Daikin's Long-Run Profitability Will Be Bolstered by Premiumization and Cost Optimization

Daikin is one of the world’s largest heating, ventilation, and air conditioning companies. The air conditioning segment constantly contributes to over 90% of the company's revenue, and the division’s revenue mix is well-diversified geographically, with the Americas—mostly the United States, China, Japan, and Europe each contributing to over 10% of revenue. Over the years, Daikin has seen decent earnings growth mainly thanks to sales channel expansion in the US and Southeast Asia, robust global demand for high-end products, and the Japanese yen’s depreciation. Meanwhile, the company maintained healthy operating margins thanks to cost rationalization and efficiency improvements.