Daikin Industries : Brief Report on the Settlement of Accounts (Consolidated) for the Three Months Ended June 30, 2022 (J-GAAP)

Member, Financial Accounting Standards Foundation

Brief Report on the Settlement of Accounts (Consolidated)

for the Three Months Ended June 30, 2022 (J-GAAP)

		August 2, 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 the filing of quarterly report:	August 3, 2022
Planned date of start of dividend payment:	―

Preparation of supplementary explanatory materials for the settlement of accounts for the first quarter: Yes

Holding briefings on the settlement of accounts for the first quarter: Yes (for institutional investors and analysts)

1. Consolidated Business Results for the Three Months Ended June 30, 2022

(From April 1, 2022, to June 30, 2022)

(1) Consolidated Business Results (Accumulated)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
Three months ended	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%
June 30, 2022	967,755	21.1	107,860	-1.3	109,515	-2.1	70,551	-10.3
June 30, 2021	798,975	37.4	109,254	100.4	111,859	102.9	78,628	137.5

Note: Comprehensive income was ¥207,854 million (134.8%) for the three months ended June 30, 2022, and ¥88,518 million (85.0%) for the three months ended June 30, 2021.

	Earnings per share	Diluted earnings
	per share
Three months ended	Yen	Yen
June 30, 2022	241.05	240.92
June 30, 2021	268.68	268.54

(2) Consolidated Financial Position

	Total assets	Net assets	Equity ratio
	Millions of yen	Millions of yen	%
As of June 30, 2022	4,078,630	2,170,394	52.2
As of March 31, 2022	3,823,998	2,008,109	51.5

(Reference) Equity capital was ¥2,127,644 million as of June 30, 2022, and ¥1,969,686 million as of March 31, 2022.

Daikin Industries, Ltd. (6367), Brief Report on the Settlement of Accounts (Consolidated) for the Three Months Ended June 30, 2022 (J-GAAP)

2. Dividends

			(Annual) Dividend per share
	1Q-end	2Q-end			3Q-end		Year-end	Total
	Yen	Yen			Yen		Yen	Yen
Fiscal Year ended March 31, 2022	―	90.00			―		110.00		200.00
Fiscal Year ending March 31, 2023	―
Fiscal Year ending March 31, 2023		100.00			―		100.00		200.00
(forecast)
Note: Revisions to the dividend forecast announced most recently: None

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	1,810,000		16.1	210,000	9.0	213,000	8.2	142,000	2.1	485.16
Full year	3,480,000		11.9	350,000	10.6	355,000	8.4	230,000	5.6	785.83

Note: Revisions to the consolidated business forecast announced most recently: Yes

*Notes

1. Changes in Significant Subsidiaries during the Three Months Ended June 30, 2022: None
2. Adoption of Accounting Treatment Specific to Quarterly Consolidated Financial Statement Preparation: Yes
3. Changes in Accounting Policies, Changes in Accounting Estimates, and Retrospective Restatement
4. 1. Changes in accounting policies relating to revisions to accounting standards, etc.: None
   2. Changes in accounting policies other than (i) above: None
   3. Changes in accounting estimates: None
   4. Retrospective restatement: None
5. Number of Shares Issued (common stock)
6. 1. Number of shares issued at end of period (including treasury shares)

As of June 30, 2022	293,113,973 shares
As of March 31, 2022	293,113,973 shares
(ii) Number of treasury shares at end of period
As of June 30, 2022	425,188 shares
As of March 31, 2022	429,774 shares

1. Average number of shares outstanding during the three months

Three Months Ended June 30, 2022	292,687,292 shares
Three Months Ended June 30, 2021	292,647,026 shares

Daikin Industries, Ltd. (6367), Brief Report on the Settlement of Accounts (Consolidated) for the Three Months Ended June 30, 2022 (J-GAAP)

The Brief Report on the Settlement of Accounts is outside the scope of quarterly review 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 "(3) Explanation of Future Forecast Information Such as Consolidated Business Forecast" of "1. Qualitative Information Regarding Settlement of Accounts for the Period under Review."
• The Company plans to hold a briefing on business results for institutional investors and analysts on Tuesday, August 2, 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 Three Months Ended June 30, 2022 (J-GAAP)

Content of Attachment
1. Qualitative Information Regarding Settlement of Accounts for the Period under Review........................	2
(1)	Explanation of Operating Results..........................................................................................................	2
(2)	Explanation of Financial Position .........................................................................................................	4
(3)	Explanation of Future Forecast Information Such as Consolidated Business Forecast.........................	5
2. 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)
	For the Three Months Ended June 30 .........................................................................................	9
	(Consolidated Statement of Comprehensive Income)
	For the Three Months Ended June 30 .......................................................................................	10
(3)	Consolidated Statement of Cash Flows ...............................................................................................	11
(4)	Notes to Consolidated Financial Statements .......................................................................................	13
	Notes on the Premises of the Company as a "Going Concern"...........................................................	13
	Notes on Significant Changes in Shareholders' Equity .......................................................................	13
	Adoption of Accounting Treatment Specific to Quarterly Consolidated Financial Statement
	Preparation ..........................................................................................................................................	13
	Additional Information........................................................................................................................	13
	Revenue Recognition ..........................................................................................................................	13
	Segment Information, etc. ...................................................................................................................	14
	Significant Subsequent Events ............................................................................................................	16

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Daikin Industries, Ltd. (6367), Brief Report on the Settlement of Accounts (Consolidated) for the Three Months Ended June 30, 2022 (J-GAAP)

1. Qualitative Information Regarding Settlement of Accounts for the Period under Review

(1) Explanation of Operating Results

In the three months ended June 30, 2022 (from April 1, 2022, to June 30, 2022), the overall world economy continued to recover, especially in personal consumption, as restrictions on economic activities eased. Meanwhile, the prolonged Russia-Ukraine situation and global inflation increased uncertainty about the future. In the U.S. economy, the favorable employment and income environment and brisk personal consumption due to the reversal of excess household savings supported the economy despite high inflation caused by supply constraints. In the European economy, although the economy was affected by the Russia-Ukraine situation and the contraction of trade transactions, it was supported by active personal consumption due to the reversal of excess savings. In Asia and emerging countries, the economic recovery was driven by strong personal consumption without the imposition of strict activity control measures and by strong exports to the United States. In the Chinese economy, while activity restrictions have been gradually eased in many cities since May, personal consumption has bottomed out, industrial production has picked up, and the economy appears to have escaped the worst phase, the future outlook remains uncertain. In the Japanese economy, although production and exports were down due to the impact of urban lockdowns in China, active personal consumption due to the easing of activity restrictions drove the economy.

To complete the strategic management plan "Fusion 25" formulated in the fiscal year ended March 31, 2022, the Daikin Group is working on measures under nine key themes, including the three growth strategy themes of "Challenge to achieve carbon neutrality," "Promotion of solutions business connected with customers," and "Creating value with air."

Under this business environment, we strived to minimize the impact of environmental changes on our business activities by closely following the progress of each region and business and responding to issues while assuming multiple scenarios for both upswings and downswings in our business. Specifically, we continued and strengthened our efforts for the following themes.

• Promote sales price policies by introducing differentiated products that are recognized for their value by the market and customers
• Strengthen sales and marketing capabilities in each business segment, including commercial air-conditioning equipment
• Promote variable cost reduction to cope with deteriorating raw material market conditions and soaring resource prices
• Improve efficiency of logistics costs to cope with further sharp rises in logistics expenses
• Streamline fixed costs while maintaining a balance between aggressive investment and improved profitability
• Strengthen procurement and supply capabilities over the medium term, with a view to the next fiscal year and beyond
• Generate results and profitability from large-scale capital investments

In addition, we have taken changes in the world as opportunities to build a strong corporate structure and generate results by setting challenging themes that will lead to the next leap forward by leveraging the Group's strengths, such as accelerating the achievement of carbon neutrality and utilizing digital technology.

The Daikin Group's net sales increased by 21.1% year over year to ¥967,755 million for the three months ended June 30, 2022. As for profits, however, operating profit decreased by 1.3% to ¥107,860 million, ordinary profit decreased by 2.1% to ¥109,515 million, and profit attributable to owners of parent decreased by 10.3% to ¥70,551 million, owing to the sharp rise in raw material prices, lockdowns in China, and other factors.

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 20.9% year over year to ¥889,254 million. Operating profit decreased by 5.5% to ¥94,483 million.

In the Japanese air-conditioning equipment market, industry demand was affected by both demand and supply factors, including postponement of capital investment amid an uncertain business environment, delays in on-site construction schedules due to shortages of semiconductors, parts, and materials, and a rebound from last year's demand from people staying at home in residential-use market, as both the commercial and residential markets were down year on year. Against this backdrop, the Group worked to minimize the impact by maintaining stable production and supply through the realization of a robust supply chain.

In the Japanese commercial air-conditioning equipment market, we have made more proposals in line with customers' air-related problems by combining the Group's ventilation and disinfection products with air-conditioning systems, such as the "SkyAir" and "VRV" series with greatly improved ease of installation, the "Heat Reclaim Ventilator" total heat exchanger unit and "UV Streamer Air Purifier." In this manner, we have strengthened our

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