Daikin Reports Record Profit Despite Global Housing Market Slowdown

Japan’s leading air-conditioning maker overcomes U.S. tariffs and China’s property crisis with higher sales and cost-cutting.

In Japan, Daikin Industries has announced the results for the first quarter of its fiscal year ending March 2026. The company achieved both higher revenue and profit on a real basis, excluding currency effects, and its profit reached an all-time high. This was accomplished despite a difficult business climate, including a prolonged slowdown in the Chinese property market and weak housing demand in the United States.

Daikin strengthened its sales and marketing power in Europe and the U.S., while also implementing strategic pricing and strict cost controls. These measures helped the company absorb the direct negative impact of about 7.5 billion yen in tariffs on its U.S. operations. As a result, Daikin’s operating margin exceeded its internal target, hitting around 10% in the first quarter.

In the air-conditioning business, housing demand was soft in the U.S. and China, and Asian demand weakened due to weather conditions. However, sales of applied and commercial-use products remained solid. Moreover, price increases in both the U.S. and China, especially for eco-friendly “green” air conditioners, boosted profitability.

The chemical segment faced a decline in sales and profit, as semiconductor demand remained strong but recovery in auto-related demand lagged behind. Even so, Daikin continued to invest in production capacity to meet future demand. In Europe, intense competition and lower earnings were partly offset by asset sales, steady pricing, and the benefits of plant expansion in Brazil.

For the quarter, Daikin reported:

• Revenue: 1.2138 trillion yen (up 5% year-on-year)
• Operating Profit: 118.9 billion yen (up 4%)
• Net Profit: 81.5 billion yen (up 29%)

Earnings per share also rose sharply from 146.14 yen to 188.16 yen.

Looking ahead, Daikin expects the external environment to remain challenging, with delayed recovery in the U.S. housing market, economic stagnation in Europe, and weaker demand in Southeast Asia. Nevertheless, the company aims to surpass its full-year operating profit target of 435 billion yen, by accelerating company-wide initiatives and adapting quickly to market changes.

This outlook suggests that Daikin is positioning itself not only as a resilient manufacturer but also as a global climate solutions leader. If it maintains momentum, its strategies could influence the broader air-conditioning and chemical industries, especially in areas related to sustainable technologies.

Explanation of Key Terms

• Operating Profit: Profit from core business operations, excluding interest and taxes. It is a key measure of business efficiency.
• Tariffs: Taxes imposed on imported goods, which increase costs but can be offset by pricing strategies or efficiency improvements.
• Operating Margin: A ratio showing how much profit a company makes from sales after covering operating expenses, reflecting profitability strength.

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