Emerging ontoa Still Wider Stage

Consolidated Business Performancefor the Full-Year of the FYE2019
May 23, 2019

Contents

Business Performance for the Full-Year of the FYE2019
Overview of business performance for the full-year
Business performance by segment

Full-Year Forecasts for FYE2020
Overview of the Full-Year Forecast
Business Performance Forecast by Segment
Condensed Consolidated Statements of Cash Flows

State of Progress on
Medium-Term Management Plan Ortus Stage 2
Shareholder returns

Business Performancefor the Full Year of FYE2019

Ortus Stage 2

3

Overview of business performance
FYE2018
Results
Margin

Revenue

646.2

FYE2019
Results
Margin740.3

YoY
Change(Billions of yen)
FYE2019
Forecast(Announced on Feb.5)+94.1

Margin735.0+14.6%

Core operating
income60.0

Non-recurring profit and loss

-0.1

1.0

+1.1

0.5

59.8

66.8

+7.0

67.0

Operating income

Net income attributable toowners of the parent
Income tax decrease(Exceptional item)

65.8
9.3%

8.9%

9.3%

48.9

+5.8

9.0%

41.2
7.6%

-12.2

+9.6%

9.0%

+11.7%

-7.7
5.6%

66.5

-15.6%

0.0

+12.2

41.2

+4.5

9.1%

41.0
5.6%

(Reversal of deferred tax
liabilities in the U.S.)

Net income attributable toowners of the parent(excluding impact ofincome tax increase)

36.7

Foreign currency translations (US$→¥) FYE2018 full-year rate: US$1=¥110.70, FYE2019 full-year rate: US$1=¥111.07, (€→¥) FYE2019 full-year rate: €1=¥125.70,(AU$→¥) FYE2018 full-year rate: AU$1=¥85.78, FYE2019 full-year rate: AU$1=¥80.77
In its FYE2019 results, the Company has recorded advisory costs of ¥2.7 billion on core operating income in connection with the acquisition of European businesses.
In the FYE2018 results, the reversal of deferred tax liabilities at a subsidiary based in the United States, accompanying a reductionin the federal income tax rate under the U.S. Tax Cuts and Jobs Act, resulted in a decrease of ¥12.2 billion in income taxes.
44Overview of Business Performance: Reasons for Changes in Revenue
Revenue increased substantially, supported by the positive impact of theacquisition of IMI Co., Ltd. to strengthen the medical business in Japan, alongwith a positive contribution from the European business of Praxair, Inc. of
the United States, the acquisition of which was completed in December 2018.

¥94.1 billion

+18.9

+14.7

+55.1

Including foreignexchange impact+3.0+2.5 （14.6% up ）Including foreignexchange impact

Including foreignexchange impact

-2.1

+0.01

＋0.6

740.3
646.2

FYE2018
ResultFYE2018 Result
5

Gas
Business
in Japan

Gas
Business in
the U.S.

Gas
Businessin Europe

Gas Businessin Asia &Oceania

Thermos
Business

363.9

187.3

55.1

106.1

27.8

345.0

172.6

－

103.1

25.3

FYE2019
Result（Billions of yen）
FYE2019 5Result

5Overview of business performance: Reasons for Change in Core Operating Income
Earnings rose substantially owing to a strong showing by the Gas Business in
the United States and the acquisition of the European business of Praxair, Inc.,
although earnings declined in the Gas Business in Japan due to the impact ofrising costs for electric power and a shortage of carbon dioxide gas sources.

+2.1
-1.5

exchange impact＋0.04（9.6% up ）

+1.4

+6.5

Including foreign+ ¥ 5.8billion-0.1

Including foreignexchange impact

Including foreignexchange impact

+0.01

-2.7

-0.2

65.8

60.0

FYE2018
ResultFYE2018 Result

Gas
Business
in JapanGas Business
Gas
Gas
in Asia &Business Business in
Oceania
Europein the U.S.

Thermos

Eliminations
or Corporate

FYE2019
Result（Billions of yen）

29.8

15.6

6.5

9.1

9.1

-4.5 *

31.3

13.5

－

9.2

7.7

-1.8

FYE2019 Result*In its FYE2019 results, the Company has recorded advisory costs of ¥2.7 billion on core operating income in connection with the acquisition of European businesses.

66Business Performancefor the Full Year of FYE2019
Business Performance by Segment
Ortus Stage 2

7

Business Performance by Segment：Gas Business in Japan
Gas Business in Japan
Revenue
Segment income (core operating income)

363.9(Billions of yen)

FYE2018
ResultFYE2019
ResultYoY
ChangeRevenue

345.0

363.9

+18.9

Segment income(core operating income)

31.3

29.8

-1.5

+5.5%

345.0

31.3

▲5.0%

FYE2018
Result29.8
FYE2019
ResultReasons for changes in revenue and segment income (YoY)
Positive factors

Negative factors

 Increased revenue in the on-site business due to a year-roundcontribution from the opening of JFE SANSO CENTER
Kurashiki Plant
 Increased revenue and segment income from hard goods

owing to favorable sales of laser cutting equipment (for metal
processing) Increased revenue and segment income in the medical

business from the effects of the acquisition of IMI Co., Ltd.,a medical equipment sales company
8 Decreased segment income reflecting higher production costs

for air separation gases due to rising fuel prices
 Decreased segment income reflecting increased costs due to ashortage of carbon dioxide gas sources Decreased revenue and segment income due to soft shipmentsof electronic materials gases for certain product fields

8

Business Performance by Segment：Gas Business in the U.S.
Gas Business in the U.S.

(Billions of yen)

FYE2018
ResultFYE2019
ResultYoY
ChangeRevenue

172.6

187.3

+14.7

Segment income

13.5

15.6

+2.1

(core operating income)Revenue
Segment income (core operating income)

187.3

172.6
+8.5%

13.5

+15.3%

FYE2018
Results

Impact of foreign currency translation: positive impacts of ¥0.6billion
on revenue and ¥0.04 billion on core operating income

15.6
FYE2019
Results

Reasons for changes in revenue and segment income (YoY)
Negative factors

Positive factors
 Increased revenue and segment income from bulk and hard

goods due to steady operations in the manufacturing sector within
the United States (steel, construction, energy)
 Increased revenue and segment income in the on-site business,

 Nonedue to the start of operation of new projects such as projects forchemicals manufacturers
 Increased revenue and segment income due to the contribution of

the HyCO business acquired from Linde AG of Germany

99Business Performance by Segment : Gas Business in Europe
Gas Business in Europe
Revenue
Segment income (core operating income)(Billions of yen)

Revenue

Segment income(core operating income)

FYE2018
ResultFYE2019
ResultYoY
Change

ー

55.1

+55.1

ー

6.5

+6.5

55.1

6.5

None
FYE2018
ResultFYE2019
Result・ The FYE2019 result represent business performance for the four-month period from December 2018 to March 2019of the European business acquired from U.S. company Praxair, Inc.
* One-off expenses incurred in FYE2019:
Recorded a ¥0.7 billion increase in cost of sales due to market price valuation of inventories (FYE2019 only) based onpurchase price allocation* Expenses that will continue to be incurred in and after FYE2019:
Recorded expenses of ¥3.2 billion due to an increase in depreciation and amortization expenses on property, plant andequipment and intangible assets (FYE2019 Q3, Q4) based on purchase price allocation

10
10

Business Performance by Segment: Gas Business in Asia and Oceania
Gas Business in Asia & Oceania
Revenue(Billions of yen)

Revenue

FYE2018
Result103.1

FYE2019
Result106.1

YoY
ChangeSegment income (core operating income)

106.1

103.1

+2.9%

+3.0
-0.1

9.2

Impact of foreign currency translation: negative impacts of ¥2.1 billion
on revenue and ¥0.2 billion on core operating income

FYE2018
ResultSegment income(core operating income)

9.2

9.1

-0.9%

9.1
FYE2019
ResultReasons for changes in revenue and segment income (YoY)
Positive factors

Negative factors

 Increased revenue and segment income due to a solid showing by

the industrial gas business in China
 Increased revenue and segment income atop favorable shipments

centered on bulk gases in Vietnam and the Philippines. Results in
Singapore also rebounded.
 Higher revenue due to favorable sales of LPG and related equipment

in Australia.
 Increased revenue and segment income due to favorable shipments

 Lower segment income as very little progress was made on

passing higher purchasing prices for LPG in Australia on to sales
prices.
 Decreased segment income due to the recording of impairment

losses on assets of ¥1.3 billion in Singapore*of electronic materials gases in East Asia, despite a decline inrevenue due to the impact of a change in accounting treatment in
Taiwan.
* In the natural gas liquefaction business under way in Indonesia (a business to provide services to liquefy and transport natural gas for power generation), the Company
recorded impairment losses on assets related to this business due to a decline in future profitability following drastic changes in the market environment surrounding
raw11
material and fuel.

11

Business Performance by Segment : Thermos Business
Thermos business
Revenue(Billions of yen)

FYE2018
ResultFYE2019
ResultYoY
ChangeRevenue

25.3

27.8

+2.5

Segment income

7.7

9.1

+1.4

(core operating income)

Impact of currency translations: positive impacts of ¥0.01 billion onrevenue and ¥0.01 billion on core operating income

Segment income (core operating income)

27.8

25.3
+9.6%

7.7

9.1

+18.6%

FYE2018
ResultFYE2019
ResultReasons for changes in revenue and segment income (YoY)
Positive factors

Negative factors

 Increased revenue and segment income in Japan atop favorable

sales led by sports bottles. The launch of frying pans also had theeffect of contributing positively to results.
 Higher revenue and segment income in South Korea, due tofavorable sales as a result of stronger sales channels.

 Contraction in demand from inbound tourists.

 Increased revenue and segment income owing to stable operationsof production plants in the Philippines and Malaysia.
 Higher earnings at overseas group companies accounted for by theequity method, centered on China-related business

1212Overview of the Full-Year
Forecast for FYE2020

Ortus Stage 2

13Overview of the Full-Year Forecast(Billions of yen)
FYE2019
Results

FYE2020
Forecast

Margin

Revenue

740.3

Margin890.0

YoY
Change+149.7+20.2%

Core operating income

65.8

95.0
8.9%

+29.2
10.7%

+44.3%

Non-recurring profit and loss

1.0

7.0

+6.0

Operating income

66.8

102.0

+35.2

9.0%

Net incom e attributable toow ners of the parent

41.2

11.5%

57.0
5.6%

+52.6%+15.8
6.4%+38.0%

Assumed exchange rate for FYE2020: (US$¥): $1=¥110, (EUR¥): €1=¥125
In FYE2020, the Company plans to record non-recurring profit of ¥7.0 billion on the sale of its assets as part ofefforts to improve asset efficiency.
1414

Full-Year Forecast : Reasons for Changes in Revenue
The Company targets substantial revenue growth through on-site projects that will
successively start operations in the United States and the contribution of the HyCO
business acquired from Linde in February 2019, as well as the year-roundcontribution of the Gas Business in Europe, which was acquired in December 2018.

+ ¥ 149.7billion+117.9+11.1+4.9+2.2 （20.2% up ）

+13.7
890.0

740.3

FYE2019
ResultFYE2019Result

Gas Business Gas Business Gas Business Gas Business
in Europein Japanin the U.S.
in Asia &Oceania

Thermos
Business

FYE2020
Forecast（Billions of yen）

375.0

201.0

173.0

111.0

30.0

363.9

187.3

55.1

106.1

27.8

FYE2020 Forecast

15
15

Full-Year Forecast : Reasons for Change in Core Operating Income
In Japan, the Company will strive to improve the profitability of the carbon dioxidebusiness. The Company seeks to capture economic growth in East Asia andSoutheast Asia, in addition to generating higher earnings on higher revenue in
the Gas Business in the United States and the Gas Business in Europe.

+ ¥ 29.2billion
+20.0
+0.8

+2.4

+0.3

+2.5

（44.3% up ）

+3.4

95.0
65.8
FYE2019
Gas
Result Businessin Japan

Gas
Businessin the U.S.

Gas
Businessin Europe

Gas Business Thermos
in Asia &Business
Oceania

Eliminations
or Corporate

FYE2020
Forecast（Billions of yen）

FYE2019Result

30.6

19.0

26.5

11.5

9.4

-2.0

29.8

15.6

6.5

9.1

9.1

-4.5

FYE2020 Forecast1616Overview of the Full-Year
Forecast by Segment for FYE2020

Ortus Stage 2

17Business Performance Forecast by Segment: Gas Business in Japan The Japanese manufacturing sector is expected to make firm investments in improving quality

and productivity and conserving labor, despite some uncertainty mainly due to the impact oftrade friction between the U.S. and China, and the consumption tax hike in Japan.

External
conditions

 The Japanese electronics industry is in an inventory adjustment phase, but it is expected to

track a recovery path from the second half of FYE2020.
 Following on from the previous fiscal year, gas production costs are expected to continue

increasing due to rising fuel prices.

Initiatives to achieve the target during the current period（Billions of yen）
Revenue Industrial Gas

Segment Income

Core operating income ratio

9.1%

8.2%
8.2%
363.9

FYE2018
Result Electronics

+3.0%

345.0

31.3

375.0

29.8

FYE2019
Result・Continue to expand gas and peripheral businesses by bringing
together the Group’s business foundation under the Total TNSC
concept
・Measures to revise prices of air separation gases

＋2.7%

30.6

FYE2020
Forecast

・Expand transactions with major customers
・Expand sales promotions according to market conditions throughnew products (high-purity gas refining equipment) Medical
・Grow the medical equipment business by fostering collaboration
within the TNSC Group Measures to reduce production and logistics costs
・Push ahead with cost reductions by improving the shipment ratio
from highly efficient plants
・Rationalize logistics by utilizing information and communications
technology

18
18

Business Performance Forecast by Segment: Gas Business in the U.S.

External
conditions

 The United States economy is forecast to remain firm.
 Progress on infrastructure investment based on economic policies is expected.

Initiatives to achieve the target during the current period（Billions of yen）
Revenue

Segment Income

 Industrial Gas

Core operating income ratio

9.5%
8.3%
7.9%
172.6

201.0

187.3
+7.3%
19.0

13.5

FYE2018
Result15.6

FYE2019
Result+21.5%
FYE2020
Forecast

・ Increase earnings through the stable operation of new on-site
projects and growth in sales of highly competitive bulk gas products
accompanying production
・ Promote growth in sales of carbon dioxide gas, for which demand is
expected to increase for food processing and refrigerated storage(utilize increases in production capacity)
・ Steadily incorporate increased demand (bulk gases, hard goods,
packaged gas) due to economic growth・Smoothly transfer the HyCO business acquired from Linde toMatheson Electronics

・ Deepen relationships with strategic
customers under the Total Electronics framework

19
19

Business Performance Forecast by Segment: Gas Business in Europe The European economy is showing signs of an overall slowdown, including a downward revision

External
conditions

to the economic growth rate forecast for Germany. However, the European economy offers
prospects for growth in new demand, in addition to firm existing demand, depending on the region
where business is undertaken and the users.

（Billions of yen）
Revenue

Initiatives to achieve the target during the current period

Segment Income

15.3%Core operating income ratio

173.0
11.9%
55.1
6.5

+214.0%+303.5%FYE2019 Result

26.5

FYE2020 Forecast

14.8%

15.3%

169.0

173.0

+2.4%

25.0
FYE2019

+6.0%

26.5

 Industrial Gas

・Capture growth in demand for on-site, bulk, and packaged gasesin Spain, Germany, and the Benelux countries
・Drive growth in the coolant gas business in Italy
・Strive to pass rising costs for electric power and personnel on tosales prices
・Capture growing demand for carbon dioxide gas
 Generate acquisition synergies

・Pursue synergies within the Group through the expansion of theelectronics business and gas applications and by deepening
relationships with existing customers with whom the Group hasbusiness ties in other regions

FYE2020 Forecast

Pro forma information**The figures above represent the business performance of the Gas Business in Europe from April 1, 2018 to March 31, 2019, assuming the acquisition date of
the European business acquired from U.S. company Praxair, Inc. was April 1, 2018.To facilitate comparisons with FYE2020, core operating income reflects
an annualized amount of ¥9.5 billion as an increase in depreciation and amortization expenses on property, plant and equipment and intangible assets due
to20
purchase price allocation (PPA), while excluding a ¥0.7 billion increase in cost of sales due to market price valuation of inventories due to PPA.

20

Business Performance Forecast by Segment: Gas Business in Asia & Oceania
 East Asia (China, Taiwan, South Korea): Production adjustments are expected to continue through2019 in the semiconductor industry.

External
conditions

 Southeast Asia: The economy is expected to trend firmly as ASEAN countries continue to conduct

infrastructure investment and attract foreign companies into the region.
 Australia: Main industries including construction, food, and energy are expected to perform solidly.

Initiatives to achieve the target during the current period（Billions of yen）
Revenue Industrial Gas

Segment Income

Core operating income ratio

10.4%

9.0%

8.6%

103.1

106.1

+4.6％
+4.6%

9.2

9.1

+25.7%

111.0

11.5

・China: Capture demand for bulk gases for the chemicals industry,where production is firm.
・Vietnam: Expand business through the start of operation of a new
on-site project・Philippines: Expand earnings centered on the electronic components
industry・Australia: Capture further demand for nitrogen gas (energy industry)
and carbon dioxide gas (food) Electronics

FYE2018
ResultFYE2019
ResultFYE2020
Forecast

・ Step up efforts to deepen relationships with existing customers bypromoting a unified Group strategy (demand, quality, cost)for strategic customers

21
21Business Performance Forecast by Segment: Thermos Business

External
conditions

 Japan: Demand from inbound tourists does not offer prospects for growth.
 Overseas: Softening internal demand in China and intensified competition in North America are

expected.

Initiatives to achieve the target during the current period（Billions of yen）
Revenue

Segment Income JapanCore operating income ratio

30.6%
25.3

31.3%

33.1%

30.0

27.8
+7.9%

・Enhance and expand the product lineup of kitchenware
・Launch new products for the home
・Seek to capture loyal customers by increasing the numberof directly operated brick-and-mortar shops and using the
Thermos e-commerce website
 Overseas

7.7
FYE2018
Result9.1

FYE2019
Result+2.3%

9.4

FYE2020
Forecast

・ South Korea: Strive to expand new sales channels and increase
sales of products for kids, and lunch jars
・Southeast Asia: Promote the expansion of sales channels
 Production structures

・ Prevent sales opportunity loss through stable operations of
production plants in the Philippines, Malaysia and China

22
22

Overview of the Full-Year
Forecast for FYE2020
Condensed Consolidated Statements ofCash Flows
Ortus Stage 2

23

Condensed Consolidated Statements of Cash Flows(Billions of yen)

FYE2019
ResultFYE2020
Forecast

YoY
ChangeProfit before income taxes

62.0

86.5

+24.5

Depreciation and amortization

56.1

83.0

+26.9

Changes in working capital

-2.4

-3.5

-1.1

Other

-17.0

-35.5

-18.5

Cash flows from operating activities

98.6

130.5

+31.9

Capital expenditures

-74.1

-29.3

Investment and loans-691.1-103.4－+691.1Other (sale of assets, etc.)

10.3

8.0

-2.3

-754.9-95.4+659.5

Free cash flows-656.235.1+691.3

Net interest-bearing debt

941.1

918.1

-23.0

Adjusted net D/E ratio

1.54Ｘ

1.38Ｘ

-0.16 pt.

Cash flows from investing activities

Net interest-bearing debt: Interest-bearing debt – cash and cash equivalents**Under IFRS, time deposits with maturities longer than three months are not included in cash and cash equivalents.
However, these time deposits are reflected in the calculation of net interest-bearing debt disclosed by the Company.
Adjusted net D/E ratio: (Net Interest-bearing debt – equity-type debt) / (equity attributable to owners of the parent + equity-type debt)
Equity-type debt: The amount of debt procured by hybrid finance that has been recognized as equity credit by rating agencies. (50% of the procured amount)
Hybrid finance: A form of debt financing that has features resembling equity, such as voluntary deferral of interest, extremely long-term redemption
periods and subordination during liquidation or bankruptcy procedures.
24

24

State of Progress on
Medium-Term Management Plan
Ortus Stage 2

Ortus Stage 2

25

State of Progress on Ortus Stage 2
890.0
Final Year of
Ortus Stage 1
Revenue（Billions of yen） 581.5

740.3
620.0
95.0

Operating
Income

54.7

910.0

60.0

100.0

65.8

（Billions of yen）

FYE2017

FYE2018

FYE2019

FYE2020

FYE2021

Actual (IFRS)

Actual (IFRS)

Actual (IFRS)

Target (IFRS)

Planned (IFRS)Revenue

581.5

646.2

740.3

890.0

910.0

Core operating
income

54.7

60.0

65.8

95.0

100.0

Core operating
income ratio

9.4%

9.3%

8.9%

10.7％

11.0%

Overseas revenue
ratio

40.8%

43.3%

47.9%

55.0%

55.0%

ROCE*1

8.4%

8.4％

6.2%

6.6％

7.1%

－

－

1.54 x1.38 x1.27 xAdjusted net D/E ratio*2* 1 ROCE (Return on capital employed) = Core operating income* /(Outstanding Interest-bearing Debt + Equity attributable to owners of parent)* The figure for core operating income is calculated as operating income excluding certain gains and expenses attributable to non-recurring factors (non-recurring items**).
** Non-recurring items apply to structural reform costs (business contraction, withdrawal, extraordinary severance payments), loss caused by natural disaster or
major accident and other matters (including disposal of idle assets).
*2 The adjusted net D/E ratio refers to the net D/E ratio adjusted to reflect hybrid finance that has been recognized as equity credit by rating agencies.
26

26

Shareholder returns

Ortus Stage 2

27

Shareholder returns
Implement a dividend policy linked to business performance,
while maintaining a stable dividend¥30

Year-end
Interim

¥20

¥13

¥12

（Forecast）

¥11

¥12

FYE2018

FYE2019

¥11
¥9

¥10

¥6

¥7

¥6

¥6

¥7

FYE2014

FYE2015

FYE2016¥9¥0
FYE201728
28

Thank you

Ortus Stage 2

Reminders

The information contained here is not disclosure information for securities trading.
The accuracy and completeness of this information are not guaranteed.
The briefing session and this material describe future plans and strategies, as well
as forecasts and outlooks of business performance. These plans and strategies, aswell as forecasts and outlooks, are made by Taiyo Nippon Sanso based on its
judgments and estimations made in accordance with the information available atpresent. Actual performance will be subject to changes caused by a variety of risks
and uncertainties (such as economic trends, market demand, exchange rates,
taxation systems and various other systems and institutions, but not limited tothem).
We wish to remind you, therefore, that the actual business performance may differ
from the forecasts and outlooks made at this time. Please refrain from making
investment judgments based solely on this information.