OSAKA — Daikin will spend 800 billion yen ($5.7 billion) on capital investments over the next three years, the company said Wednesday, as it seeks to cash in on demand for energy-efficient heating in Europe and India’s growing air conditioner market.
The outlays — part of its three-year plan for fiscal 2023 through fiscal 2025 — mark a 47% increase over the previous three-year period. Research and development spending will climb 53% from the previous period to 390 billion yen.
In addition to doubling production capacity in India with a new plant in southern India in the coming months, Daikin will consider building another plant in the western part of the country. It will also expand research and development and strengthen its sales network there.
“Demand for air conditioners [in India] is expanding more than anywhere else in the world,” said President and CEO Masanori Togawa. In India, the number of installed air conditioners in 2030 is expected to quadruple over 2020.
The Japanese company is focusing on air conditioning systems with a low environmental impact. Demand for heat pumps, which are gradually replacing fossil-fuel-burning furnaces, continues to be strong in Europe as nations cut carbon emissions and shift away from Russian energy. Daikin’s new plant in Poland will help boost production.
The company aims to increase energy-saving inverter-equipped air conditioners to 93% of global shipments in fiscal 2025, up from 79% in fiscal 2021.
It will also invest heavily in North America, where its sales exceeded 1 trillion yen for the first time in fiscal 2022.
Daikin seeks to improve its operating profit margin in North America, which is low compared with China and other regions, to 10% in fiscal 2025, a 4 percentage point increase from fiscal 2022 results.
Spending on mergers and acquisitions, a major part of Daikin’s growth, was not included in the three-year plan, but Togawa said it would likely be about 350 billion yen, depending on negotiations. The company is believed to be targeting an expansion of its North American sales network.