Daikin sees robust Philippines sales growth

MANILA, Philippines — Japanese air-conditioning giant Daikin expects to sustain its growth in the Philippines due to the country’s robust economy and the government’s aggressive infrastructure program, but said the local investment climate remains unattractive to set up a production facility.

Daikin Airconditioning Philippines Inc. president Lee Wai Kok said yesterday the company is targeting sales growth of between 40 to 50 percent for its 2018 fiscal year from 2017’s projected sales of P3.3 billion, buoyed by a  booming economy which is enabling more consumers to buy air-conditioning units.

“The Philippine market has great potential with high GDP growth and ideal demographic situation. Middle income class is expected to increase rapidly in the next 10 years and construction is rising with the Build Build Build program. So with that, there is great opportunity for air-conditioning in the Philippines,” Kok said.

Daikin Philippines is expecting sales for its fiscal year ending March 2018 to grow 32 percent to P3.3 billion from P2.5 billion the previous year.

Since 2010, the firm’s sales has increased by not less than 30 percent annually.

Daikin’s sustained sales growth in the Philippines, however, is not enough yet to entice the Japanese giant to pour in significant investments and set up a production facility in the country.

Daikin is starting commercial operations this year of an air-conditioner production facility in Vietnam. In Southeast Asia, the company also has production base in Thailand and Malaysia.

Daikin Philippines deputy division manager Bart Roa said the Philippines remains as an unattractive production base site for the company given its small market.

Daikin’s annual unit sales in Vietnam has been hitting one million annually compared to the less than 100,000 units in the Philippines, according to Roa.

“But even though our unit sales are not big, if our (incentives) packages are very attractive for investors, of course they would choose the Philippines as their production hub. But that’s not the case. Here, they’re scared because they are not protected. They are afraid that once a new administration comes in, there will be new policies,” Roa said.

But even without having a local production base, Daikin Philippines division manager Jed Caburian said there is a huge opportunity for the company to grow its business given the still low penetration for air-conditioning units in the country.

“There is still a very big potential as 23 million households are not penetrated in Philippines. Only 15 percent penetration. That means for every 100 families, only 15 have air-conditoner units. And right now, air-conditioning is not anymore a luxury,” Caburian said.

Kok said Daikin is opening three additional branches this year to expand its customer reach and dealer network nationwide.