Action and Earn Societys Trust
1. Be Open, Fair, and Known to Society 2. Make Contributions that Are Unique to Daikin to Local Communities
8. The Pride and Enthusiasm of Each Employee Are the Driving Forces of Our Group1. The Cumulative Growth of All Group Members Serves as the Foundation for the Groups Development 2. Pride and Loyalty 3. Passion and Perseverance
9. Be Recognized Worldwide by Optimally Managing the Organization and its Human Resources, under Our Fast & Flat Management System
1. Participate, Understand, and Act 2. Offer Increased Opportunities to Those who Take on Challenges 3. Demonstrate Our Strength as a Team Composed of Diverse Professionals
10. An Atmosphere of Freedom, Boldness, and Best Practice, Our Way
Environmental Awareness 12 Group Strategies
Strategic Assumptions
SWOT
Strategy: FUSION 20 FY2021 Goals Direction for Group Development
When our products are used, a large amount of
electricity is consumed.
Reducing the impact on
climate change is a top-priority issue
for us.
1DAIKIN INDUSTRIES, LTD. ANNUAL REPORT 2017
Financial HighlightsDaikin Industries, Ltd. and Consolidated Subsidiaries Years Ended March 31
Millions of Yen
2016 2017
Operating Results (for the year):
Net sales 2,043,691 2,043,969
Gross profit 711,576 730,935
Operating income 217,872 230,769
Net income attributable to owners of parent 136,987 153,939
Cash Flows (for the year):
Net cash provided by operating activities 226,186 267,663
Net cash used in investing activities (105,493) (128,823)
Free cash flow (Note) 120,693 138,840
Net cash used in financing activities (85,422) (73,544)
Financial Position (at year-end):
Total assets 2,191,105 2,356,149
Total shareholders equity 1,014,409 1,111,636
Per Share Data (yen):
Net income (basic) 469.23 526.81
Shareholders equity 3,473.54 3,802.10
Cash dividends 120.00 130.00
Cash flow per share 413 475
Ratios (%):
Gross profit margin 34.82% 35.76%
Operating income margin 10.66 11.29
Return on shareholders equity (ROE) 13.44 14.48
Shareholders equity ratio 46.30 47.18
Note: Free cash flow = Net cash provided by operating activities + net cash used in investing activities
Operating Income and Operating Income Margin
0
50
150
200
15
100
12
9
0
3
6
250
2013 2014 2015 2016 2017
( billion) (%)
Operating Income Operating Income Margin
Net Sales, Gross Profit, and Gross Profit Margin
0
600
1,200
40
0
10
20
2,400
301,800
( billion) (%)
2016 20172013 2014 2015
Net Sales Gross Profit Gross Profit Margin
ROE
0
3
6
9
12
15
%
2013 2014 2015 2016 2017
2
At a Glance
Room air-conditioning systems Air purifiers Heat-pump hot-water-supply and room-heating
systems Packaged air-conditioning systems Multiple air-conditioning systems for office
buildings Air-conditioning systems for facilities and plants Absorption refrigerators Freezers Water chillers Turbo refrigerator equipment Air-handling units Air filters Industrial dust collectors Marine-type container refrigeration
Fluorocarbons Fluoroplastics Fluoroelastomers Fluoropaints Fluoro coating age
