FUSION 10: Maximizing corporate value to become a truly global and excellent company.
 
Five Basic Policies of Next-term Strategic Management Plan 
The next-term strategic management plan FUSION 10, targeting fiscal year 2010, builds on previous achievements and aims to expand business scale as well as comprehensively and substantively enhance Daikin's strengths in order to achieve great gains and realize "brilliant future creation".

At the same time, in its core businesses of air-conditioning and chemicals, Daikin is placing the highest priority on achieving concrete results in peripheral fields where business opportunities are unfolding and aims to reach new heights by continuing management reform. There are 5 key policies:
 
1. "Selection and concentration" to achieve development
Instead of exploring completely new business areas, translate business opportunities in peripheral fields into concrete results, at the same time as concentrating on fundamental enhancement of core businesses.

2. Rapid business creation through intensive use of flexible alliances and partnerships
Comprehensively pursue synergy through bold M&A, alliances and partnerships, including acquisition of OYL Industries, and accelerate realization of business achievements.

3. Enhanced management strengths to survive the new era
Amid the intensifying global competition, undertake challenging management issues that are broader and deeper in scope than ever before, including establishment of a financial strategy and risk management framework for the overall Group and development of unique CSR initiatives, aiming to establish management capabilities to enable maximization of corporate value and market capitalization.

4. Establishment of technological capabilities and infrastructure of the highest global standard 
Enhance core technologies to reach the highest world standards as well as achieve technology fusion, including in-house technology fusion and cogeneration with outside entities.

5. Dramatic strengthening of HR capabilities
Develop Daikin's "people-oriented management," which has formed the foundation of growth thus far, on a global Group basis. At the same time, place utmost priority on strengthening and developing human resource capabilities as a management issue, emphasizing recruitment of diverse employees and professional development, to undertake bold challenges in new territory and realize imminent business opportunities.

	FY2005 Performance	FY2008 Estimate	FY2010 Goals
Sales	793 billion JPY	More than 1.35 trillion JPY	More than 1.7 trillion JPY
Operating Profit (%)	67 billion JPY (8.5%)	More than 120 billion JPY (9.0%)	More than 10%
Ratio of overseas business	46%	60%	70%
AC business	Global no. 2	Global no. 1	Global no. 1
Fluorochemical business	Global no. 2	Global no. 1	Global no. 1

Four principle targets to achieve our goal
The comprehensive sharing and practice of Our Group Philosophy is an absolute requirement to Daikin's goal of maximizing corporate value. Furthermore, Daikin has four principle targets to achieve this goal. The collective strengths of the global Group will be used to carry out concrete measures to realize these targets. 

1. World-leading No.1 Businesses
While business scale is obviously necessary to achieving the global No.1 position, Daikin also seeks to become the clear No.1 by offering the best products and services in the world. At the same time, Daikin desires to develop business in each region of the world as a welcomed and accepted presence.

Daikin aims to achieve the global No.1 position in 2010 with sales of more than ¥ 1.4 trillion in the AC field. Daikin will begin by comprehensively enhancing its strengths as a specialist in ductless air-conditioning at the same time as pursuing new business creation in areas peripheral to the core business. In addition, a flexible alliance and partnership strategy will be adopted to rapidly transform various business opportunities into concrete results.

Specifically, in addition to the 4 regional pillars of Japan, Europe, China and Asia/Oceania where it already markets products, Daikin will cultivate full-scale business entry in new markets, including North America, India, Central and South America, and the Middle East and Africa, to achieve its global 8-pillar strategy. At the same time, Daikin will expand from the ¥ 2 trillion ductless market into the¥ 8 trillion comprehensive AC market, which includes the ducted, applied (large-scale industrial AC), low temperature and refrigeration fields. 

With further expansion into peripheral markets such as heating and hot water supply, Daikin seeks to enlarge its business scope to become a comprehensive AC and refrigeration manufacturer offering a multitude of products and services to all types of customers around the world. 

2. Generate innovation and value through unique technologies as shift creation leader
The further acceleration of new product development to support business expansion is an obvious necessity. Going forward, Daikin aims to enhance its core technologies, including AC heat pumps, inverters and fluorochemicals, which have sustained business development up to now, as well as promote fusion with new, cutting-edge technologies in such fields as information, nanotechnology, functional materials and energy. Envisioning the world 10 years from now as a shift creation leader, Daikin will continue to generate the seeds of innovation through development of next-generation core technologies in pursuit of health, comfort and harmony with the environment. 

3. Robust fiscal structure and profitability with excellent capital efficiency
Daikin will implement a comprehensive financial strategy to execute timely investments aiming for further growth and development. While executing an aggressive investment strategy, Daikin will maximize operating cash flow to enable further growth investments and increase returns.

Furthermore, aiming to maintain and enhance an agile fiscal structure and realize rapid returns on large-scale investments, Daikin seeks to accelerate its cash generation cycle through more efficient use of operating capital and strict selection of investment targets.

4. Thoroughly implement "people-oriented management" throughout the global Group
Daikin has long believed in the infinite capacity of people and has implemented people-oriented management in the conviction that people form the basis of a company's competitiveness and that the cumulative growth of all members serves as the foundation of company growth. With FUSION 10, Daikin aims to further enhance its people-oriented management and thoroughly implement it on a global basis. Subsequently, Daikin aims to further strengthen and reform its corporate structure to that of a truly global and excellent company.

Full text can be found at:  http://www.daikin.com/press/2006/060626/index.html