Investing.com -- Daikin Industries, Ltd. (TSE:TYO:6367) reported a third-quarter operating profit (OP) that fell short of market expectations.
The global air conditioning giant disclosed a 3Q OP of ¥72.1 billion, a modest increase of 2% year-on-year (YoY), but significantly below the consensus estimate of ¥90 billion and the company’s own forecast of ¥80 billion.
The underperformance was attributed to a series of setbacks, including customer churn due to supply shortages in the first half of the year and the inability to meet a sudden spike in demand before the tightening of refrigerant regulations in the United States.
Additionally, sales in the high-margin Chinese market fell by 15% on a local currency basis, exacerbating the earnings miss. The Chemicals segment also saw a 42% drop in OP, impacted by decreased sales in semiconductor, automotive, and LAN cable applications.
Despite the disappointing third-quarter results, Daikin has left its full-year guidance unchanged, implying a significant rebound with a fourth-quarter OP of ¥109.3 billion, which would represent a 28% YoY increase. The company has emphasized that it is implementing various measures for recovery.
Morgan Stanley (NYSE:MS) analysts commented on the situation, highlighting potential market apprehensions: "Given the risk of a drop-out in demand in the US following the rush of demand (Daikin missed out on this and industry channel inventory levels have increased), the stock market could well price in concerns of an earnings miss (the OP consensus is currently at ¥427 billion, which is mostly in line with guidance for ¥428 billion, but this is expected to be lowered going forward; our forecast is for ¥415 billion)."
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