May 13, 2019
Taiyo Nippon Sanso Corporation

Consolidated Financial Performancefor Fiscal Year 2019
(Based on IFRS)(Amounts less than ¥1 million are omitted)

1.

Financial results for the FYE2019 (April 1, 2018 – March 31, 2019)(1) Operating results(Percentages indicate year-on-year change)

Core operating
incomeRevenue

OperatingincomeNet income(¥ million)%(¥ million)%(¥ million)%

FYE2019

740,341

14.6

65,8199.6

66,86311.7

FYE2018

646,218

11.1

60,033

9.7

59,862

11.5(¥ million)%

Net income
attributable toowners of theparent%(¥ million)%

43,709 (13.9)

41,291 (15.6)

29,745(31.8)

50,754

48,91943,596

4.3

40.2(¥ million)

Total
comprehensive
income40.8(Reference) Income before income taxes FYE2019: ¥62,083 million (11.1%) FYE2018: ¥55,897 million (11.4%)
Core operating income is calculated as operating income excluding certain gains and expenses attributable tonon-recurring factors (non-recurring items).
Return on equity
Income before
attributable toincome taxes to total
owners of the parent
assets ratio (%)(%)
FYE2019
95.42
10.4
4.6
―
FYE2018
113.04
13.3
6.0―(Reference) Share of profit (loss) of associates and joint ventures accounted for using the equity method
FYE2019: ¥3,836 million
FYE2018: ¥2,836 million
Basic earnings
per share (yen)Core operating
income torevenue ratio (%)

Diluted net income
per share (yen)

8.9
9.3

(2) Financial position

Total assets(¥ million)

Total equity(¥ million)

Equityattributable toowners of theparent(¥ million)

Equityattributable toowners of theparent ratio (%)

Equityattributable toowners of theparent per share(yen)

FYE2019 (March 31, 2019)

1,771,015

435,854406,602

23.0

939.56FYE2018 (March 31, 2018)

931,047

412,072

386,457

41.5

893.01(3) Consolidated cash flows

FYE2019

98,685(754,969)

664,925

Balance of cash andcash equivalents at
term-end(¥ million)
59,620FYE2018

83,199(52,088)(39,859)

47,809Cash flows fromoperating activities(¥ million)

Cash flows frominvesting activities(¥ million)

1

Cash flows fromfinancing activities(¥ million)

2.

Dividends
Annual Dividend
End of
End of
End ofTerm end
1st quarter 2nd quarter 3rd quarter
Yen

Yen

Yen

FYE2018

―

11.00

―

12.00

23.00

¥ million
9,957

FYE2019

―

12.00

―

13.00

25.00

10,822FYE2020 (est.)

―

13.00

―

13.00

26.00

3.

Yen

Yen

Total

Ratio ofdividends toequityTotal amount Payout ratio
attributable toof dividends (consolidated)owners of theparent(consolidated)
%

%

20.3

2.7

26.2

2.7

19.7

Forecasts for business operations for FYE2020 full term (April 1, 2019 – March 31, 2020)(Percentages indicate year-on-year change)

Core operating
incomeRevenue(¥ million)

OperatingincomeNet income

Net income
attributable toowners of theparent%(¥ million)%(¥ million)%(¥ million)%(¥ million)%

Basic earnings
per share
(yen)
(Yen)

First half of
FYE2020

435,000

32.0

46,00063.4

46,00058.8

26,70042.6

25,500

44.2

58.92

Full term

890,000

20.2

95,00044.3

102,000

52.6

59,50036.1

57,00038.0

131.71(Reference) Income before income taxes First half of FYE2019: ¥39,000 million (44.1%) FYE2019 full term: ¥86,500 million(39.3%)* Explanation concerning the appropriate use of forecasts for business operations and other notable matters- This report contains business forecasts and other forward-looking statements that are based on information currently available
to the Company and certain assumptions judged to be reasonable by management. The Company gives no assurances thatbusiness forecasts will be attained. Moreover, actual results may differ materially from business forecasts due to various
factors. For details on the assumptions of the forecasts and related matters, please see page 4, “(3) Future Outlook,” in “1.
Overview of the Business Results.”

4. Overview of Business Results for the Fiscal Year Under Review(1) Overview
The business environment surrounding the Taiyo Nippon Sanso Group (TNSC Group) in the fiscal year
under review (from April 1, 2018 to March 31, 2019) saw strong production activities in both domestic andoverseas manufacturing industries, and shipments of air separation gases (oxygen, nitrogen, and argon) weresteady. In the electronics-related field, deliveries in some product fields declined in Japan.
Against this backdrop, the TNSC Group achieved the following results for the fiscal year under review.
Revenue on a consolidated basis increased 14.6% year on year to ¥740,341 million, core operating income
rose 9.6% to ¥65,819 million, operating income increased 11.7% to ¥66,863 million, and net income
attributable to owners of the parent decreased by 15.6% to ¥41,291 million.
The Company completed the acquisition of the European business of Praxair, Inc. of the United States on
December 3, 2018. The adjustments for segment income for the fiscal year under review include ¥2,695
million in acquisition-related expenses for the European business (advisory costs, etc.).
Core operating income is calculated as operating income excluding certain gains and expenses attributable tonon-recurring factors (non-recurring items).

2(2) Overview of Business Performance by Reportable Segment
A breakdown of business performance by reportable segment is as follows.
Segment income represents core operating income.
From the fiscal year under review, the TNSC Group changed its reportable segments. Therefore, to facilitate
the year-on-year comparisons shown below, the figures for the previous fiscal year have been reclassified
based on the changes to the reportable segments. Moreover, the Gas Business in Europe has been added as areportable segment, and the results of the European business acquired from Praxair, Inc. of the United States
have been presented in this segment.
Gas Business in Japan
In the industrial gas-related business, revenue from air separation gases, a core product, performed steadily
for use primarily in the key industries of steel and chemicals. In addition, revenue from on-site businessincreased since a new on-site plant started operations in October 2017. Hard goods significantly expanded
revenue, mainly due to metal processing. In the medical business, there was a contribution to earnings fromthe medical equipment sales company, IMI Co., Ltd., acquired in October 2018. In the electronics-related
field, revenue from electronic materials gases declined.
As a result, in the Gas Business in Japan, revenue increased 5.5% year on year to ¥363,951 million, while
segment income decreased 5.0% to ¥29,808 million.
Gas Business in the United States
In the industrial-gas related business, revenue from bulk gas and hard goods increased significantly following
a steady performance in the manufacturing sector. In the on-site business, the start of operation at a new
project for a chemicals manufacturer contributed to revenue. In addition, revenue rose partly due to acontribution from the HyCO business*, which was acquired from Linde Gas North America LLC (“Linde
America”), a subsidiary of German company LindeAktiengesellschaft (“Linde AG”) in February 2019. In theelectronics-related field, revenue from equipment and installation rose substantially.
As a result, in the Gas Business in the United States, revenue increased 8.5% year on year to ¥187,323
million, and segment income rose 15.3% to ¥15,634 million.
* HyCO stands for hydrogen (H2) and carbon monoxide (CO), which are separated from natural and othergases through a technology called Steam Methane Reforming (SMR). The HyCO business provides
large-scale supply of H2 and CO to oil refining and petrochemical industries through a pipeline.
Gas Business in Europe
The European business acquired from Praxair, Inc. of the United States comprises the industrial gas businessin Germany, Spain, Portugal, Italy, Norway, Denmark, Sweden, the Netherlands and Belgium, the carbon
dioxide gas business in the United Kingdom, Ireland, the Netherlands and France, and the helium-related
businesses.
In the Gas Business in Europe, revenue was ¥55,101 million and segment income was ¥6,567 million.
Gas Business in Asia & Oceania
In the industrial gas-related business, revenue increased due to steady sales centered on bulk gas in China andSoutheast Asia. In Australia, sales of LPG and related equipment were brisk. In the electronics-related
business, revenue declined due to the impact of a change in accounting treatment in Taiwan, however,shipments of electronic materials gases were strong.
As a result of the above, in the Gas Business in Asia & Oceania, revenue increased 2.9% year on year to¥106,164 million, while segment income decreased 0.9% to ¥9,149 million.
Thermos Businesses
In the Thermos Business, revenue increased year on year mainly due to solid sales centered on sports-use
vacuum bottles in Japan, as well as the positive impact of sales promotions for frying pans with detachable
handles, a new product launched in February 2019. Overseas, sales were favorable in South Korea.
As a result, in the Thermos Business, revenue increased 9.6% year on year to ¥27,800 million, and segment
income rose 18.6% to ¥9,189 million.

3(3) Future Outlook
In the Gas Business in Japan, sales of air separation gas are expected to increase, albeit moderately, based on
firm demand from the key industries of steel, chemicals and transportation equipment. Additionally, in theelectronics-related field, the Company aims to increase sales of electronic materials gases to internationallycompetitive semiconductor manufacturers. In the Gas Business in the United States, we expect to increase
sales of bulk gas and hard goods on the back of steady production activities in the manufacturing sector. The
HyCO business, which was acquired from Linde America of the United States in February 2019, is also
expected to contribute to earnings growth. In the Gas Business in Europe, which was acquired from Praxair,
Inc. of the United States in December 2018, the Company expects to maintain high profitability and steady
growth. In the Gas Business in Asia & Oceania, earnings growth is expected mainly owing to the launch of
new projects in the Philippines and Vietnam. In the Thermos Business, the Company will generate earnings
by launching new products that capture customer needs, such as frying pans with detachable handles, whichwere rolled out in February 2019.
The Company’s full-year forecasts for the fiscal year ending March 31, 2020 are outlined below. The
assumed exchange rates for the primary foreign currencies of the U.S. dollar and euro are US$1 = ¥110 and€1 = ¥125, respectively.
Core operating
incomeRevenue
FYE2020(¥ billion)
FYE2019(¥ billion)
Change (%)

Operating income

Net income
attributable toowners of theparent

Net income

890.0

95.0

102.0

59.5

57.0

740.3

65.8

66.8

43.7

41.2

20.2

44.3

52.6

36.1

38.0

(4) Basic Policy on Profit Distribution and Dividends for FYE2019 and FYE2020
The Company’s basic policy is to continuously maintain a stable dividend, while remaining mindful of theneed to retain internal reserve to enhance and strengthen the business structure. The Company will strive toreturn profits to shareholders through a dividend policy linked to consolidated business performance.
In accordance with this policy, the Company plans to set the year-end dividend for the fiscal year underreview at ¥13 per share. Therefore, the Company plans to pay an annual dividend of ¥25 per share, including
an interim dividend of ¥12 per share. For the fiscal year ending March 31, 2020, the Company plans to pay
an annual dividend of ¥26 per share, including an interim dividend of ¥13 per share.
5. Management Policies, Business Environment and Key Priorities(1) Management Policies of the Company
The TNSC Group has embraced the corporate philosophy of “Market-driven collaborative innovation:
Improving the future through gases.” The TNSC Group has also adopted the following aspirations as thebasic policy guiding its corporate activities: We pride ourselves on our ability to act on customer feedback
and to partner with a wide range of industries to help improve the quality of life. And we shape the future
through gas technologies, crafting a harmonious relationship between people, society and the planet.
” Under this policy, the TNSC Group aims to achieve sustained growth and increase corporate value.
(2) Medium- and Long-Term Management Strategies
The TNSC Group’s long-term vision, formulated in May 2014, calls for the prompt achievement ofconsolidated revenue of ¥1 trillion. Guided by this vision, the TNSC Group achieved its numerical targets for
Ortus Stage 1, a three-year medium-term management plan that commenced in the fiscal year ended March
31, 2015. The TNSC Group is now implementing Ortus Stage 2, a four-year medium-term management planthat began in the fiscal year ended March 31, 2018.
Furthermore, the TNSC Group’s business scale has expanded significantly following the acquisition of theEuropean business of Praxair, Inc. of the United States in December 2018, and the acquisition of a portion of
the HyCO business and related assets from Linde America, a subsidiary of German company Linde AG, in
February 2019. The TNSC Group has therefore revised the numerical targets for the fiscal year ending March4

31, 2021, the final year of Ortus Stage 2.
The basic policies and key strategies laid out when the medium-term management plan was formulated will
be maintained until the plan’s final fiscal year. The key strategies are structural reform, innovation,
globalization and M&A.
FYE2019 Results(Ortus Stage 2 – 2nd Year)

FYE2021 Plan
(Ortus Stage 2 – Final Year)

Revenue¥740.3 billion¥910.0 billion

Core operating income¥65.8 billion¥100.0 billion

Core operating income ratio

8.9%

11.0%

Overseas revenue ratio

47.9%

55.0%

ROCE (Note 1)

6.2%

7.1%

Adjusted net D/E ratio (Note 2)

1.54

1.27

Notes:
1.

2.

The Company closely monitors the balance between core operating income, capital and interest-bearing
debt. Accordingly, the Company measures capital efficiency using return on capital employed (ROCE),
which is calculated as core operating income divided by invested capital (outstanding interest-bearing debt
+ equity attributable to owners of parent).
This indicator was added as a numerical benchmark when the Company revised its numerical targets in
February 2019. The adjusted net D/E ratio is an indicator of financial soundness calculated as adjusted
interest-bearing debt (interest-bearing debt – equity-type debt – cash and cash equivalents) divided byadjusted equity attributable to owners of the parent (equity attributable to owners of the parent + equity-typedebt). Equity-type debt refers to the amount of debt procured by hybrid finance that has been recognized as
equity credit by rating agencies.

(3) Key Priorities of the Company
In order to achieve the targets of the medium-term management plan in the fiscal year ending March 31,
2021, its final fiscal year, the TNSC Group will address the following key priorities:
Expand the Domestic Gas Business
Aiming to achieve sustained growth, the TNSC Group will strive to expand the gas and peripheral businesses,
including gas-related equipment and services, and to maximize Group-wide synergies. In addition, the TNSCGroup will strengthen its earnings capabilities mainly by promoting structural reforms in production andlogistics.
Globalization
The TNSC Group initiated global business expansion in the 1980s. With the acquisition of the European
business of Praxair, Inc. of the United States in December 2018, these efforts culminated in the creation of a
global network spanning the four hubs of Japan, the United States, Europe, and Asia and Oceania. Looking
ahead, the TNSC Group will enhance its collective capabilities by leveraging its networks in each region andbringing together their strengths. By doing so, the TNSC Group will expand its business scale further andimprove its earnings capabilities.
Strengthen the Financial Position
Based on the generation of stable operating cash flow, the TNSC Group will strive to systematically reduce
interest-bearing debt and improve the net D/E ratio at an early stage.
Safety, Quality, and Compliance
The TNSC Group will strengthen measures to ensure safety, quality and compliance around the world, inorder to lay a solid business foundation that will enable sustained growth.
6. Basic Policy on the Selection of Accounting Standards
From the fiscal year ended March 31, 2017, the TNSC Group has adopted International Financial ReportingStandards (IFRS) primarily for the purpose of improving the international comparability of financial statements inthe capital markets and to unify accounting procedures within the TNSC Group.

57. Notes to the consolidated financial statements
Note regarding going concern assumption
Not applicable.
8. Change in accounting policy
From the fiscal year under review, the TNSC Group has adopted IFRS 15, “Revenue from contracts withcustomers” (issued in May 2014) and “Clarifications to IFRS 15” (issued in April 2016) (hereinafter collectively
referred to as “IFRS 15”).
In accordance with the adoption of IFRS 15, the TNSC Group recognizes revenue, based on the following 5-stepmodel, in an amount that reflects the consideration to which the Group expects to be entitled in exchange forgoods or services transferred to customers.
Step 1: Identify the contract with the customer
Step 2: Identify performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) the performance obligations are satisfied
The TNSC Group conducts gas businesses in Japan and overseas, mainly for customers in the steel, chemical, andelectronics industries, and has built production and sales structures for its main products in Japan, the UnitedStates, Europe, and Asia & Oceania. In addition, the TNSC Group conducts the manufacture and sales business ofhousewares such as stainless steel vacuum bottles.
Regarding product sales in these businesses, because a customer acquires control over a product at the time theproduct is delivered, TNSC judges that its business obligations have been satisfied and recognizes its revenue, atthe time the product is delivered.
Revenue is measured from the price promised in the contract with the customer, after deducting such amounts as
discounts, rebates and returns.
The amount of the price in the sales contract of a product is generally collected within one year from the time
when control over the product is transferred to a customer, and does not include the important element of theinterest.
The impact of the adoption of IFRS 15 on the consolidated financial statements of the TNSC Group was negligible.
When IFRS 15 was adopted, a method, which was recognized as a transitional measure, was used to recognize thecumulative effect of adopting this standard on the date of starting the adoption. However, the cumulative financial
impact on the date of starting the adoption of this standard was negligible.
9. Segment information
Outline of reportable segments
The TNSC Group conducts gas businesses in Japan and overseas, mainly for customers in the steel, chemical, andelectronics industries, and has built production and sales structures for its main products in Japan, the UnitedStates, Europe, and Asia & Oceania.
In addition, the TNSC Group conducts the manufacture and sales business of housewares such as stainless steel
vacuum bottles. Therefore, the Company has established the following five reportable segments: Gas Business inJapan, Gas Business in the United States, Gas Business in Europe, Gas Business in Asia & Oceania, and Thermos
Business.
Changes to reportable segments
To display the results of the Thermos Business more clearly, from the fiscal year under review, the TNSC Grouphas changed the four existing reportable segments of Gas Business in Japan, Gas Business in the United States,
Gas Business in Asia & Oceania, and Thermos & Other Businesses, to the four segments of Gas Business in Japan,
Gas Business in the United States, Gas Business in Asia & Oceania, and Thermos Business. Furthermore, the Gas
Business in Europe has been added as a new reportable segment due to the acquisition of the European business of
Praxair, Inc. of the United States.
To facilitate the year-on-year comparisons, the figures for the preceding fiscal year have been reclassified based on
the changes to the reportable segments.

6

The principal products and services included in the four segments are shown in the table below.
Business segment

Main products and services

Gas Business in Japan
Gas Business in the
United States
Gas Business in Europe
Gas Business in Asia &Oceania
Thermos Business

Oxygen, nitrogen, argon, carbon dioxide, helium, hydrogen, acetylene, gasrelated equipment, specialty gases (electronic materials gases, pure gases, etc.),
electronics-related equipment and installation, semiconductor manufacturing
equipment, cutting and welding equipment, welding materials, plants andmachinery, liquid petroleum gas (LPG) and related equipment, medical-use
gases (oxygen, nitrous oxide, etc.), medical equipment, stable isotopes
Housewares

The accounting methods adopted for the reported operating segments are the same as the methods adopted toprepare the consolidated financial statements for the preceding fiscal year. Revenue from inter-segment
transactions and transfers is based primarily on prevailing market prices.
(1) Figures of revenue and income (loss) by reportable segment
FYE2018 (April 1, 2017 – March 31, 2018)(¥ million)
Business segment
Adjustments(Note 1)

Amounts on
theConsolidated
Statements ofIncome646,218―

646,21830

24,431(24,431)―

105,299

25,386670,649(24,431)646,218

―

9,236

7,749

61,925(1,891)60,033

19,319

―

6,603

1,050

43,256

10

43,266

―

―

―

―

0

―

0

Gas
Business
in Japan

Gas
Businessin theUnitedStatesGas
Businessin Europe

Gas
Business
in Asia &Oceania

Thermos
Business

Revenue toexternal customers

345,048

172,646―

103,166

25,356

Revenue frominter-segment
transactions andtransfers

10,837

11,430―2,132

355,886

184,076―

31,38013,559Depreciation andamortization

16,283

Impairment loss

0

Total

Revenue

Total
Segment income(Note 2)Other items

Share of profit(loss) of
associates andjoint ventures
279
(121)
―
(28)
3,357
3,487
0
accounted forusing the equity
methodNotes:
1. The ¥1,891 million negative adjustment for segment income is comprised of ¥312 million of intersegment
eliminations and companywide expenses of ¥1,578 million that were not allocated to any particular reportablesegment. These companywide expenses related principally to basic research expenses that were not allocated to aparticular reportable segment.
2. Segment income represents core operating income, which is calculated as operating income excluding certain gains orlosses attributable to non-recurring factors (non-recurring items).

7

3,488

FYE2019 (April 1, 2018 – March 31, 2019)(¥ million)
Business segment
Adjustments(Note 1)

Amounts on
theConsolidated
Statements ofIncome740,341―

740,341

37

26,454(26,454)―

109,977

27,837766,795(26,454)740,341

6,567

9,149

9,189

70,350(4,531)65,81921,710

8,855

6,257

1,090

55,992

118

56,111

―

―

1,340

―

1,438

―

1,438

Gas
Business
in Japan

Gas
Businessin theUnitedStates

Revenue toexternal customers

363,951

Revenue frominter-segment
transactions andtransfers

Gas
Businessin Europe

Gas
Business
in Asia &Oceania

Thermos
Business

187,323

55,101

106,164

27,8008,177

14,426―

3,813

372,129

201,749

55,10129,80815,634

Depreciation andamortization

18,077

Impairment loss

97

Total

Revenue

Total
Segment income(Note 2)Other items

Share of profit(loss) of
associates andjoint ventures
52
(121)
(6)
(10)
3,923
3,835
0
accounted forusing the equity
methodNotes:
1. The ¥4,531 million negative adjustment for segment income is comprised of ¥237 million of intersegment eliminations
and companywide expenses of ¥1,598 million that were not allocated to any particular reportable segment, as well as
the expenses of ¥2,695 million to acquire the European business. These companywide expenses related principally tobasic research expenses that were not allocated to a particular reportable segment.
2. Segment income represents core operating income, which is calculated as operating income excluding certain gains orlosses attributable to non-recurring factors (non-recurring items).

(2)Reconciliation of segment income with income before income taxes(¥ million)
FYE2018

FYE2019(April 1, 2017 to March 31, 2018)(April 1, 2018 to March 31, 2019)

Segment income
Gain on sales of noncurrent assets
Share of profit (loss) of associates
and joint ventures accounted forusing the equity method
Impairment loss
Other
Operating income

60,03365,819

1,209

1,336

(651)

―

(162)

(20)

(565)

(272)

59,862

66,863Financial revenue

1,299

2,294

Financial expenses(5,264)(7,074)55,89762,083

Income before income taxes

8

3,836

Per-Share Information
Basic earnings per share and the basis for share appraisal are as follows.
FYE2018

FYE2019(April 1, 2017 to March 31, 2018)(April 1, 2018 to March 31, 2019)

Net income attributable to owners of
the parent company (¥ million)

48,91941,291

Average number of shares (thousand
shares)432,762432,758

Weighted average number of shares (¥)
113.04
Note: Diluted earnings per share are not listed as there are no dilutive shares.

95.42

Important subsequent events
Not applicable.

9