New Medium-Term Business Plan
“Ortus Stage 1”
Ortus: “beginning, birth” in Latin

May 14, 2014

Contents
1. Long-Term Vision
2. Business Targets of the New Medium-term Business Plan
3. Structural Reform
4. Innovation
5. Globalization
6. M&A Strategy
7. Investment Plan

1. Long-Term Vision
Achieve “sales of 1 trillion yen, an operating margin of 10%, a ROCE of10% or above, and an overseas sales ratio of 50% or above” by FY2023.
⇒Position the new medium-term plan as the first stage in the achievement of the long-term
management vision, and develop a foundation and system for building a new revenue base.

Globalmarket

Sales ¥1 trillion

OperatingMargin 10%

ROCE 10%or above

Ourshareholders
and investors

Overseas Sales
Ratio 50% or above[Future plans for shareholder returns]
The Company positions returns to shareholders as one of its highest priorities and seeks to perform a dividend payout
policy in a manner that fairly reflects its business performance while maintaining stable dividend payouts. Going forward,
we will strive to further improve our business performance based on the strategic policy set forth in the New MediumTerm Business Plan, and aim to raise consolidated dividend payout ratio during the period of the plan (FY2015 – FY2017).

2. Business Targets of
the New Medium-Term Management Plan
Aim to achieve “sales of 600 billion yen, an operating margin of 7.5%,
a ROCE of 8% or above, and an overseas sales ratio of 40% or above” in FY2017.
New Medium-Term Management Plan
“Ortus Stage 1”(Sales: 100 million yen)

Net Sales
Operating Income
Operating Margin
Overseas Sales Ratio
Capital Expenditure, Investmentand Lending
Balance of Net debt
Net D/E Ratio
ROCE(Operating margin)

FY2013
4,6832485.3%
28%

FY2014
5,227
314
6.0%
31%

FY2015
5,500
350
6.4%
34%

FY2016
5,700
380
6.7%
36%

FY2017
6,000
450
7.5%
40%

FY2023
10,0001,000
10.0%
50% or above

359713

473

366

1,161

-

2,286
1.12%
5.5%

2,197
0.8%
6.2%

2,090
0.72%
6.4%

2,003
0.66%
7.0%

2,410
0.74%
8.0%

10.0%

Structural reform, growth strategy

Optimization,
expansion3. Structural Reform
Aim to reduce 6-7 billion yen/year in fixed costs (compared to the FY endedMarch 2014) by implementing the measures below.
Current condition

Purpose・ Domestic businesses continue
low growth・ Maintain stable revenue base・ To seize growth opportunities

・ Overseas businesses areachieving growth

In JapanMeasures
・ Domestic businesses:
streamline, optimize
・ Overseas businesses:
selectively input management
resources

Measures already implemented

Measures to be implemented during the period of “Ortus Stage 1”・Special preferential treatment for early
retirement

・ Reorganization: Integrate Business
Administration and Electronics divisions
into Industrial Gases
・ Streamline indirect operations by promoting
shared services
・ Strengthen supply chains・ Improve gas engineering operations
・ Restructure affiliated companies

・ Reorganization

Overseas= Establish Corporate Planning &Global Operations division

・ Personnel reallocation (assign personnel tooverseas businesses)

Revise personnel
and wagesystems

4. Innovation
Create the new businesses that will be the core of the next generation, byseizing opportunities of global energy shift such as natural gases andshale gas.
Accelerate the commercialization of new products into global market byaggressively taking innovations from open resources.
Definition of “innovation”: To create completely new value based on newtechnologies and ideas
・ Create new synergy by strengthening cooperation with Mitsubishi Chemical Holdings Group―

Overseas on-site business, CO2 spa, value add materials

・ Open innovation―

Investment into venture companies, development and sale of high-value added products throughM&A

・ Development of new energy businesses―

Natural gas liquefaction, hydrogen on-site business, shale gas-related businesses

・ Commercialization of new strategic products into growth markets―

Hydrogen station, superconductive cooling system, PSA nitrogen generator, oxygen stable isotope
labeled water (water -18O), helium containers, new materials, etc.

5. Globalization
Fully implement globalization during the period of “Ortus Stage 1” and, for the longrun, increase the overseas sales ratio to 50% or above (FY2023).
Strategically input management resources in North America and emerging
economies to ensure that growth opportunities are seized.

EuropeEast Asia

NorthAmerica
Japan

MiddleEastIndia

Southeast
Asia
Oceania

Position Japan, North America, andAsia as key markets while
aggressively expanding businessareas through measures such as
M&As and business development

SouthAmerica

Existing locations of Taiyo Nippon Sanso Group・ Localize overseas management systems: Establish a global innovation group, business systems in China, India, andSoutheast Asia
・ Promote globalization of domestic group companies: Southeast Asia, etc.
・ Develop global human resources: Personnel shift to overseas businesses, introduction of an overseas trainee system
・ Introduction of International Financial Reporting Standards (IFRS)・ Strengthen technical risk management on a global scale6. M&A Strategy
Cultivate and penetrate global markets, including new countries, andaccelerate business expansion.
NorthAmerica

WesternEurope
EasternEurope

EastAsiaJapanMiddle
EastAfricaIndia andsurroundingareas

Southeast
Asia

SouthAmerica

Oceania
Existing locations of Taiyo Nippon Sanso Group
Size of industrial gas market (2010) *Source: Gas Georama
Size of industrial gas market (2022 estimate) *Company’s estimation

・ Expand sales channels, products, and regional portfolio
・ Increase profitability by expanding businesses and increasing business density
・ Acquire human resources, technologies, and expertise and use these resources effectively

7. Investment Plan
Make a strategic investment of 200 billion yen in three years in and outside
Japan, including M&As of operating companies, investment in venturebusinesses, large capital expenditure, investment in rationalization, etc.
Investment Plan (strategic division)

Example of investment

Ordinary investment¥75 billion

M&A¥40 billion

Large capital expenditure,investment in rationalization¥82 billion

Investment in venturebusinesses¥3 billion

TotalShunan, Yamaguchi Prefecture
Further construction at a manufacturing plant for oxygen stable
isotope labeled water (water -18O)¥200 billion
Lakeland, Florida, U.S.
Constructed a new air separation plant in the U.S. which isexperiencing an industrial recovery through the shale gas
revolution

Investment Plan (regional division)

Japan¥58 billion

United States¥77 billion

Asia and Others¥65 billion

Total¥200 billion