Daikin Industries : Brief Report on the Settlement of Accounts (Consolidated) for the Business Year Ended March 31, 2022 (J-GAAP)

Member, Financial Accounting Standards Foundation

Brief Report on the Settlement of Accounts (Consolidated) for the Business Year Ended March 31, 2022 (J-GAAP)

								May 10, 2022
Name of Listed Company: Daikin Industries, Ltd.				Listed on TSE
Code No.: 6367
(URL: https://www.daikin.co.jp/)
Representative:	Masanori Togawa, President and CEO
Contact:	Motoshi Hosomi,
	General Manager of the Corporate Communication Department of the Head Office
	(Tel.: [phone])
Planned date of Ordinary General Meeting of Shareholders: June 29, 2022
Planned date of start of dividend payment:		June 30, 2022
Planned date of the filing of securities report:		June 29, 2022
Preparation of supplementary explanatory materials for the settlement of accounts: Yes
Holding briefings on the settlement of accounts: Yes (for institutional investors and analysts)
1. Consolidated Business Results for the Fiscal Year Ended March 31, 2022
(From April 1, 2021, to March 31, 2022)
(1) Consolidated Business Results			Note: Amounts less than one million yen are truncated.
					Percentages indicate year-over-year increases/decreases.
		Net sales		Operating profit	Ordinary profit	Profit attributable to
			owners of parent
Fiscal Year ended		Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%
March 31, 2022		3,109,106	24.7	316,350	32.6	327,496	36.3	217,709	39.3
March 31, 2021		2,493,386	-2.2	238,623	-10.1	240,248	-10.7	156,249	-8.5

Note: Comprehensive income was ¥366,141 million (28.5%) for the fiscal year ended March 31, 2022, and ¥284,851 million (288.5%) for the fiscal year ended March 31, 2021.

			Ratio of earnings	Ratio of ordinary
		Diluted earnings	for the fiscal year
	Earnings per share	profit to total	Operating margin
	per share	to shareholders'
		assets
			equity
Fiscal Year ended	Yen	Yen	%	%	%
March 31, 2022	743.88	743.46	12.0	9.3	10.2
March 31, 2021	533.97	533.66	10.1	8.1	9.6

(Reference) Equity in earnings of affiliates was ¥1,401 million for the fiscal year ended March 31, 2022, and ¥7 million for the fiscal year ended March 31, 2021.

(2) Consolidated Financial Position

	Total assets	Net assets	Equity ratio	Net assets
	per share
	Millions of yen	Millions of yen	%	Yen
As of March 31, 2022	3,823,998	2,008,109	51.5	6,729.73
As of March 31, 2021	3,239,662	1,698,495	51.4	5,691.85

(Reference) Equity capital was ¥1,969,686 million as of March 31, 2022, and ¥1,665,688 million as of March 31, 2021.

Daikin Industries, Ltd. (6367), Brief Report on the Settlement of Accounts (Consolidated) for the Fiscal Year Ended March 31, 2022 (J-GAAP)

(3) Consolidated Cash Flows

	Cash flows from	Cash flows from	Cash flows from	Cash and cash
	equivalents at end of
	operating activities	investing activities	financing activities
	period
Fiscal Year ended	Millions of yen	Millions of yen	Millions of yen	Millions of yen
March 31, 2022	245,071	(180,789)	(48,698)	717,802
March 31, 2021	374,691	(159,666)	98,942	662,267

2. Dividends

		(Annual) Dividend per share			Total cash	Dividend		Ratio of
							dividends for		dividends to net
							payout ratio
	1Q-end	2Q-end	3Q-end	Year-end	Total		the fiscal year		assets
		(Consolidated)
							(Total)		(Consolidated)
Fiscal Year ended	Yen	Yen	Yen	Yen	Yen		Millions of yen	%	%
March 31, 2021	―	80.00	―	80.00	160.00	46,822	30.0	3.0
March 31, 2022	―	90.00	―	110.00	200.00	58,536	26.9	3.2
Fiscal Year ending	―		―
March 31, 2023	100.00	100.00	200.00			25.7
(forecast)

3. Consolidated Business Forecast for the Fiscal Year Ending March 31, 2023

(From April 1, 2022, to March 31, 2023)

Note: Percentages indicate year-over-year increases/decreases.

	Net sales		Operating profit	Ordinary profit	Profit attributable to	Earnings per
		owners of parent	share
	Millions		%	Millions	%	Millions	%	Millions	%	Yen
	of yen		of yen	of yen	of yen
First half	1,710,000		9.7	200,000	3.8	203,000	3.1	140,000	0.6	478.33
Full year	3,380,000		8.7	340,000	7.5	345,000	5.3	228,000	4.7	779.00

*Notes

1. Changes in Significant Subsidiaries during the Period (Changes in specified subsidiaries resulting in change in scope of consolidation): None
2. Changes in Accounting Policies, Changes in Accounting Estimates, and Retrospective Restatement
3. 1. Changes in accounting policies relating to revisions to accounting standards, etc.: Yes
   2. Changes in accounting policies other than (i) above: None
   3. Changes in accounting estimates: None
   4. Retrospective restatement: None
4. Number of Shares Issued (common stock)
5. 1. Number of shares issued at end of period (including treasury shares)

As of March 31, 2022	293,113,973 shares
As of March 31, 2021	293,113,973 shares
(ii) Number of treasury shares at end of period
As of March 31, 2022	429,774 shares
As of March 31, 2021	469,595 shares

1. Average number of shares outstanding during the period

Fiscal Year Ended March 31, 2022	292,666,743 shares
Fiscal Year Ended March 31, 2021	292,620,665 shares

Daikin Industries, Ltd. (6367), Brief Report on the Settlement of Accounts (Consolidated) for the Fiscal Year Ended March 31, 2022 (J-GAAP)

(Reference) Summary of Non-Consolidated Business Results for the Fiscal Year Ended March 31, 2022 (From April 1, 2021, to March 31, 2022)

(1) Non-Consolidated Business Results			Note: Percentages indicate year-over-year increases/decreases.
	Net sales		Operating profit	Ordinary profit	Profit
Fiscal Year ended	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%
March 31, 2022	681,899	21.1	60,048	68.3	170,705	69.6	153,800	75.3
March 31, 2021	563,243	-4.3	35,675	-33.8	100,673	-34.3	87,720	-38.4
	Earnings per share	Diluted earnings
	per share
Fiscal Year ended		Yen		Yen
March 31, 2022		525.51		525.20
March 31, 2021		299.77		299.60
(2) Non-Consolidated Financial Position
	Total assets	Net assets		Equity ratio		Net assets
			per share
	Millions of yen	Millions of yen		%		Yen
As of March 31, 2022	1,814,520	1,021,203		56.1		3,480.34
As of March 31, 2021	1,683,011	924,161		54.8		3,151.01

(Reference) Equity capital was ¥1,018,656 million as of March 31, 2022, and ¥922,141 million as of March 31, 2021.

The Brief Report on the Settlement of Accounts is outside the scope of audit by a certified public accountant or an audit corporation.

Explanation about the Appropriate Use of the Business Forecast and Other Noteworthy Points

• The business forecasts are based on information currently available to Daikin Industries, Ltd. (the "Company") and certain assumptions that are deemed reasonable. Actual results may differ significantly from these forecasts. For the basis of presumption of the business forecast and the notes on its use, please refer to "(4) Business Forecast for the Future" of "1. Overview of Operating Results, etc."
• The Company plans to hold a briefing on business results for institutional investors and analysts on Wednesday, May 11, 2022. Documents and materials distributed in this briefing will be posted on the Company's website by the time that the briefing starts.

Daikin Industries, Ltd. (6367), Brief Report on the Settlement of Accounts (Consolidated) for the Fiscal Year Ended March 31, 2022 (J-GAAP)

Content of Attachment
1. Overview of Operating Results, etc...........................................................................................................	2
(1)	Overview of Operating Results for the Fiscal Year Ended March 31, 2022..........................................	2
(2)	Overview of Financial Position for the Fiscal Year Ended March 31, 2022 .........................................	4
(3)	Overview of Cash Flows for the Fiscal Year Ended March 31, 2022....................................................	5
(4)	Business Forecast for the Future ...........................................................................................................	5
(5)	Basic Policy on Profit Distribution and Dividends for the Fiscal Year Ended March 31, 2022, and
	the Fiscal Year Ending March 31, 2023 ................................................................................................	6
2. Basic Stance Regarding Choice of Accounting Standards ........................................................................	6
3. Consolidated Financial Statements and Primary Notes .............................................................................	7
(1)	Consolidated Balance Sheet ..................................................................................................................	7
(2)	Consolidated Statement of Income and Consolidated Statement of Comprehensive Income ...............	9
	(Consolidated Statement of Income)..................................................................................................	9
	(Consolidated Statement of Comprehensive Income)......................................................................	10
(3)	Consolidated Statement of Changes in Equity ....................................................................................	11
(4)	Consolidated Statement of Cash Flows ...............................................................................................	13
(5)	Notes to Consolidated Financial Statements .......................................................................................	15
	Notes on the Premises of the Company as a "Going Concern"...........................................................	15
	Changes in Accounting Policies ..........................................................................................................	15
	Additional Information........................................................................................................................	15
	Segment Information, etc. ...................................................................................................................	16
	Per Share Information .........................................................................................................................	20
	Significant Subsequent Events ............................................................................................................	20

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Daikin Industries, Ltd. (6367), Brief Report on the Settlement of Accounts (Consolidated) for the Fiscal Year Ended March 31, 2022 (J-GAAP)

1. Overview of Operating Results, etc.

(1) Overview of Operating Results for the Fiscal Year Ended March 31, 2022

In the fiscal year ended March 31, 2022 (fiscal 2021), economic activities continued to resume in various countries in conjunction with rising vaccination rates, but the overall world economy grew slowly due to resurgences of the coronavirus (COVID-19), disruptions to logistics networks, and the rising prices of goods, including energy prices. In the U.S. economy, despite the resurgence of infections and growing inflationary pressure, economic policies proved successful, and the economic climate was strong. In the European economy, household demand rapidly recovered due to the resumption of economic activities following vaccination progress. However, from autumn onward, the number of infections rose again, and the prices of goods climbed, slowing the pace of demand growth. The economies of Asia and emerging countries were affected by infection trends and activity restriction measures, and while economic conditions varied from country to country, the regional economies saw only a gradual recovery overall. The Chinese economy saw an increase in exports and new infrastructure investment by the government during the first half of the fiscal year, but a resurgence of COVID-19 in the second half of the fiscal year resulted in the government putting severe activity restrictions in place that exerted downward pressure on personal consumption, and the economy experienced a slowdown. The growth of the Japanese economy stagnated due to sluggish service consumption caused by the spread of infections as well as the decrease in production due to supply constraints.

In such a business environment, the Daikin Group responded flexibly and speedily to changes in the environment and strove to improve profitability with an "aggressive" and "challenging" mindset that anticipates future changes and is grounded in a lean, robust management structure. Specifically, we worked to build a flexible production and supply system that can respond to changes in demand, increase market shares by expanding sales of new products that meet new needs, implement total cost reductions such as material substitution from copper to aluminum in response to soaring raw material prices, promote sales price policies by introducing differentiated products that are recognized for their value by the market and customers, reduce fixed costs, and improve logistics efficiency.

In addition, we formulated the strategic management plan "Fusion 25" with a target year of the fiscal year ending March 31, 2026, and implemented initiatives based on nine key themes, including the three growth strategy themes of the "Challenge to achieve carbon neutrality," "Promotion of solutions business connected with customers," and "Creating value with air."

The Daikin Group's net sales increased by 24.7% year over year to ¥3,109,106 million for the fiscal year under review. As for profits, operating profit increased by 32.6% to ¥316,350 million, ordinary profit increased by 36.3% to ¥327,496 million, and profit attributable to owners of parent increased by 39.3% to ¥217,709 million.

Operating results by business segment are as follows:

(i) Air-Conditioning and Refrigeration Equipment

Overall sales of the Air-Conditioning and Refrigeration Equipment segment increased by 24.4% year over year to ¥2,828,499 million. Operating profit increased by 26.6% to ¥282,404 million.

In the Japanese commercial air-conditioning equipment market, while the impact of COVID-19 remained, industry demand recovered in comparison to the previous fiscal year, when the market suffered a major drop, and resulted in year-over-year growth. The Group reinforced product appeal by launching new products, such as the "VRV" and "SkyAir" series, that respond to the air conditioning industry's issue of a shortage of installation engineers by simplifying construction work and ensuring consistent construction quality. We also issued proposals for improving environments to tackle customers' air-related problems by combining the Group's ventilation and disinfection products, such as the "Heat Reclaim Ventilator" total heat exchanger unit and the "Commercial Streamer Air Purifier," with air-conditioning systems. As a result of the product lineup reinforcement and proposal expansion, net sales of commercial air-conditioning systems increased year over year.

In the Japanese residential air-conditioning equipment market, industry demand declined year over year due to the effects of the long rains and cool temperatures during the summer season, together with the subsiding of pent-up demand from people staying at home. The Group enhanced product appeal by launching a new model of the room air conditioner "Urusara X," which is equipped with proprietary functions such as waterless humidification, air supply ventilation, and exhaust ventilation, and by performing a model change for the room air conditioner "risora" with close attention paid to design. Air purifiers continued to enjoy solid demand, and we reinforced our product lineup with the launch of a new "UV Streamer Air Purifier," which combines the Daikin Group's proprietary Streamer air purification technologies with deep ultraviolet (UVC) LEDs and whose high wavelengths are effective at controlling viruses and bacteria. As a result of these efforts, net sales of residential air-conditioning systems increased year over year.

In the Americas, there was a period in the previous fiscal year when supply capacity was affected due to the spread of COVID-19 and partial shutdown of factories. In the fiscal year under review, however, despite the labor shortages and parts supply problems across North America, the Group steadily increased both production and sales as a result

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