Consolidated Business Performancefor the First Half of the Fiscal YearEnding March 2017 (FYE2017)
November 15, 2016TAIYO NIPPON SANSO Corporation
11Contents

1. Business Performance for First Half of FYE2017
1) Overview of business performance for the first half2) Business performance by segment

2. Full-Year Forecasts for FYE2017
1) Overview of forecasts for the full-year2) Forecasts by segment

3. Medium-Term Management Plan Ortus Stage 1
1) State of progress2) Strategic direction
3) Transformation
4) Innovation
5) Globalization & M&A2

1-1. Overview of Business Performance for the First Half(Billions of yen)

Revenue

FY E2016 Q2Results (IFRS)FY E2017 Q2Results (IFRS)

MarginMargin

284.3

268.7

FY E2017 Q2
Y oY Change

Announced targets(IFRS)
Margin-15.6

293.0-5.5%

Core operating
incom e22.5

Non-recurring prof it and loss

1.8

0.1

-1.7

0.0

Operating income

24.3

25.9

1.6

24.2

25.7
7.9%

9.6%

8.6%

Net income attributable toowners of the parent

15.0

+3

5.3%

+14.2%

9.7%

16.4

24.2

+6.5%

1.4
6.1%

8.3%

8.3%

14.7
+9.6%

Impact of foreign currency translations (US$→¥): FYE2016 Q2 rate: $1=¥121.73 FYE2017 Q2 rate: $1=¥105.39→Impact of currency translations led to decreases of ¥15.8 billion in revenue and ¥1.2 billion in core operating income

35.0%

1-2. Business Performance by Segment(Billions of y en)

RevenueGas Business inJapan

Gas Business inthe U.S.

FYE2016 Q2Results(IFRS)FYE2017 Q2Results(IFRS)%
Change

155.6

152.4

-2.0%

Segment
income12.4

Revenue

77.1

Segment
income14.1

Factor➢Sales of LP gas decreased due to the impact of the falling oil price➢Higher revenue from equipment and installation work in electronics➢Reduced costs due to the falling oil price+13.5%➢Segment income increased in line with higher revenue from equipment andinstallation work in electronics

4.6

65.1
4.7

-15.6%+1.9%➢Sales of bulk gases were firm (particularly carbon dioxide gas), but hard goods fell
➢Recognized sales of business acquired from Air Liquide from September➢Higher segment income from brisk sales of carbon dioxide gas to food andbeverage manufacturers➢Contribution from recognition of business acquired from Air Liquide➢Revenue grew in the Philippines, but Singapore was soft

Revenue

37.7

37.7-0.1%

Gas Business inAsia & Oceania

Thermos andOther➢Contribution from M&A +4.9 billion (T hailand and Australia)➢Sales of electronics gases in China, South Korea and T aiwan were mostly
unchanged year on year
➢Segment income increased in the Philippines in conjunction with revenue growth,Segment
income2.2Revenue

13.7

13.4

-2.3%

Segment
income4.0

5.0+24.0%

2.5+16.8%

but segment income decreased in Singapore➢M&A (T hailand and Australia) contributed +0.9 billion➢Growth in inbound demand settled down➢Cost reduction effect on imports due to appreciation of the yen➢Equity in earnings of affiliates increased due to strong performances by overseas
affiliates* Segment income represents core operating income, which is calculated as operating income excluding certain gains and expenses attributable to non-recurring
factors4

2-1. Full-Year Forecasts for FYE2017(Billions of yen)

Revenue

FY E2016
Results (IFRS)
MarginFY E2017
Forecast (IFRS)(Announced Nov. 2)

594.4

YonY
ChangeFY E2017
Forecast (IFRS)(Announced May 11)

Margin570.0Margin-24.4

610.0-4.1%

Core operating
incom e47.4

Non-recurring prof it and loss

1.40-1.40

Operating income

48.9

52.0+3.1

52.0

52.0
8.0%

9.1%

8.2%

Net income attributable toowners of the parent

29.0

+4.6

9.1%

30.0
4.9%

+9.6%

8.5%

+6.3%

+1.0
5.3%

52.0

8.5%

30.0

+3.3%

Revision of business forecasts (Revenue of -¥40.0 billion and operating income of ±¥0 billion)
Assumed full-year exchange rate （US$→¥）: ¥10554.9%

2-2. Forecasts by Segment
FY E2016
Results(IFRS)(Billions of y en)

FYE2017
Forecast(IFRS)(Announced%
ChangeFuture initiativ es

Nov. 2)

Revenue

327.9

320.0-2.4%

Gas Business inJapan

Gas Business in
the U.S.

Segment
income27.8

28.2+1.3%

Revenue

149.5

145.0-3.0%

Segment
income9.2

10.8+16.9%

Revenue

89.3

77.0-13.8%

Gas Business in
Asia & Oceania
Segment
income3.0

5.8+92.7%

Revenue

27.5

28.0+1.7%➢ Acquire new on-site projects from Nippon Steel & Sumitomo
Metal Corporation and JFE Steel Corporation (underconstruction)➢ Acquire some business and assets from Air Liquide➢ Acquire new on-site projects➢ Decide to build a new carbon dioxide gas plant at Continental
Carbonic Products, Inc. (CCPI)➢ Start supplying by new pipeline in the Philippines➢ Start operations at second plant in northern Vietnam➢ Revise power purchase contract at LNOX in Singapore➢ Start operations at carbon dioxide plant at LNOX

334.0
27.6
160.0
11.3
88.0
7.7
28.0

➢ Launch new products in August➢ Start operations at new plant in the Philippines

Thermos andOtherSegment
income➢ Promote the strengthening of supply chains➢ Start operations at Water-18O No. 3 Plant

FYE2017
Forecast(IFRS)(AnnouncedMay 11)

9.0

9.0

-0.0%

7.0

* Segment income represents core operating income, which is calculated as operating income excluding certain gains and expenses attributable tonon-recurring factors

63-1. Ortus Stage 1: State of Progress
Left axis: Revenue(Billions of Yen)

800
Revenue

Japanese GAAP

Operating Income

ＩＦＲＳ

600

60400

40200

200Revenue

FYE2013
ResultFYE2014
ResultFYE2015
ResultFYE2016
ResultFYE2017
Forecast468.3

522.7

559.3

641.5

570.0

（+93）

(Difference versus initial plan)

Operating Income24.8

31.4

Operating Margin

35.2

5.3%

6.0%

6.3%
（▲0.1％）(Difference versus initial plan)（+715）

43.3（+02）(Difference versus initial plan)

52.0
（+53）

6.8%

9.1%

（+0.1％）

Overseas Sales Ratio

27.6%

31.4%

35.0%

44.4%

39.6%

ROCE

5.5%

6.2%

6.2%

7.4%

8.5%

* The fiscal year ended March 31, 2016 includes the impact of changes in the accounting period of some subsidiaries(revenue +¥51.3 billion, operating income +¥2.9 billion)

7

Right axis: Operating Income(Billions of Yen)
8003-2. Ortus Stage 1 Strategic Policy

1. Transformation･ Reduce fixed costs by ¥6 to ¥7 billion

Core targets

2. Innovations･ Create new businesses that will be the core of thenext generation･ Accelerate the commercialization of new products intoglobal markets

Overseasmarkets

3. Globalization･ Strategically place management resources globallyto increase overseas ratio to 50% by FYE2023

4. M&A･ Aggressively pursue acquisitions and ventures toaccelerate business expansion globally

8Growthmarkets

3-3. Progress with Transformation

Transformation

Improvement in earnings due to transformationand cost reductions (Cumulative Vs. FYE2014)

Reducepersonnel
expenses(Billions of yen)

76Results & forecasts
Initial plan

Strengthen
supplychainsSet uporganizationalframework to
support growthstrategies

5Rationalize
otherdomestic
businesses

432

Rationalize
overseasbusinesses

10

FYE2015

FYE2016

FYE2017

The initial target for the current fiscal year is ¥6 to ¥7 billion. As a result of transformation and cost
reductions centered on domestic businesses, TNSC now expects to achieve about ¥6 billion, which
would be largely in line with the initial target.
9３-４. Commercialization of new strategic products

Innovation

Develop new products in energy, healthcare and other fields that will be thecore of the next generation
Innovation

Make profitable businesses

Toward next-generationcore businesses

・ Superconductor cooling system
・ Hydrogen production technology, etc.

・Hydrogen Refueling Stations
・Cryopreservation Systems
・Water-18O, etc.

Superconductor cooling system

Hydrogen Refueling Stations

Cryopreservation Systems

Large cooling capacity turbo-Brayton
refrigerator that is able to cool asuperconducting power application to 200ºC or lower by using neon gas as theworking fluid. Commenced sales ofNeoKelvin®-Turbo 10kW, (announcedJuly 29, 2016)）●Expanded sales of hydrogen stations●Commenced sales of Integrated
Temperature History Information
Management System CryoLibraryiMaster® for Biological Samples(announced September 14, 2016)->Initiative to commercialize regenerative
medicine

centered on the packaged hydrogenstation「®」, with 15 units
sold on a cumulative basis®

NeoKelvin®-Turbo 10kW, a large
cooling capacity turbo-Brayton refrigerator

10●Successfully developed technology to produce
high-purity hydrogen from ammonia for use in fuelcell vehicles through joint research aimed atrealizing ammonia hydrogen stations (announcedJuly 19, 2016)

CryoLibrary iMaster®
System Main Screen
CryoLibrary® Advance3-4. Open Innovation

Innovation

Aim to incorporate products high in added value through venture capital
investment
Innovation

Make profitable businesses

Toward next-generationcore businesses

・Open Innovation● Open Innovation strategy
TNSC
Acquisition of high-value-added products
SulfaTrap LLC
Desulfurization sorbents(remove the sulfur component
from natural gas and otherhydrocarbons)2016 investment

・On-site・Bulk・Packaged・Gas applications

New customers(global)

Jilin OLED Material Tech Co. Ltd
Organic electroluminescencematerials(for display manufacturers)

11

Expand sales of industrial gases
based on high-value-added products
and materials

2016 investment

Acquire new customers by highvalue-added products and materials

・Oil refining
・Chemicals
・Electronics
・Other manufacturingindustries, etc.

３-５. U.S.①:Acquisition of Air Liquide divested assets

M&A

September 2016, acquired certain U.S. assets (eighteen air separation units,
two nitrous oxide plants, four carbon dioxide plants and three packaged gas
retail stores in Alaska ) divested by Air Liquide.
Acquired industrial gas
production network

LegendCorporate HQs
Air Separation Unit
Business bases
Legend(2016 acquisitions)
Air Separation Unit
LCO2 Plant
N2O Plant
Packaged Gas Site

This acquisition contributes to extending production network of separate gases in the
East and Midwest and building our status as a national supplier12３-５. U.S.②:Expand on-site business

Globalization

Awarded large-scale on-site supply contracts in Texas and Louisiana
New on-site business in Texas

New on-site business in Louisiana

Location: Central Texas
Pipeline Customer: Major oxygen user
Start Up: 2017

Location: Westlake, Louisiana
Pipeline Customer: Lotte Chemical Louisiana LLC
Start Up: 2018

Texas and Louisiana

Texas

LegendAir separation units（existing）
Air separation units（under construction）

Louisiana

On-site plant for Sasol（Announced in January 2015）

Establish long-term revenue base with on-site supply contracts and support fabrication
customer growth with new argon sales
13３-５. U.S.③:Expand CO2 business

Globalization

Construct a LCO2 and dry ice manufacturing facility in Pennsylvania
Northeast

New plant overview
Location: Clearfield, Pennsylvania
Start Up: 2017

TorontoInvestment objectives

ChicagoBostonHartford

DetroitAllentown

Establish stable LCO2 and dry ice supply chain
to customers in Northeast and Mid Atlantic
Reduce distribution expense into the target
marketRedirect existing production capacity to new
customers in Midwest

Columbus
Indianapolis
St. Louis

Louisville

New York

Philadelphia
Pittsburgh
Baltimore

LegendCO2 plant (existing)
CO2 plant (under construction)

Leverage acquired assets and the Clearfield project to expand the CO2 and dry ice businesses
143-5. Growth Strategies for Asia & Oceania
Strengthen Group capabilities by using regional headquarters
・ Establish regional headquarters in Singapore and China, and strengthen
collaboration within each area and between Group companies
Complete the transition of capital to regional headquarters in China
in March 2017 (planned)

Strengthen businesses in regions that TNSC has already entered・Strengthen TNSC’s business infrastructure in the regions that it has
already entered by installing air separation units and conducting M&A
Acquire Taiyo Gases Co., Ltd. in October 2016 (Thailand)

Expand business territory
・Enter regions that TNSC has not yet entered by setting up operatingcompanies and conducting M&As
Establish operating company in November 2016 (planned) (Myanmar)

Strengthen capabilities regarding global customers
・Focus on expanding sales of electronics products in Taiwan, China
and South Korea
・Respond flexibly to the globalization of electronics customers
15Globalization
M&A3-5. Asia & Oceania: Entry into Myanmar

Globalization

Established an operating company in the Thilawa Special Economic Zone in Myanmar
Company Overview

Basic Information about Myanmar

Company name: Taiyo Nippon Sanso Myanmar CorporationGDP: ¥5 trillion

Location: Thilawa Special Economic Zone

GDP growth rate: 7.03% (2015 result)

Shareholder: Taiyo Nippon Sanso Holdings Singapore Pte. Ltd. 100%

Industrial gas market size: ¥2.0 billion (Yangon

Capital: The equivalent of US$11,296 thousand in Myanmar Kyat (MMK)area)

Business: ・Production and sales of industrial gases
・Engineering and piping works, etc.

Mandalay

Main facilities: Headquarters office, air separation unit, filling station, anddelivery facility, etc.

Naypyidaw

Business Strategy
YangonThilawa

Provide a global standard of service (quality and safety)
Sell industrial gases to Japanese companies (construction, metal
processing, transportation equipment-related and other fields)
Secure sales channels through sales agreements with leading local
dealers
Establish a bulk gas business in Myanmar ahead of other companies

Dawei

BangkokPhnom Penh

Southern
Economic Corridor

Ho Chi Minh
City

Enter to Myanmar to derive first-mover profit in anticipation of rapid growth in the future
16

Disclaimer●This material is not intended for purposes of disclosure for securities
transactions, and it is impossible to guarantee that the information
contained in this presentation is accurate and complete.
●This presentation and report contain forward-looking statements (estimatesand forecasts) regarding the future plans, strategies, activities andperformance of Taiyo Nippon Sanso Corporation. Forward-looking
statements reflect management’s assumptions and beliefs based on
information available as of the time of writing. Actual results reflect avariety of risk and uncertainties. These risks and uncertainties include,
but are not limited to, changes in general economic and specific market
conditions, currency exchange rate fluctuations, tax systems, andregulations.
●Accordingly, actual results may differ from forecasts issued at this time.
With this in mind, please refrain from relying solely on these materials
when making investment decisions.

17