Daikin Industries' group operating profit for April-September probably grew 7 percent on the year to just shy of 150 billion yen (USD 1.31 billion), beating predictions thanks to strong sales of industrial air conditioners at home and abroad, as well as of chemicals used in making semiconductors. Daikin had predicted the tally would grow 2 percent year-on-year to 143 billion yen, a figure that would itself have marked a fifth consecutive record for the first half. Sales for the six-month period probably grew 12 percent to 1.17 trillion yen, likewise surpassing a forecast 8 percent rise to 1.13 trillion yen.
Air conditioning units for offices and stores contributed greatly to profits. At home, Daikin reaped results from doing more business through electrical workshops and the like, on top of its existing trade with wholesalers. Many enterprises also replaced units as part of efforts to improve factory conditions in the national campaign to overhaul Japanese work culture, bringing Daikin more sales. Sales of household units stalled, owing largely to prolonged summer rains in eastern Japan, but the strong showing by industrial units absorbed the lull. Profit from Daikin's Japanese air conditioner business apparently grew 10 percent.
Overseas, the company scored rapid gains in China and India. Operating profit in the China region grew about 10 percent on a local currency basis. Daikin stepped up business with contractors and others and captured demand for air conditioning in businesses and large, upper-class homes. In India, more customers bought air conditioners and maintenance checkups as a package, and sales there grew by about one-fifth. Daikin makes relatively high margins on maintenance checkups, so shipping more units greatly helps to boost profits. Business in North America was dull, and profit there probably inched down. Major hurricanes in the southern U.S. caused breaks in shipments there. Costs at factories new and old piled up temporarily as operations stepped up at Daikin's recently opened factory in the state of Texas that mainly makes household air conditioners. Profit from the chemicals segment apparently jumped nearly 60 percent to about 12 billion yen. Fluorine products, used in manufacturing semiconductors and as materials for fuel hoses in automobiles, performed well. The company sees operating profit for the year through March 2018 climbing 5 percent year-on-year to 243 billion yen, and sales rising 7 percent to 2.19 trillion yen. It is highly likely Daikin will upgrade that outlook based on its strong first half. But prices for metals including iron, used in air conditioning units' plating and other parts, and copper, a base material in their piping, are rising. Shifting that burden to product prices and cutting costs will present challenges for the company. – Nikkei Asian Review