Annual Report 2016 Fiscal Year Ended March 31, 2016
An
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AIK
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Our Group Philosophy .....................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
CSR (Corporate Social Responsibility) ...22
Financial Section
Eleven-Year Financial Highlights ...30
Financial Review ........................32
Consolidated Balance Sheet ......40
Consolidated Statement of Income ....................................42
Consolidated Statement of Comprehensive Income ...........43
Consolidated Statement of Changes in Equity ...................43
Consolidated Statement of Cash Flows ..............................44
Notes to Consolidated Financial Statements ................45
Independent Auditors Report ...72
Corporate Data .........................73
DaikinWorking to Increase Its Corporate Value through Business Expansion and Contributing to the
Sustainable Development of Society
Daikin Industries aims to become a Truly Global Excellent Company
and is accelerating its global business development. Along with this,
Daikin is drawing on the environment-related technologies it has accumulated to date
to expand its business activities and contribute to environmental preservation.
Beginning this fiscal year, Daikin has begun to implement its FUSION 20
strategic management plan. Under this plan, we will bring together our knowledge and
passion, and, by working to create new value for the atmosphere and the natural environment,
we will offer products and services that enrich the lives of our customers.
The world today confronts a wide range of issues, including the expansion in demand
for air-conditioning systems, especially in the newly emerging countries,
and the impact of this and other factors on climate change. Looking ahead,
by working toward the substantially wider use of products and services that conserve energy
and bring greater comfort to our lives, Daikin is endeavoring to find solutions
to social issues as it continues to grow and develop its business activities.
Forward-Looking StatementsThis 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
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 Group1. Flexible Group Harmony2. 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 Trust1. Be Open, Fair, and Known to Society2. 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
Development2. Pride and Loyalty3. Passion and Perseverance
9 Be Recognized Worldwide by Optimally Managing the Organization and its Human Resources, under Our Fast & Flat Management System1. Participate, Understand, and Act2. Offer Increased Opportunities to Those who Take on Challenges3. Demonstrate Our Strength as a Team Composed of Diverse Professionals
10 An Atmosphere of Freedom, Boldness, and Best Practice, Our Way
Our Group Philosophy
1DAIKIN INDUSTRIES, LTD. ANNUAL REPORT 2016
Financial HighlightsDaikin Industries, Ltd. and Consolidated Subsidiaries Years Ended March 31
Millions of yen
2015 2016
Operating Results (for the year):
Net sales 1,915,014 2,043,691
Gross profit 649,902 711,576
Operating income 190,588 217,872
Net income attributable to owners of parent 119,675 136,987
Cash Flows (for the year):
Net cash provided by operating activities 160,423 226,186
Net cash used in investing activities (77,331) (105,493)
Free cash flow (Note) 83,092 120,693
Net cash used in financing activities (83,073) (85,422)
Financial Position (at year-end):
Total assets 2,263,990 2,191,105
Total shareholders equity 1,024,725 1,014,409
Per Share Data (yen):
Net income (basic) 410.19 469.23
Shareholders equity 3,511.34 3,473.54
Cash dividends 100.00 120.00
Cash flow per share 285 413
Ratios (%):
Gross profit margin 33.94% 34.82%
Operating income margin 9.95 10.66
Return on shareholders equity (ROE) 13.10 13.44
Shareholders equity ratio 45.26 46.30
Note: Free cash flow = Net cash provided by operating activities + net cash used in investing activities.
Operating Income and Operating Income Margin
0
60
120
180
12
9
0
3
6
240
2012 2013 2014 2015 2016
( 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) (%)
2015 20162012 2013 2014
Net Sales Gross Profit Gross Profit Margin
ROE
0
3
6
9
12
15
(%)
2012 2013 2014 2015 2016
2
At a Glance
0
500
1,500
200
0
50
1,000 100
150
2,000
2012 2013 2014 2015 2016
193.81,828.0
( billion) ( billion)
0
60
120
24
16
8
0
180
2012 2013 2014 2015 2016
162.3
20.6( billion) ( billion)
0
10
20
4
2
1
0
40
330
2012 2013 2014 2015 2016
32.42.4
( billion) ( billion)
0
5
15
0.8
0
0.2
10 0.4
0.6
20
2012 2013 2014 2015 2016
16.50.1
( billion) ( billion)
Room air-conditioning systems 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 Medium- and low-temperature air-conditioning
systems Absorption refrigerators Humidity-adjusting external air-processing units Air purifiers Water chillers Air-handling units Air filters Marine-type container refrigeration
Fluorocarbons Fluoroplastics Fluoroelastomers Fluoropaints Fluoro coating agents Semiconductor-etching products Water and oil repellent agents Mold release agents Fluorinated oils Pharmaceuticals and intermediates Dry air suppliers
Oil hydraulic pumps Oil hydraulic valves Cooling equipment and systems Inverter controlled pump motors Hydrostatic transmissions Centralized lubrication units and systems
Warheads for Japans Ministry of Defense Warhead parts for guided missiles Home-use oxygen therapy equipment
Since becoming the first in Japan to manufacture packaged air-conditioning systems in 1951, Daikin has supported comfortable living based on the strengths of technologies that it has itself nurtured as the worlds sole manu-facturer to create a full line of products from refrigerants to air conditioners.
In 1933, Daikin was the first in Japan to engage in research on fluorinated refrig-erants. Today, our activities range from research and development to commer-cialization, and we offer a lineup of more than 1,800 fluorine compounds.
Daikins unique hydraulic technologies offer outstanding energy-conservation performance and are contributing to the development of industry by unleashing the potential of power control.
Daikins superior machining and quality control technologies are used in the production of defense-related products and other industries where high levels of precision and performance are criti-cal.
Major Products DescriptionNet Sales and Operating Income
Air-Conditioning 89.5% Chemicals 7.9%
Oil Hydraulics 1.6%
Defense 0.8%
Percentage of Net Sales E
Air-Conditioning
Chemicals
Oil Hydraulics
Defense
3DAIKIN INDUSTRIES, LTD. ANNUAL REPORT 2016
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