[Company analysis] Daikin Industries, Ltd. (ダイキン工業)

「Daikin Industries, Ltd. (ダイキン工業)」is a company headquartered in Osaka Prefecture, a global manufacturer that focuses on the air conditioning business and chemical business. Currently,「Daikin Industries」 has the second largest air conditioner business in the world and the second largest market share in  fluorochemical product in the world. They have the world's top share in air conditioner. This company is operating in 150 countries around the world, and overseas sales account for 70%. In addition, 80% of all employees are working abroad. The number of consolidated employees is approximately 76,484.

 

1. Company Profile

2. Summary and Features

3. Major Business

4. Financial Information

 

 

 

1. Company Profile

 

※Unit is JPY million, as of 2019

Company name	Daikin Industries, Ltd.
Company name (Japanese)	ダイキン工業
Date of establishment	Saturday, October 25, 1924
Headquarters location	大阪市北区中崎西 2-4-12梅田センタービル
Capital	85,032
Consolidated sales	2,481,109
Consolidated operating profit	276,254
Consolidated total assets	2,700,890
Consolidated capital	1,446,849
Capital adequacy ratio	53.6%
Consolidated number of employees	76,484

 

 

 

2. Summary and Features

 
「Osaka Kinzoku Kogyosho, Ltd.」was founded by Yamada Akira(山田晁) in 1924, is the beginning of「Daikin Industry」. At the time of their founding, they were manufacturing radiator tubes for airplanes, and in 1951 they succeeded in developing the first packaged air conditioner in Japan. In 1963, the company name was changed from 「Osaka Metal Industry Co., Ltd.」to the current「Daikin Industries」

「Daikin Industries」is a company that is mainly recognized by general consumers for air conditioners for home use, but in fact, it is the company with the world's top share in the industrial air conditioner field. one of the features of this company is that it is the only manufacturer of air conditioning in the world that comprehensively develops everything from refrigerants to air conditioning equipment. Japan's market share of commercial packaged air conditioners utilizing "inverter technology" is approximately 40%.

Besides,「Daikin Industries」is the first company to start a fluorochemical business in Japan. Fluoride compounds are used in a variety of applications, from "fluorine resin", which dramatically improves battery performance (capacity and durability) of electric vehicles, to solar cells, semiconductor fields, and coating materials for smartphone touch panels.

As for the recent sales results, the total sales have increased from 500 billion yen in 2005 to 4 trillion yen. The reason for this rapid growth is M & A. In 2006,「Daikin Industries」purchased Malaysia's「OYL Industry」for 243.8 billion yen. Through this purchase,「Daikin Industries」could take dozens of OYL affiliates operating in the Americas, Europe, Asia, and China into subsidiaries, and through them, this company got the second largest market share in air conditioner in the world. 

In 2008,「Daikin Industries」purchased「ROTEX」which manufactures and sells heating equipment. In 2011, they acquired「AIRFEL」, a Turkish air conditioner manufacturer, and in 2012, they took over「Goodman」for 296 billion yen. As a result of these M & As, their sales was increased dramatically and the operating margin also become improved.

As for the breakdown of sales by「Daikin Industries」, 90% of the sales are from air conditioning and refrigerator business. This high sales ratio has remained unchanged for the past 10 years. The strategy adopted by this company is to concentrate management resources on the air conditioning department, aiming to become the top share manufacturer in the world in the air conditioning business. The equity ratio seems to be rather low at around 40%, but considering the fact that the equity ratio fell to around 30% at the time of the large-scale M & A conducted in 2007 and 2013, they somehow achieved positive trend.

 

 

 

3. Major Business

 

 ■ Air conditioner section
This is the core business of「Daikin Industries」, which handles room air conditioners, multi-systems for buildings, air conditioners, dehumidifiers, etc.

■ Chemical department
They are developing and deploying products for various applications centered on fluorine compounds.

■ Hydraulic machinery division
They mainly manufacture hydraulic equipment for excavators and hydraulic machines for ferris wheels.

■ Special machinery division
Based on micron precision processing technology and quality control ability, we are also expanding into the aerospace parts field.

 

 

 

4. Financial information

 

※Unit is JPY million

 

		2016	2017	2018
Consolidated sales		2,043,968	2,290,560	2,481,109
Consolidated operating profit		230,769	253,739	276,254
Consolidated total assets		2,356,148	2,489,953	2,700,890
Consolidated net assets		1,135,609	1,324,321	1,446,849
Breakdown of sales	Air conditioning and refrigerator business	1,835,276	2,052,884	2,222,172
	Chemicals business	156,754	183,147	200,790
	Others	51,837	54,529	58,145