International. Daikin has been analyzing different strategies to combat the industrial crisis and find a recovery in the market. Your virus-eliminating air purifiers will be one of your flags.
For this fiscal year Daikin estimates that its group operating profit will fall 44% to 150 billion yen ($1.39 billion), after a 4% drop in fiscal 2019. However, the company has been developing different plans to face the coming months with the establishment of some new projects.
President Masanori Togawa established six "emergency projects" for the company: reform in procurement, production, inventory and logistics; improve marketing to maintain prices and capture market share; developing new products; cut fixed costs; set priorities for large investments; and raising capital.
Daikin's "proactive" measures include a focus on air purifiers that use patented technology to kill bacteria and viruses, as Togawa sees a growing global demand for better air quality and circulation. More inquiries about such products are coming from Singapore and other markets as the coronavirus spreads.
Daikin is stepping up outsourced production of these purifiers in China and aims to sell 550,000 units in fiscal 2020, more than 30% more than the previous year. It is also considering manufacturing them at its plant in Malaysia to gain an advantage over rivals.
As for its main air conditioners, the company will increase e-commerce marketing in China and focus on high-performance units that are considered to have antibacterial effects.
Investors approve of the direction Daikin is taking. The company's shares gained 16% since the earnings briefing, beating the Nikkei Stock Average's 10% rise and approaching the year-to-date high of the stock since early February.
Daikin "has worked out growth projects and is implementing them," said Taku Ouchi of SMBC Nikko Securities. "This suggests that their competitiveness will increase further in the post-coronavirus world."
Daikin has built a track record of growing profits after crises. In fiscal year 1993, the company recorded its first red ink in 17 years due to the collapse of the Japanese economic bubble, as well as the maturation of the domestic market.
Daikin changed things by improving the productivity of domestic plants. The company also launched the world's first humidity-regulated room air conditioner that didn't need a water supply.
For the fiscal year that just ended, sales are 2.5 times the turnover in fiscal year 2009, thanks to a series of acquisitions. Operating profit increased sixfold during that period.
Source: Nikkei.
