NIPPON SANSO HOLDINGS CORPORATION

Medium-term Plan Key Strategies (FYE2023 – FYE2026)

Agenda■ Medium-term Management Plan Policy■ Review of Ortus Stage 2 (FYE2018 – FYE2021)■ Business Environment Outlook During the Next Medium-term (FYE2023 – FYE2026)■ Focused Fields of NS Vision 2026
1. Sustainability Management
2. Exploring New Business toward Carbon Neutrality
3. Total Electronics
4. Operational Excellence
5. DX Initiatives■ Regional Business Strategy- Japan, the U.S., Europe, Asia & Oceania- Thermos■ Numerical Target, Financial & Non-Financial KPI■ Appendix©2022 NIPPON SANSO Holdings Corporation All rights reserved.

1Medium-term Management Plan Policy
Medium-term Management Plan Name

Medium-term Management Plan Slogan

We formulated our first medium-term management plan, NS Vision 2026,
after the establishment of Nippon Sanso Holdings in October 2020 with the vision that,“We aim to create social value through innovative gas solutions
that increase industrial productivity, enhance human well-being
and contribute to a more sustainable future.”
Under the four global regions + Thermos business structure,
we established five strategies:
Sustainability Management, Exploring New Business toward Carbon
Neutrality, Total Electronics, Operational Excellence, and DX Initiatives.
We will strengthen the group’s comprehensive capabilities
and achieve further growth to provide a bright and comfortable future
for people, society, and the Earth.

Review of Ortus Stage 2(FYE2018 – FYE2021)

Look Back on Past Medium-term Management Plan
Sales Revenue & Core OI

Review of Ortus stage 2■ Sales Revenue ■ Core OI ■ Core OI Margin

10.7%
10.6%

9.4%

9.8%

900
Billion
JPY

818.2

Main efforts, strong focus, and achievements:
1. Increased globalization and expansion through the acquisitionof the European business and the U.S. HyCO* business
2. Commissioned on-site projects and CO2 Projects in the U.S.
3. Strengthened the electronics specialty gases business in East Asia

600

581.5
87.2

100
Billion
JPY

54.7
300

50

0

0

Ortus Stage 1(2014-2017)

Ortus Stage 2(2017-2021)©2022 NIPPON SANSO Holdings Corporation All rights reserved.

4. Enhanced and expanded supply base in the Asia & Oceania region
5. Transitioned to holdings company structure which fosters improved
communication, faster decision making and mobilization*On-site supply of H2 and CO to the petroleum refining and chemical industries.

4Characteristics of Nippon Sanso Holdings Group
What we are aiming for
Further global expansion and growth
Safe and reliable supply of industrial gas to all industries
In the Thermos business, we propose a comfortable andeco-friendly lifestyle for people and society

What are the characteristics of our system?
Local business with production and consumption in samegeographic area

Regional organization and management structure
4 global regions + Thermos business structure©2022 NIPPON SANSO Holdings Corporation All rights reserved.

5

What will Change?
Management team was formally running the domestic gas business and overseeing
its ownership in the overseas group companies

We changed three things after becoming a holding company

1

2

3

Speedier decision-making
through authority delegation,
and appropriate management
resource allocation

Greater clarity inbusiness execution responsibilities
and performance

Enhance the group’s
comprehensive capabilities
by sharing regional strengths
and advantages©2022 NIPPON SANSO Holdings Corporation All rights reserved.

6

Business Environment Outlook
During the Next Medium-term(FYE2023 – FYE2026)

Key Considerations: Environment and Society©2022 NIPPON SANSO Holdings Corporation All rights reserved.

8

Key Considerations: Industrial Gas Market
Improve Profitability

Reliable Acquisition of Business Opportunities

Regional Market overview

EBITDA Margin

Japan

the U.S.

EuropeAsia &
OceaniaA

2019
Industrial Gas
Market* (MM USD)

5,719

21,994

18,51920,215B

2019
Market Ranking

#1

#4

#4

#6

C

1.0 - 1.5%

2.5 – 3.0%

2.0 – 2.5%

4.0 - 4.5%

GDP Growth Rate Assumption

34.8%

33.1%

27.1%

NSHD

20.4%

0.0%

*Estimation based on “Gasworld Industrial Gas Market Forecast 2020"©2022 NIPPON SANSO Holdings Corporation All rights reserved.

10.0%

20.0%

30.0%

40.0%

Source: Refinitiv Eikon most recent fiscal year end

9Focused Fields of
NS Vision 2026
(FYE2023 – FYE2026)

Structure of NS Vision 2026
Focused Fields
of NS Vision 2026

©2022 NIPPON SANSO Holdings Corporation All rights reserved.

Regional
Business Strategy

Numerical Target

11

Sustainability Management: Concept
We will strive to engage in dialogue and collaboration with our stakeholders and aim to continuously enhance our corporate value bycontributing to a sustainable society.

Environment

Safety & Quality

HR▷

Resource-recycling society▷

Process safety and security▷▷

Harmonizing with environment▷

Community based▷▷

Reduce environmental impact▷“Selling gas is selling safety”▷

Respect people and their rights
Work worthwhile for eachand every employee

Compliance▷▷

In a sincere and fair manner
International/regional rules
and the laws

Quality management
and assurance

Nippon Sanso Holdings Corporation signed the United Nations Global Compact (UNGC) advocated by the United Nations and was
registered as a participant on January 18, 2022.

©2022 NIPPON SANSO Holdings Corporation All rights reserved.

13

Sustainability Management
Based on TCFD recommendations, we conducted scenario analysis of climate related issues identified as the next materiality.

Carbon Neutral Program I

Carbon Neutral Program II

GHG emissions [thousand t-CO2e]

7,000
6,000

-18%

5,000

-32%

Lower customer GHG
emissions throughenvironmental productofferings

4,000
3,000
2,000
1,000

(FYE2026)

and applications

0
FYE2019＊

FYE2026

FYE2031

2040

2050

▷

Energy conservation and efficiency of energy use▷

Renewable energy and green power▷

Carbon capture and offsets

Zero Waste Program
Japan: HALD (Halve Amount of Landfill Disposal)
Reduce TNSC’s landfill waste disposed by 50% by FYE2026▷＞

NSHD group
GHG emissions▷

Global GHG reduction through NSHD’s products and technologies

Sustainable Water Program▷

Investigation of water stress by use of the “Aqueduct” (WRI)▷

Identify gas production plants in high-risk areas every year

Appropriate waste management and recycling※ Base year: set in FYE2019, when the European gas business and the US HyCO business joined to the Group©2022 NIPPON SANSO Holdings Corporation All rights reserved.

GHG emissions in FYE2019 show the actual GHG emissions in FYE2019 plus the following:①emissions of European gas business in FYE2019:②estimated emissions of the US HyCO business in FYE2019

14

Sustainability Management
Safety First Program

Quality Reliability Program

Lost Time Injury Rate (LTIR)*
≤

1.6**

until FYE2026▷

Sharing information on work related injuries and best practices▷

Safety capability by using DX, AI and IoT▷

Safety education/utilizing the Technical Academy▷

Investment for safety▷

Quality ethics and compliance education▷

Quality audit program▷

Automatization of test, inspection and analysis recording▷

Compliance Penetration Program▷

Talent Diversity Program▷▷

Talent development strategies for sustainable growth▷

Embrace and motivate diversified talents▷

Promote cross regional talent exchanges▷

Enhance successor development plans©2022 NIPPON SANSO Holdings Corporation All rights reserved.

Increasing customer satisfaction through the activities
of Semiconductor Specialty Gas Quality Committee

Continue compliance training in each region to instill awarenessand ethics among all employees
Prevent compliance violations
Detect compliance violations through disseminating and operating
the whistleblowing system* Number of lost time injuries per one million working hours** The average value of FYE2017-2021 (2.53) is set as a benchmark,and a reduction of about 40% by FYE2026 is set as a goal

15

Exploring New Business toward Carbon Neutrality: Action Plan
Gaining “quick-win” CN projects▷

Join/Gain CN project in Steel/Glass/Ceramics/Aluminum/non-ferrous market▷

HyCO projects for a hydrogen society with internal training to sales rep

R&D development and strategic partners▷

Join various CN projects and share knowledge among the Group▷

Find potential strategic partners▷

Increase resources into dedicated R&D themes such as combustion technology etc.

External/Internal communication▷▷

Establish communication platform
Enhance our presence through proactive efforts such as posting CN activities on social networking
service©2022 NIPPON SANSO Holdings Corporation All rights reserved.

17

Exploring New Business toward Carbon Neutrality
Solutions for the Steel Market

Biomethane
Partial oxidation

Reducing CO2 footprint▷▷▷

Autothermal reforming

Provide alternatives to replace coal by using wellproven HyCO technologies

RDF gasification

BFG

Dry reforming

CO2 capture solution and expertise in transportof LCO2* by ship for a CCS** projectC0 H2Blast furnace

H2 burner to reduce CO2 emissions in electric
furnaces*Liquified CO2** Capturing CO2 emissions from industrial process
for storage deep underground

Solutions for the Glass and Non-Ferrous Market

Other uses
outsidesteel mill

CO2

Use of CO2 as feedstock for syngas
production

1

Steel mill

2

CO2 purification& liquefaction

3

Transport,
storage & loading

4

Transport

5

Offloading &storageRich CO2
flue gas

Greening combustion process▷

From air-fuel to 100% Oxy-fuel©2022 NIPPON SANSO Holdings Corporation All rights reserved.

18

Total Electronics: Action Plan
We have a long history in the semiconductor materials and gas business.

Global supplier in semiconductor ecosystem▷▷©2022 NIPPON SANSO Holdings Corporation All rights reserved.

Offering robust/updated quality assurance,
new product and technology solutions
Leverage and enhance our existing group capability
and solutions

20

Total Electronics
Initiatives to Achieve Financial Target

2

1Enhance SSG* business▷▷

Increase the product line-up
and production capability
Improving group SSG quality
and responsivenessGroup capability enhancement
for equipment, ASU
and engineering▷▷▷*SSG: Semiconductor Specialty Gases©2022 NIPPON SANSO Holdings Corporation All rights reserved.

3

Leverage group capability
for equipment in Electronics

DX Introduction▷

Enhancing semiconductor quality
through DX

Enhance the possibility to acquireon-site business for semi-investment
Expand the opportunity for semi/PV**
opportunity in Asia**PV: Photovoltaics

21

Operational ExcellenceGroup Goals

Action Plan

Group Goals

1

Fostering a group-wide productivity
improvement mindset
through global Operational Excellence Day events2

Cost reduction
Cost reduction effect
Early success by horizontal sharing of best practices
effect ofof overover¥ ●●100billion
million¥ 56.0across operating companies
in total
forfor
4 years.
in total
4 years.

3

Promotion of standardization and optimization ofoperations throughout the group©2022 NIPPON SANSO Holdings Corporation All rights reserved.

23

DX Initiatives: Action Plan
1 Focus on Digitization & Digitalization efforts
2 Prioritize the three fields
Customer Engagement

Operational Excellence

Employee Engagement

3 Initiatives by regional management
4 Dedicated DX organization in the NSHD Group©2022 NIPPON SANSO Holdings Corporation All rights reserved.

25

DX Initiatives
Digital Initiatives Bring New Value
Procurement

Production

Shipment &Logistics

Sales &
MarketingTechnology Development, Engineering

Value

General Administration
HR – Employee Engagement

・Digital Marketing

・Remote Operation

・Process Automation

・Autonomic Systems

・Data Science
Global IT Security©2022 NIPPON SANSO Holdings Corporation All rights reserved.
2626

Regional Business Strategy

Global Business Network
Total Revenue¥ 957.1bn.
Total Sales Ratio

100%

EuropeA&O

Japan

the U.S.

Thermos

13%
Revenue209.7bn.

22%

3%
Revenue

123.5bn.

Revenue

372.0bn.

¥¥¥

Segment OI

Segment OI

Segment OI

26.3bn.

12.8bn.

Revenue

39%

224.8bn.

30.9bn.

Revenue

26.8bn.

¥¥Segment OI

Segment OI

27.3bn.

6.4bn.

¥

¥

¥

¥

¥

OI margin

OI margin

OI margin

OI margin

OI margin

12.5%

10.4%

8.3%

12.2%

24.0%

23%

©2022 NIPPON SANSO Holdings Corporation All rights reserved.

28

Industrial Gas Business - Region
Japan
Growth- Enhance new products and services- Provide and expand Industrial Gas
Solutions for customers
Business Transform- Review of low profitablebusiness portfolio

EuropeGrowth- Focus on resilient markets- M&A opportunity
Optimize Base Business- Invest in application technology- Evaluate market mix- Geographical footprint©2022 NIPPON SANSO Holdings Corporation All rights reserved.

the U.S.

Focused Fields
Sustainability Management
Exploring New Businesstoward Carbon Neutrality
Total Electronics
Operational Excellence
DX Initiatives

Growth- Organic Growth:
Enhance cross-selling efforts- Expand plant networks,
onsite generator installs and pursue
targeted distributor M&A

Asia & Oceania
Growth- Large scale onsite project acquisitionand expand ASU capabilities- New products & sales area expansion- Global HyCO Opportunities
Management- Launch of new management structure

29

New Management Structure of Asia and Oceania

Asia and Oceania business segment
East Asia (TE)Southeast Asia and India

Southeast Asia

India

China

Korea

East Asia (Industrial gas)

Oceania

China

Oceania

Taiwan Organized the region into four sub-segments based on differences in business environment and strategic direction
 Each of four sub-segments is responsible for managing its own region
 At the beginning of FYE2024, target to launch new management structure in Asia and Oceania(governance structure, authority delegation level, key meetings, internal audit structure, etc.)©2022 NIPPON SANSO Holdings Corporation All rights reserved.

30

Thermos Business
What is THERMOS?
Providing a wide variety of products to create new lifestyles for a sustainable
society. The Thermos Business is solely a B2C business, creating a broad rangeof contact points with general consumers.
Why have THERMOS?
-Strong profitability, cash flow generation, and favorable growth rates as a result ofshifting consumer trends from disposable bottles to long lasting replacement
products-Proactive customer service and tailoring products to meet customer demands
which the Industrial Gas businesses constantly strive to achieve
Growth- New products, direct operating stores, EC platform business- Develop an interactive communication system- Increase Thermos brand awareness and maximize the brand equity©2022 NIPPON SANSO Holdings Corporation All rights reserved.

31

Numerical Target
Financial & Non-financial KPIs

Targeted Group KPI - Summary
Revenue

Environment

JPY 975.0-1,000.0
Billion*Reduction rate of GHG emissions (Base year: FYE2019)18% :FYE2026

32% :FYE2031

Core Operating Income
JPY 125.0-135.0
Billion*

EBITDA Margin

Financial
KPIs
FYE2026

GHG reduced emissions through environmental product offer
Lower customer GHG emissions
through environmental productofferings and applications

Group:≥24%

Safety Management

Japan, the U.S., EU, A&O,
Thermos:

Lost Time Injury Rate

≥17~33%≤1.6
FYE2026

Adjusted net D/E Ratio≤0.7* Due to the uncertainty in the
global economy, revenue andcore operating income areshown in range.

GHG emissions＞ NSHD group
FYE2026

ROCE after Tax≥6%©2022 NIPPON SANSO Holdings Corporation All rights reserved.

Compliance

Rate of receiving
compliance training

100%
FYE2026

HR

Rate of female employees

NonFinancial
KPIs≥22% :FYE2026
25% :FYE2031
Rate of female
management posts≥18% :FYE2026
22% :FYE2031

33

Capital Allocation
IN

OUT
Strategic

OperatingCF
NS Vision 2026
(The Total for 4 years)

730.0

Strategic investment 38.0 bn JPY
 Investment for- Carbon Neutral related initiatives- Digital Transformation initiatives

Investment

433.0
bn JPYbn JPY
Dividend &Repaymentof debt

Thermos2%
Strategic
9%
Japan
A&O
24%
14%
Europe
24%

the
U.S.
27%

Strategic
Initiatives
12%

GrowthInitiatives
37%

Sustaining
45%
M&A
6%

<Investment / revenue % by business segment>
Japan: 7.4%, the U.S.: 10.5%, Europe: 12.9%, A&O: 11.1%,
Thermos: 6.9%©2022 NIPPON SANSO Holdings Corporation All rights reserved.

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END

Appendix

Our Materiality

Reflecting the incremental social awareness of sustainability and global environmental issues
as well as change of the corporate structure, our materiality was revised after previous version in 2015,
and obtained approval of NSHD board on December 2nd, 2021.
> Strengthening communication withstakeholders

High

Safety andSecurity(SFP)

Very highCorporate
Ethics(CPP)

Importance to stakeholders

Respect for
Human
Rights(UNGC)

Extremely highPreconditions for the existenceof an enterprise> Product and service safety and quality（SFP)> Sustainable supply chain (QRP)> Contribution to regional and industrial
development as social infrastructure> Diversity & Inclusion (TDP)> Conservation of water
resources (SWP)> Pursuit of customer satisfaction(QRP)> Coexistence with the local community> Technology and R&D capabilities that
supportthe creation of customers and social
value> Promotion of initiatives for digital innovation> Employee and family health> Conservation of biodiversity> Protection and effective utilizationof intellectual property
High> Providing products and services that
contribute to solving environmental
and social issues (CNPⅡ)> Climate change mitigation andadaptation (CNPⅠ, TCFD)> Effective use of resources andprevention of pollution (ZWP, SWP)
> Strengthening information security measures> Improvement of productivity and promotion of
production optimization> Development and maintenanceof human resources (TDP)> Improvement of employee engagement> Provision of comfortable and prosperous
lifestyle
Very highExtremely highImportance to Nippon Sanso Holdings
Key issues related to the global environment

Key issues related to social systems

Key issues related to the Company and its organizational structure

Abbreviations
SFP: Safety First Program, CNP I: Carbon Neutral Program I, CNP II: Carbon Neutral Program II, ZWP: Zero Waste Program,
SWP: Sustainable Water Program, QRP: Quality Reliability Program, TDP: Talent Diversity Program, CPP: Compliance
Penetration Program, UNGC: United Nations Global Compact, TCFD: Task Force on Climate-related Financial Disclosures©2022 NIPPON SANSO Holdings Corporation All rights reserved.

37

TCFD Scenario Analysis
Conduct scenario analysis of climate related issues identified as the next materiality, based on TCFD recommendations, using "transition scenarios" and"physical climate scenarios""Transition scenario" is considered by IEA SDS, “physical scenario” by IPCC RCP8.5
Organize the Group's opportunities and risks, and analyze the impact of “procurement”, “operations” and “products and services”
Type

Climate change risks

Policy regulations

Technology

Introduction of carbon pricing

Replacement to low-carbon
alternative products/Progressin energy saving

Financial
ImpactLargeBusiness risksMarkets

Changes in market needs/Changes
in customers' business activities

Large

Reputation

Industry criticism

Large

Acute

Intensification of Disasters/Frequent
typhoons/Heavy rain/Droughts

MediumChronic

Sea level rise/
Rise in average temperatures

Small

PhysicalResponse / Actions by NSHD

《Medium- to long-term》> Decrease in profits due to increased tax burden《Medium- to long-term》> Acquire business opportunities by differentiating
through early response> Increase introduction of renewable energy
by power purchase agreement and green power
certificates《Medium- to long-term》> Decrease in sales of existing products due to screeningof low-carbon products《Short- to medium-term》> Increase profit margin by energy saving> Increase in demands for existing products that
contribute to low carbonization《Medium- to long-term》> Increase in business opportunities throughenvironmental product offerings and applications that
contribute to low carbonization> Promote the development of environmental
product offerings and applications that contribute to
low carbonization> Promote energy saving by improving
productivity through the introduction of DX
technology, etc. (Introduction of SAITEKI,
optimization of delivery)《Long-term》> Decrease in sales due to changes in the manufacturing
process of the steel and chemical sector> Decrease in sales due to new entrants utilizing byproduct O2
gas as demand for water electrolysis process expands《Medium- to long-term》> Increase in demand for blue and green H2> Increase in demand for green fuels> Increase in demand for CO2 capture for CCUS

> Promote the introduction of carbon-free (H2,NH3) combustion technology> Expanding the use of oxygen combustion> Acquire demand for medium-scale CO2 capture
inresponse to CCUS
> Expansion of H2 supply business by HyCO
business> Increase sales environmental product offerings
and applications that contribute to low
carbonization《Medium- to long-term》> Investor valuation decline for GHG emitting companies《Medium- to long-term》> Continue stable funding by demonstrating contribution
to GHG reduction> Disclosure of quantitative data on GHG
reduction contributions through integrated reports,
etc.
> Promote disclosure of non-financial information

MediumTransition

Business opportunities《Medium- to long-term》> Plant shutdowns due to disasters caused by abnormal weather> Increase in premiums paid
《Long-term》> Narrowing of profit margin due to increase in running costsof air separation unit caused by rising temperatures> Promotion of disaster countermeasures> Use of insurance《Medium- to long-term》> Increasing demand for medical products to treat diseases> Replacement of aging air separation unit
to reduce running costs> Provision of medical oxygen, etc.

Short-term（～ 2025）、Medium-term（2025 ～ 2030）、Long-term（2030 ～ 2050）©2022 NIPPON SANSO Holdings Corporation All rights reserved.

38