Daikin Industries : Brief Report on the Settlement of Accounts (Consolidated) for the Business Year Ended March 31, 2021 (J-GAAP)

Member, Financial Accounting Standards Foundation

Brief Report on the Settlement of Accounts (Consolidated) for the Business Year Ended March 31, 2021 (J-GAAP)

								May 11, 2021
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, 2021
Planned date of start of dividend payment:			June 30, 2021
Planned date of the filing of securities report:		June 29, 2021
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, 2021
(From April 1, 2020, to March 31, 2021)
(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, 2021		2,493,386	-2.2	238,623	-10.1	240,248	-10.7	156,249	-8.5
March 31, 2020		2,550,305	2.8	265,513	-3.9	269,025	-2.9	170,731	-9.7

Note: Comprehensive income was ¥284,851 million (288.5%) for the fiscal year ended March 31, 2021, and ¥73,322 million (-56.8%) for the fiscal year ended March 31, 2020.

			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, 2021	533.97	533.66	10.1	8.1	9.6
March 31, 2020	583.61	583.22	12.0	10.0	10.4

(Reference) Equity in earnings of affiliates was ¥7 million for the fiscal year ended March 31, 2021, and ¥166 million for the fiscal year ended March 31, 2020.

(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, 2021	3,239,662	1,698,495	51.4	5,691.85
As of March 31, 2020	2,667,512	1,462,591	53.8	4,904.46

(Reference) Equity capital was ¥1,665,688 million as of March 31, 2021, and ¥1,434,968 million as of March 31, 2020.

Daikin Industries, Ltd. (6367), Brief Report on the Settlement of Accounts (Consolidated) for the Fiscal Year Ended March 31, 2021 (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, 2021	374,691	(159,666)	98,942	662,267
March 31, 2020	302,166	(156,187)	(169,933)	321,151

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, 2020	―	80.00	―	80.00	160.00	46,811	27.4	3.3
March 31, 2021	―	80.00	―	80.00	160.00	46,822	30.0	3.0
Fiscal Year ending	―		―
March 31, 2022	90.00	90.00	180.00			29.8
(forecast)

3. Consolidated Business Forecast for the Fiscal Year Ending March 31, 2022

(From April 1, 2021, to March 31, 2022)

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	1,450,000		18.0	163,000	23.8	163,000	23.6	107,000	26.5	365.63
Full year	2,750,000		10.3	270,000	13.1	270,000	12.4	177,000	13.3	604.83

*Notes

1. Changes in Significant Subsidiaries during the Period: None
   (Changes in specified subsidiaries resulting in change in scope of consolidation)
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.: None
   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, 2021	293,113,973 shares
As of March 31, 2020	293,113,973 shares
(ii) Number of treasury shares at end of period
As of March 31, 2021	469,595 shares
As of March 31, 2020	529,837 shares

1. Average number of shares outstanding during the period

Fiscal Year ended March 31, 2021	292,620,665 shares
Fiscal Year ended March 31, 2020	292,546,158 shares

Daikin Industries, Ltd. (6367), Brief Report on the Settlement of Accounts (Consolidated) for the Fiscal Year Ended March 31, 2021 (J-GAAP)

(Reference) Summary of Non-Consolidated Business Results for the Fiscal Year Ended March 31, 2021 (From April 1, 2020, to March 31, 2021)

(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, 2021	563,243	-4.3	35,675	-33.8	100,673	-34.3	87,720	-38.4
March 31, 2020	588,263	3.2	53,897	10.6	153,255	8.2	142,518	15.1
	Earnings per share	Diluted earnings
	per share
Fiscal Year ended		Yen		Yen
March 31, 2021		299.77		299.60
March 31, 2020		487.16		486.84
(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, 2021	1,683,011		924,161		54.8		3,151.01
As of March 31, 2020	1,420,493		843,497		59.2		2,876.43

(Reference) Equity capital was ¥922,141 million as of March 31, 2021, and ¥841,611 million as of March 31, 2020.

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 (conference call) for institutional investors and analysts on Wednesday, May 12, 2021. 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, 2021 (J-GAAP)

Content of Attachment
1. Overview of Operating Results, etc...........................................................................................................	2
(1)	Overview of Operating Results for the Fiscal Year Ended March 31, 2021..........................................	2
(2)	Overview of Financial Position for the Fiscal Year Ended March 31, 2021 .........................................	4
(3)	Overview of Cash Flows for the Fiscal Year Ended March 31, 2021....................................................	4
(4)	Business Forecast for the Future ...........................................................................................................	5
(5)	Basic Policy on Profit Distribution and Dividends for the Fiscal Year Ended March 31, 2021, and
	the Fiscal Year Ending March 31, 2022 ................................................................................................	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 Presentation Methods .......................................................................................................	15
	Additional Information........................................................................................................................	15
	Segment Information, etc. ...................................................................................................................	16
	Per Share Information .........................................................................................................................	20
	Significant Subsequent Events ............................................................................................................	20

- 1 -

Daikin Industries, Ltd. (6367), Brief Report on the Settlement of Accounts (Consolidated) for the Fiscal Year Ended March 31, 2021 (J-GAAP)

1. Overview of Operating Results, etc.

(1) Overview of Operating Results for the Fiscal Year Ended March 31, 2021

In the fiscal year ended March 31, 2021 (fiscal 2020), the overall world economy slowed significantly as economic activity stagnated due to the global spread of the coronavirus (COVID-19).While some countries saw a recovery, there were also regions where the infection spread again, prolonging the impact of the disease. Although the U.S. economy slowed due to a decline in personal consumption in the first half of the period, it showed signs of recovery from the second half of the period as government economic measures and strong online sales provided support for consumption. The European economy was supported by recovery of exports, despite the continued slowdown in personal consumption due to prolonged restrictions on activities. In the economies of Asia and emerging countries, domestic demand was sluggish due to restrictions on activities, but there were signs of economic recovery, helped by gains in exports and government spending. The Chinese economy continued a recovery trend from quick resumption of economic activities and increases in exports and government infrastructure investment in the information and telecommunication and energy sectors. The Japanese economy, despite export gains to China and recovering production activities, experienced downward pressure from sluggish personal consumption.

In such a business environment, the Daikin Group launched cross-divisional projects, and focused on dealing with the COVID-19 pandemic in terms of business operations, including production, procurement, and sales. In particular, the Group worked to develop and launch new products related to air quality, such as air purifiers and ventilation products, by capitalizing on the growing awareness for the safety and assurance of indoor air quality and air environments. In addition, the Group worked to maintain its product supply system despite procurement being impacted from the sales networks, production sites, and suppliers in each country. Although market environments vary according to country and region, sales are returning to a recovery trend, particularly in residential air- conditioning equipment.

In addition, the Daikin Group set "Accelerating Our 3 Structures of Collaborative Innovation, Let Us Win in this Era of Change" (3 Structures of Collaborative Innovation: Collaborative Innovation with Customers, Collaborative Innovation with External Bodies, and Collaborative Innovation within the Group) as the slogan for its Annual Group Policy for 2020. The Group made efforts to strengthen sales and marketing capabilities; foster new product development; build flexible production and procurement systems; improve quality; enhance human resources capabilities; and reduce both fixed and variable costs in each region around the world.

The Daikin Group's net sales decreased by 2.2% year over year to ¥2,493,386 million for the fiscal year under review. As for profits, operating profit decreased by 10.1% to ¥238,623 million, ordinary profit decreased by 10.7% to ¥240,248 million, and profit attributable to owners of parent decreased by 8.5% to ¥156,249 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 decreased by 1.5% year over year to ¥2,273,821 million. Operating profit decreased by 5.5% to ¥223,110 million.

In the Japanese commercial air-conditioning equipment market, industry demand declined, particularly in the market for stores, due to the spread of COVID-19. As air quality needs rose for ventilation and disinfection, the Daikin Group expanded its proposals for air environments using systems that combine air-conditioning equipment and ventilation equipment. This includes the launch of new products in the lineup of "Heat Reclaim Ventilator," high- performance ventilation equipment that can ventilate a room without affecting the room's temperature. The Group strengthened its efforts to convey its value to the market in order to meet expectations as an air-conditionermanufacturer, such as by developing "untact" sales utilizing online activities, stimulating demand through advertising focused on ventilation and disinfection, and opening an "Air Consultation Service" to directly answer customer concerns. However, net sales of commercial air-conditioningsystems were lower year over year due to factors including reduced demand.

In the Japanese residential air-conditioning equipment market, industry demand for both room air conditioners and air purifiers exceeded the previous fiscal year because of demand for additional purchases of air conditioning equipment due to changes in residential applications including remote work, as well as growth in demand for home appliances due to people spending more time at home. The Group responded to market needs by launching a series of high value-added products utilizing proprietary technologies, such as the Streamer disinfection unit, waterless humidification, and room air conditioner air supply ventilation, including the room air conditioners "Urusara X" and "Ururu Sarara Air Purifier." Additionally, despite disruptions to its supply chain caused by COVID-19, the Group worked to maintain a stable supply system and increased sales. Through these efforts, the Group's net sales of residential air-conditioningsystems increased year over year.

In the Americas, net sales decreased year over year as a whole due to the impact from the spread of COVID-19. Residential air-conditioning systems received a positive effect on demand from more time spent at home and greater

- 2 -