Daikin (USOTC:DKILY) reported a sharp drop in third-quarter operating profit, as weaker-than-expected demand weighed on performance and forced the company to cut its full-year outlook.
Operating profit for the quarter fell 15% year on year to ¥61.3 billion, well below market expectations of ¥88.9 billion and short of the company’s own guidance. The Japanese air-conditioning group pointed to softer demand conditions—most notably in the United States—and a far smaller contribution from sales expansion than it had anticipated.
Following the disappointing quarter, Daikin reduced its full-year operating profit forecast to ¥413 billion, down from its previous target of ¥435 billion. The downgrade reflects a ¥19 billion reduction in expectations for the air-conditioning business and a further ¥3 billion cut related to its chemicals segment.
Daikin noted that conditions remain challenging across its major regions. Demand in China continues to be subdued, while parts of Asia have seen shipment delays caused by unseasonal weather and flooding, alongside weak economic sentiment. In North America, inventory adjustments are still ongoing, although the company said these pressures are beginning to ease.
Despite the volume headwinds, Daikin’s North American operations recorded a 12% year-on-year increase in sales over the first three quarters. That growth came even as sales volumes declined 10%, with the impact offset by an 8% rise in pricing, an 8% improvement in sales mix, and a 6% contribution from Latin American air-conditioning businesses integrated into Daikin’s North American platform.
The company also highlighted progress in its North American win-back program, which achieved a 60% recapture rate in the third quarter and helped lift Daikin’s regional market share to 25%.