Emerging ontoa Still Wider Stage
Consolidated Business Performancefor the Full-Year of the FYE2018
May 16, 2018

Contents
Business Performance for the Full-Year of theFYE2018
Overview of business performance for the full-year
Business performance by segment

Full-Year Forecasts for FYE2019
Forecasts for the Full Year
Gas Business in Japan
Gas Business in the U.S.
Gas Business in Asia & Oceania
Thermos BusinessState of Progress of Ortus Stage 2

Shareholder returns

Business Performance for theFull Year of FYE2018

Ortus Stage 23

Overview of business performance(Billions of yen)

RevenueCore operating
incomeNon-recurring profit and loss

Operating income
Net income attributable toowners of the parent
Income tax decrease(Exceptional item)
Net income attributable toowners of the parent(excluding impact ofFYE2017

FYE2018

Results

Results(IFRS)(IFRS)

581.5

646.2

FYE2018
YoY Change

Forecast (IFRS)(Announced Target)

Margin

+64.7

635.0

11.1%

54.7

60.0

9.4%

9.3%

+5.3

60.0

+9.7%

9.4%

-1.0

-0.1

+0.9

0.0

53.6

59.8

+6.2

60.0

9.2%

34.7
6.0%

-1.1

9.3%

48.9
7.6%

-12.2

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

33.6
5.8%

+11.5%+14.2+40.8%

9.4%

48.0
7.6%

-11.1

(U.S . corporat e t ax reduct ion)

36.7
5.7%

+3.1
+9.2%

Impact of foreign currency translations (US$→¥):
FYE2017 full-year rate: US$1=¥108.72, FYE2018 full-year rate: US$1=¥110.70
4 → Currency translations had a positive impact of ¥6.8 billion on revenue and ¥0.6 billion on core operating income

4Business performance by segment(Billions of yen)

Gas

Revenue

FYE2017

FYE2018

Results

Results(IFRS)(IFRS)

321.4

342.4

Segment
incomeGasRevenue

29.4
147.2

30.7+1.3

172.6

+25.4

Segment
incomeGas

Revenue

Oceania

12.0

13.5

Thermos+1.5

incomeRevenue

85.8

103.1

5.1

9.2

+17.3

+4.1
+78.8%

27.0

27.9+0.9+3.5%

and Otherbusinesses Segment
income➢JFE SANSO CENTER Kurashiki Plant started operation➢Electronics-related business: Favorable sales of electronic materials gases➢LP gas: Higher sales price following an increase in the import price➢Increased costs in line with rising crude oil prices➢Electronics-related business: Sales of electronic materials gases trended favorably➢Recognition of business acquired from Air Liquide contributed \13.8 bn➢Higher revenue mainly from bulk gases, packaged gases and hard goods➢Impact of foreign currency translation: +¥2.7 bn➢Increased segment income mainly due to higher revenue from bulk gases, packaged gases
and hard goods+12.3% ➢Impact of foreign currency translation: +\0.2 bn+20.1%
Segment

Factor➢Business acquired from Air Liquide contributed to increased segment income

Business
in Asia and+4.4%+17.2%

Businessin the U.S.

21+6.5%Business
in JapanYoY Change10.0

8.3-1.7-16.5%➢Impact of consolidating Supagas Holdings Pty Ltd (Australia): +\9.1 bn➢China, Taiwan, South Korea: Solid sales of electronic materials gases➢Impact of foreign currency translation: +\3.8 bn➢Impact of consolidating Supagas Holdings Pty Ltd (Australia): +\1.6 billion➢China, Taiwan, South Korea: Increased proﬁt due to increased sales of electronic materials gases➢Impact of foreign currency translation: +\0.3 bn➢Japan: Solid sales centered on vacuum insulated portable mugs and tumblers➢Overseas: Increased revenue from expanded sales channels in South Korea➢Impact of foreign currency translation: +\0.3 bn➢Japan: Segment income decreased due to increased expenses (primarily advertising expenses)➢Overseas: Sluggish business performance by Group companies accounted for by the equity method➢Impact of foreign currency translation: +\0.1 bn※ Segment income: Numerical value calculated by subtracting losses (nonrecurring items) produced by nonrecurring factors fromoperating income.
55

Full-Year Forecasts for FYE2019
Overview

Ortus Stage 2

6Forecasts for the Full Year

(Billions of yen)

FYE2018

FYE2019

Results (IFRS)Results (IFRS)

Margin

RevenueCore operating
incomeNon-recurring profit and loss

Operating income
Net income attributableto owners of the parent
Income tax decrease(Exceptional item)
Net income attributableto owners of the parent(excluding impact of income tax increase)

646.2

YoY Change

Margin

670.0

3.7%

60.0

64.0
9.3%

+4.0
9.6%

+6.6%

-0.1

0.5

+0.6

59.8

64.5

+4.7

9.3%

48.9

9.6%

40.0
7.6%

6.0%

-12.20(U.S. corporate tax reduction)(Not scheduled)

36.7

40.0
5.7%

+7.7%

-8.9
-18.2%+12.2+3.3
6.0%

Assumed exchange rate (US$→¥): US$1=¥105, * FYE2018 rate: US$1=¥110.70
7+23.8+8.9%

7

Full-Year Forecasts: Reasons for Changes in Net Sales
Growth scenario
Firm No. 1 position in Japan, further expand business and raise operational
density in North America, Asia and other overseas growth markets.

¥23.8 billion+15.0+2.4+3.9+2.7

Including foreignexchange impact of-¥8.9 billion

670.0

646.2
FYE2018ResultFYE2018 ResultGas Businessin Japan*Gas Businessin the U.S.

（up 3.7％）

Gas Businessin Asia &Oceania

Thermos*FYE2019
Forecast（Billions of yen）

360.0

175.0

107.0

28.0

345.0

172.6

103.1

25.3

FYE2019 Forecast

Aim for steady improvement in performance to achieve Ortus Stage 2
quantitative target of ¥800 billion* From FYE2019, businesses other than the Thermos business that had previously been classified under “Thermos and Other Businesses”
have been transferred to the “Gas Business in Japan” segment.
88Full-Year Forecasts: Reasons for Change in Core Operating Income
Growth scenario
Firm No. 1 position in Japan, further expand business and raise operational
density in North America, Asia and other overseas growth markets.

+0.5

FYE2018 Result+1.6

Including foreignexchange impactof -¥0.7 billion

60.0
FYE2018
Result+0.5+1.5¥4.0 billion+０ (up 6.6%)

Gas Businessin Japan*

64.0

Gas Business Gas Business inin the U.S.
Asia & Oceania

Thermos*

Eliminations orCorporate

FYE2019
Forecast（Billions of yen）

31.8

14.0

10.7

9.3

-1.8

31.3

13.5

9.2

7.7

-1.8

FYE2019 Forecast

Expand business in Japan and overseas and improve earning capabilities bypromoting structural reforms to achieve Ortus Stage 2 quantitative target of ¥76.0 billion* From FYE2019, businesses other than the Thermos business that had previously been classified under “Thermos and Other Businesses”
have been transferred to the “Gas Business in Japan” segment.
99

Full-Year Forecasts for FYE2019

Gas Business in Japan

Ortus Stage 210

Gas Business in Japan
Japanese manufacturing operations including steel, chemicals,
transportation equipment and construction machinery are generally
good and gradual growth is expected

Externalconditions

The semiconductor industry is expected to maintain its strong
performance, but fears of a slowdown in some product sectors remain
Increased costs are expected in line with rising crude oil prices

400.0
380.0

（Billions of yen）

Initiatives to achieve the target during the current period

Revenue
Segment Income55

360.0

360.0

345.0
340.0
320.0
300.0

323.7

+15.0
+4.3％

35+0.530.0

31.3

FYE2017
Result*FYE2018
Result*

45

+1.3％

31.8
FYE2019
Forecast25* From FYE2019, businesses other than the Thermos business that had previously
been classified under “Thermos and Other Businesses” have been transferred tothe “Gas Business in Japan” segment. The above graph has been adjusted toaccount for applicable conversions and enable a comparison of standards.
■Amount transferred
FYE2017: ¥2.3 billion in net sales and ¥0.6 billion in core operating income
FYE2018: ¥2.6 billion in net sales and ¥0.6 billion in core operating income
11Industrial Gas
・Expand the customer base (expand earnings in bulk gases,
hard goods and gas-related equipment) through Groupsynergies (Concept of “Total TNSC”)
・ Expand the carbon dioxide gas business (promote pricerevision, utilize the Mizushima New Plant)
・ Expand on-site earnings through a year-round contribution
from JFE SANSO CENTER Kurashiki Plant
・ Expand medical growth areas (Home medical care, respiratory
care products, bio and Stable Isotope)
Electronics
・ Securely capture increased demand from existing customers(LCD, semiconductors)
Energy・ Capture fuel conversion demand (oil → LPG)
・ Expand consumer commercial rights through M&A

11

Full-Year Forecasts for FYE2019

Gas Business in the U.S.

Ortus Stage 212

Gas Business in the U.S.
Production expansion is expected throughout the entire manufacturingindustry (tax system revisions, labor market improvements)
Infrastructure investment is expected

Externalconditions

Business opportunities increase due to expanded electronics tradetransactions
Anticipated exchange rate of US$1=¥105, higher yen than the previous
year’s forecast

200.0（Billions of yen）

30

Revenue

Industrial Gas

Segment Income

180.0

172.6

+2.4

175.0

+1.4％

160.0
140.0

12.0

100.0

FYE2017
Result13.5

FYE2018
Result+0.5
+3.3％

2520

147.2

120.0

1514.0FYE2019
Forecast

105

Anticipated impact of currency translations: decreases of ¥8.9 billionin net sales and ¥0.7 billion in core operating income
13Initiatives to achieve the target during the current period・ A series of new on-site operations starting will lead to growthin sales and profits and expansion in highly competitive bulk
gas products accompanying production
・ Expand earnings through effective utilization (new expansion,reduced distribution costs) of the new carbon dioxide plant(in Pennsylvania)
・ Steadily incorporate increased demand (bulk gases, hard
goods, packaged gas) due to economic growth
Electronics
・ Expand electronic materials gases by strengthening sales
capabilities for strategic customers
・ Deepen relationships with existing customers by improving
quality and promoting stable supply13Gas Business in the U.S.: New on-site operations start
Launch on-site operations in two places in Louisiana and one each in Texas and Nebraska,
aim to secure more on-site projects by leveraging the industrial gas product network
throughout the U.S.
On-siteBulkgases

ASU under construction in Nebraska(Scheduled to start supplying for Nucor Corporation
around the start of 2019)

LegendCorporate headquarters
Air separation unitAir separation unit(under construction)
Carbon dioxide plants

Nitrous oxide plants
Business bases
Bulkgases

ASU under construction inVernon, California(Scheduled to start
operations in December2018)14

On-siteBulkgases

ASU under construction in Texas (Scheduled tostart operations for on-site user in May 2018)

On-site

Bulk
gases

ASU under construction in Louisiana (Scheduled to start
supplying Sasol Chemicals (USA) LLC in December
2018; Scheduled to start supplying Lotte ChemicalLouisiana LLC around the start of 2019)14

Full-Year Forecasts for FYE2019

Gas Business in Asia & Oceania

Ortus Stage 215

Gas Business in Asia & Oceania
East Asia (China, Taiwan, South Korea): Semiconductor manufacturers are
reinforcing facilities

Externalconditions

Southeast Asia: Production activities are brisk in all areas, including steel,automotive components and electronic components
Australia: Solid in main industries including infrastructure, food, medicalcare and oil and gas
Initiatives to achieve the target during the current period（Billions of yen）

25

Revenue

120

Segment Income110

・ Philippines: Expanding earnings centered on electronic components

103.1

100

85.8+1.59.2

7060+15.9％

10.7

5.1
FYE2017
Result1620・ Vietnam: Expand sales through the start of operations of the newplant in northern Vietnam

15・ Singapore: Expand sales of hard goods (expand sales channels, rollout overseas)
・ Australia: Capture nationwide demand

80

50

107.0

+3.9
+3.7％

90

Industrial Gas

FYE2018
ResultFYE2019
Forecast

1050

・ India: Expand sales of bulk gases due to stable plant operations,
expand helium sales

Electronics
・ Promote a unified Group strategy (demand, quality, cost) forstrategic customers
・ Steadily incorporate expected increase in demand(NAND/Logic)
・ Pursue sales expansion resulting from the impact of reinforced
facilities (South Korea/China)

16

Gas Business in Asia & Oceania:
Expand business by realigning Australian operating companies
Two Australian operating companies were realigned
in April 2018 and the new Supagas Pty Limited emerged

New Supagas
Business overview
・Net sales: ¥21.0 billion
・Core operating income: ¥3.4 billion (FYE2018 results)
・Share of Australian market: Approx. 10%(TNSC estimate)NorthernTerritory

・Handled commercial materials: Propane gas and related equipment,
air separation gases, carbon dioxide gas, helium

Queensland

Aim of the business realignment

WesternAustralia

・Capture demand through a nationwide rollout of dealers anddistributors

SouthAustralia

New South
Wales

Legend・Promote supplementation and completion of commercialmaterials (LP gas-related equipment, carbon dioxide, helium)
・Rationalizing corporate functions

Newly established liquefied carbon dioxide
production plant

Supagas Headquarters
Supagas Air separation units

Start operations in November 2018 (scheduled)

Supagas Business bases

Victoria

Former Renegade Gas Pty Ltd
headquarters
Former Renegade Gas business base

Newly establish a liquefied carbon dioxide gas
production plant in Nowra, New South Wales

Tasmania

Install production facilities for dry ice in Sydney,
BrisbaneLiquefied carbon dioxide gas plant(under construction)

17

Expand sales in food and beverages, where growing
demand is expected

Expand earnings by leveraging the production and sales network
located throughout Australia

17Full-Year Forecasts for FYE2019

Thermos Business

Ortus Stage 218

Thermos Business
Demand for vacuum insulated bottles is solid in Japan and demand among
Externalconditions

inbound tourists has a firm foundation
Firm demand in the U.S., impact of industry reorganization remains in Europe
Demanded expected to grow in East and Southeast Asia

4030（Billions of yen）

20Revenue

Initiatives to achieve the target during the current period

Segment Income

24.7

25.3

100FYE2017
Result*28.0+10.4％

20

9.4

+2.7

+1.6
7.7

FYE2018
Result*+20.0％

1510・ Expand sales through introduction of new products (insulatedmugs) and product lineup expansion (kitchenware)

5・ South Korea: Expand product categories, expand earnings
by broadening sales channels

9.3FYE2019
Forecast0* From FYE2019, businesses other than the Thermos business that had previously
been classified under “Thermos and Other Businesses” have been transferred tothe “Gas Business in Japan” segment. The above graph has been adjusted toaccount for applicable conversions and enable a comparison of standards.
■Amount transferred
FYE2017: ¥2.3 billion in net sales and ¥0.6 billion in core operating income
FYE2018: ¥2.6 billion in net sales and ¥0.6 billion in core operating income
19JapanOverseas

・ North America: Inventory adjustment completed in previousyear, business to rebound in current year
・ Europe: Improve earnings by realigning the alfi GmbHbusiness (expand sales of Thermos products, strengthenmarketing, cut costs)
Production structures
・ Eliminate sales opportunity loss through stable operations ofproduction plants in the Philippines, Malaysia and China, andstrengthen supply to Europe

19Full-Year Forecasts for FYE2019

State of Progress of Ortus Stage 2Ortus Stage 220

State of Progress of Ortus Stage 2
1,000.0

Final Year ofOrtus Stage 1
800.0
Revenue（Billions of yen）

620.0

581.5

646.2

670.0

OperatingIncome（Billions of yen）

54.7

56.560.0

76.0

64.00 760

FYE2017 Result(IFRS)FYE2018
FYE2018
Target (IFRS) Result (IFRS)FYE2019
Target (IFRS)FYE2021
Planned (IFRS)Revenue

581.5

620.0

646.2

670.0

800.0

Core operating
income

54.7

56.5

60.0

64.0

76.0

Core operating
income

9.4%

9.1%

9.3%

9.6%

9.5%

Overseas sales
ratio

40.8%

－43.3%－45.0%

ROCE※

8.4%

7.9%

8.4%

8.5%

9.0%

Long-term vision* 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).
21
21

Shareholder returns

Ortus Stage 2

22

Shareholder returns

The Company maintains a stable dividend and is improving a dividend
policy tied to performance
JGAAP

Year-endInterim

40 YenIFRSDividend payout ratio

27.1%
24.3%

26.8%

24.9%

27.1％*

30.0%

26.0%

20.3%

30 Yen20.0%
20 Yen11 Yen10 Yen

6 Yen
6 Yen

0 Yen

FYE2014

7 Yen
6 Yen
FYE2015

12 Yen12 Yen（Planned）

10.0%

9 Yen

7 Yen
FYE2016

9 Yen
FYE2017

11 YenFYE2018*

12 YenFYE2019(Forecast)* Large-scale corporate income tax deductions arose from a reform of the U.S. tax system that resulted in a lowering of
the federal corporate tax rate during FYE2018. Excluding the effects of the above, the dividend payout ratio was 27.1%.
230.0%

23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 notguaranteed.
The briefing session and this material describe future plans and strategies,
as well as forecasts and outlooks of business performance. These plansand strategies, as well as forecasts and outlooks, are made by Taiyo
Nippon Sanso based on its judgments and estimations made in accordancewith the information available at present. Actual performance will besubject to changes caused by a variety of risks and uncertainties (such as
economic trends, market demand, exchange rates, taxation systems andvarious other systems and institutions, but not limited to them).
We wish to remind you, therefore, that the actual business performance
may differ from the forecasts and outlooks made at this time. Pleaserefrain from making investment judgments based solely on thisinformation.