Supplementary Materials forConsolidated Business Performancefor the First Quarter of FYE2020

July 29, 2019TAIYO NIPPON SANSO Corporation
11Contents
１. Business Performance for First Quarter of FYE2020
1) Overview of business performance2) Business performance by segment
２. Full-Year Forecasts for FYE2020
1) Overview of forecasts for the full-year2) Forecasts by segment for the full-year
３. Reference Materials
1）Breakdown for revenue disclosure categories for each segment
2）Statement of non-recurring profit and loss3）Condensed Consolidated Statements of Cash Flows
4）Condensed Consolidated Statements of Financial Position
5）Key performance indicators
6）Sales mix by business
7）TNSC’s Gas Supply Structure21-1. Overview of business performance(Billions of yen)

FYE2019
Q1 results
MarginRevenue

158.6

FYE2020
Q1 results

FYE2020
Forecast
YoY Change

Margin210.3(Announced May 13)

Margin

+51.7

890.0

+32.6%

Core operating income

13.9

21.7

Non-recurring profit and loss

0.8

-0.6

-1.4

7.0

Operating income

14.7

21.0

+6.3

102.0

Finance costs

-0.5

-2.8

-2.3

-15.5

Income before income taxes

14.2

18.2

+4.0

86.5

Income tax expenses-4.0

-5.4

+1.4

-27.0

Net income

10.1

12.7

+2.6

59.5

Net income attributable to ownersof the parent

9.6

12.2

+2.6

57.0

Net income attributable to non-controlling interests

0.4

8.8%

+7.8
10.3%

9.3%

95.0

+55.9%

10.0%

10.7%

+42.7%

11.5%(Attribution of net income)

6.1%

5.8%

0.5

+26.2%

+0.1

6.4%

2.5

Impact of foreign currency translations (US$→¥): FYE2019 Q1 rate: $1=¥109.53 FYE2020 Q1 rate: $1=¥109.67(€→¥): FYE2020 Q1 rate: €1=¥122.87
In FYE2020, the Company plans to record non-recurring profit of ¥7.0 billion on the sale of its assets as part of efforts to improve asset efficiency.

31-1. Overview of business performance【Revenue】
FYE2019
Q1 results

FYE2020
Q1 results% Change

FYE2020 Forecast(Announced May 13)

Gas Business in Japan

82.6

83.8

+1.4%

375.0

Gas Business in the U.S.

44.5

49.6+11.6%

201.0

Gas Business in Europe―

44.0―

173.0

Gas Business in Asia and Oceania

25.1

26.1

+4.1%

111.0

Thermos Business

6.3

6.5+4.1%

30.0

Revenue Total

158.6

210.3

+32.6%

890.0

FYE2019Q1 results

FYE2020
Q1 results% Change

FYE2020 Forecast(Announced May 13)

Gas Business in Japan

6.1

5.6-7.6%

30.6

Gas Business in the U.S.

3.1

5.2+69.7%

19.0

Gas Business in Europe－6.9－

26.5

Gas Business in Asia and Oceania

3.3

2.6-21.5%

11.5

Thermos Business1.7

1.9+12.6%

9.4

Eliminations or Corporate-0.3-0.6－-2.0

Core operating income Total

13.9

21.7

+55.9%

95.0

Non-recurring profit and loss

0.8-0.6－

7.0

Operating income Total

14.7

21.0+42.7%

102.0(Billions of yen)【Operating income】(Billions of yen)4

1-2. Business Performance by Segment: Gas Business in JapanFYE2019

FYE2020

Q1 results

Q1 results

Air separation gases, other3.6

3.6+0.3%

Packaged subtotal

3.6

3.6+0.3%

Air separation gases

12.4

12.2-2.0%

Carbon dioxide

5.65.5-2.4%

Helium

1.0

1.1+6.8%(Billions of yen)
Packaged

Bulk

Other gases

2.5

2.4-1.2%

Bulk subtotal

21.7

21.4-1.6%

Air separation gases

18.2

18.1-0.5%

Other gases

1.8

1.7-3.9%

On-site subtotal

20.019.9-0.8%

LP gas

7.8

7.7-0.7%

Specialty gases

6.3

6.3-0.9%

Subtotal

59.6

59.0-1.0%

Gas-related and plant, other

14.0

15.9+13.9%

Electronics-related

3.2

2.9-8.2%

Welding and cutting-related

5.7

5.8+0.7%

Subtotal

22.9

24.7+7.5%

Revenue Total

82.6

83.8

+1.4%

6.1

5.6-7.6%

Gases
On-siteRevenueEquipment and installation,
other

Segment income

Reasons for changes in revenue

Reason for change in segment income

・ Bulk & On-site (Air separation gases): Decline centered・ Higher costs due to rising fuel prices

on key industries for steel, transport equipment

・ Contribution from acquisition of IMI Co., Ltd.

・Equipment and installation, other （Medical）:・ Expenses: Higher costs due to personnel expenses etc.

Contribution from acquisition of IMI Co., Ltd.

5% Change

1-2. Business Performance by Segment: Gas Business in the U.S.
FYE2019

FYE2020

Q1 results

Q1 results

Air separation gases, other

11.0

12.1

+9.9%

Packaged subtotal

11.0

12.1

+9.9%

Air separation gases

8.6

9.1+5.1%

Carbon dioxide

5.8

6.0+3.7%

Helium1.51.7+14.6%(Billions of yen)
Packaged

Bulk

Other gases

2.7

2.4-8.8%

Bulk subtotal

18.7

19.4+3.4%

Air separation gases

2.0

2.3+14.2%

Other gases

0.3

3.3

-On-site subtotal

2.3

5.6

+143.1%

LP gas0.4

0.3-25.2%

Specialty gases

1.6

1.7

+3.4%

Subtotal

34.2

39.3

+14.7%

Electronics-related

1.5

1.1-24.1%

Welding and cutting-related

8.7

9.2+5.9%

Subtotal

10.2

10.3

+1.5%

Revenue Total

44.5

49.6

+11.6%

3.1

5.2+69.7%

Gases
On-siteRevenue

Equipment and installation,other% Change

Segment income*Impact of foreign currency translation: Positive impacts of ¥0.06 billion on revenue and ¥0.0 billion on segment income

Reasons for changes in revenue
・ Bulk: Favorable shipments centered around air separation
gases
・ On-site: Start of operation at a new project,contribution from acquisition of HyCO business・ Welding and cutting-related: Favorable sales to theconstruction and energy industries

6

Reason for change in segment income••

Industrial gas-related business is generally favorable,
centered on air separation gases.
Contribution from acquisition of HyCO business1-2. Business Performance by Segment: Gas Business in Europe
FYE2020(Billions of yen)Q1 results
Packaged

BulkGases

Revenue

On-siteAir separation gases, other

8.6

Packaged subtotal

8.6

Air separation gases

10.1

Carbon dioxide

7.0Helium2.0

Other gases

3.1

Bulk subtotal

22.3

Air separation gases

5.9

Other gases

0.9

On-site subtotal

6.8

Specialty gases
Subtotal

40.0

Gas-related and plant, other3.0

Welding and cutting-related

0.9

Subtotal

3.9

Revenue Total

44.0

Equipment and installation,other

2.1Segment income

6.9

The European business acquired from Praxair, Inc. of the United States in December 2018 has been disclosed in this segment.
The revenue increased 3.5% year on year from ¥42.5 billion as compared・
to the business performance of the Gas Business in Europe from April 1,2018 to June 30, 2018, assuming the acquisition date of the European business acquired from U.S. company Praxair, Inc. was April 1, 2018.

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1-2. Business Performance by Segment: Gas Business in Asia and Oceania
FYE2019

FYE2020

Q1 results

Q1 results

Air separation gases, other0.90.9-6.9%

Packaged subtotal

0.9

0.9-6.9%

Air separation gases

4.7

4.2-9.5%

Carbon dioxide

0.4

0.4+6.6%

Helium

1.0

1.4+41.9%

Other gases

0.8

0.7-16.9%

Bulk subtotal

6.9

6.8-2.0%

Air separation gases

0.8

0.8+10.6%

On-site subtotal

0.8

0.8

+10.6%

LP gas3.5

3.8+8.8%

Specialty gases

6.8

6.5-4.3%

Subtotal

19.2

19.0-0.6%

Gas-related and plant, other

3.8

4.0+4.8%

Electronics-related

0.9

1.8+101.8%

Welding and cutting-related

1.1

1.1

+1.7%

Subtotal

5.9

7.0+19.3%

Revenue Total

25.1

26.1

+4.1%

3.3

2.6

-21.5%(Billions of yen)
Packaged

Bulk
Gases
On-siteRevenueEquipment and installation,otherSegment income% Change*Impact of foreign currency translation: Revenue decreased by ¥0.77billion and segment income by ¥0.13 billion

Reasons for changes in revenue
・Bulk： Sales in Southeast Asia were firm.
・LP gas： Favorable sales in Australia.
・Specialty gases（Mainly electronic materials gases）：
Decline in shipments of Taiwan
・Electronics-related equipment and installation :Revenue in Taiwan increased moderately

8Reason for change in segment income
・ Increased cost in transport of air separation gases
in Australia
・ Earnings declined due to lower electronic materials gas
revenue in Taiwan

1-2. Business Performance by Segment: Thermos Business(Billions of yen)

RevenueFYE2019

FYE2020

Q1 results

Q1 results% Change

Japan

5.3

5.6

+5.4%

Overseas

0.9

0.9

-3.3%

6.3

6.5+4.1%

1.7

1.9+12.6%

Revenue TotalSegment income*Impact of yen appreciation on currency translations Revenue decreased by ¥0.05 billion and segment income by ¥0.02 billion

Reasons for changes in revenue
・Japan: Sales centered on vacuum insulated portable mugs
were firm

9Reason for change in segment income
・Overseas: Increased earnings due to higher revenue
in South Korea, earnings growth at groupcompanies accounted for by the equity-method

2-1. Full-Year Forecasts for FYE2020(Billions of yen)

FYE2019
Results
Margin

Revenue

740.3

FYE2020
Forecast
Margin890.0

YoY Change% 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%

11.5%

+52.6%

Finance costs

-4.7

-15.5

-10.8

Income before income taxes

62.0

86.5

+24.5

Income tax expenses

-18.3

-27.0

+8.7

Net income

43.7

59.5

+15.8

Net income attributable to ownersof the parent

41.2

57.0

+15.8

Net income for the year attributable to non-controlling interests

2.4(Attribution of net income)

5.6%

6.4%

2.5

+38.0%+0.1

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 of efforts to improve asset efficiency.

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2-2. Full-Year Forecasts for FYE2020 by Segment【Revenue】
FYE2019
Results

FYE2020
Forecast% Change

Gas Business in Japan

363.9

375.0+3.0%

Gas Business in U.S.

187.3

201.0+7.3%

Gas Business in Europe

55.1

173.0+214.0%

Gas Business in Asia and Oceania

106.1

111.0+4.6%

Thermos Business

27.8

30.0+7.9%

Revenue Total

740.3

890.0+20.2%

FYE2019
Results

FYE2020
Forecast% Change

Gas Business in Japan29.8

30.6+2.7%

Gas Business in U.S.

15.6

19.0+21.5%

Gas Business in Europe*1

6.5

26.5+303.5%

Gas Business in Asia and Oceania

9.1

11.5+25.7%

Thermos Business9.1

9.4+2.3%

Eliminations or Corporate*2-4.5-2.0－

Core operating income Total

65.8

95.0+44.3%

Non-recurring profit and loss

1.07.0－Operating income Total

66.8

102.0+52.6%(Billions of yen)

*1

【Operating income】(Billions of yen)

*1 The FYE2019 results represent business performance for the four-month period from December 2018 to March 2019 of the European business acquired from U.S. company Praxair, Inc.
*2 In the FYE2019 results, European business acquisition-related expenses (advisory fees, etc.) of ¥2.7 billion have been recorded in core operating income.

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(Reference Materials)

12Breakdown for revenue disclosure categories for each segment
The breakdown for revenue disclosure categories for each segment is listed in the below chart.
Revenue disclosure category

BreakdownGases

Industrial gases such as oxygen, nitrogen, and argon, LP gases, specialty gases

PackagedGas filling containers (cylinders) are delivered to the customer, and the gas is supplied according to method of use

Air separation gases, other All gases including air separation gases (oxygen, nitrogen, argon that are created by separation from the atmosphere)
Bulk

A storage tank for liquified gas is installed within the customer’s facility, and the gas is supplied according to method of use

Air separation gases

Oxygen, nitrogen, argon

Carbon dioxide

Carbon dioxide gas, dry ice

HeliumHelium gas

Other gases

Other gases such as hydrogen

On-siteA gas production facility is established in an area adjacent to the customer, and the gas is constantly supplied using a directly connected pipe

Air separation gases

Oxygen, nitrogen, argon

Other gases

Other gases such as hydrogen and carbon monoxide

LP gas

Propane gas, butane gas

Specialty gases

Gases for electronic materials that are used in the manufacture of semiconductors or LCD panels, standard gas, high-purity gas

Equipment and installation, other

13Ancillary equipment for gas usage, refining equipment to raise gas purity level, construction for equipment installation, and other equipment

Gas-related and plant, otherGas-related supply facilities and gas abatement equipment, air separation units, and other equipment

Electronics-related

Construction for equipment and pipe installation toward electronics, refining equipment for removing impurities, and other equipment

Welding and cutting-related

Equipment, apparatuses, welding rods and other items (hard goods) used in metal processing including gas welding and cuttingNon-recurring Income and Expense Items
FYE2019
Q1 results

FYE2020
Q1 results

YoY changeCore operating income

13.9

21.7+7.8

Non-recurring profit and loss

0.8-0.6-1.4

Operating income

14.7

21.0+6.3(Billions of yen)【Non-recurring Income and Expense Items】
FYE2019 Q1 results
Item

FYE2020 Q1 results
AmountItem(Billions of yen)

Gain on sales of domestic land

0.9 Gain on sales of domestic land, etc.

Other-0.1

Restructuring-related expenses for thealfi business (Thermos)
Impairment loss associated with thesale of an affiliated company

Total

140.8 Total

Amount(Billions of yen)

0.2
-0.5
-0.3
-0.6

Condensed Consolidated Statements of Cash FlowsFYE2019

FYE2020

Q1 results

Q1 results

Income before income taxes

14.2

18.2

+4.0

Depreciation and amortization

11.2

20.5

+9.3

Changes in working capital

-2.3

-1.9

+0.4

Others

-7.0

-2.6

+4.4

16.0

34.1

+18.1

Capital expenditures

-17.8

-19.6

-1.8

Investments and loans

-0.5

-0.2

+0.3

Others (asset sales, etc.)

3.2

0.5

-2.7(2) Cash flows from investing activities

-15.2

-19.4

-4.2

Free cash flow (1+2)

0.8

14.7

+13.9

Net interest-bearing liabilities

286.1

960.0

+673.9Adjusted net D/E ratio-1.60-(Billions of yen)

(1) Cash flows from operating activities

YoY change

Net interest-bearing liabilities: interest-bearing liabilities - 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 liabilities disclosed by the Company.
Adjusted net D/E ratio: (Net interest-bearing debt – equity-type debt*1) / (equity attributable to owners of parent + equity-type debt*1)*1 Equity-type debt: the amount of debt procured by Hybrid finance*2 that has been recognized as equity credit by rating agencies(50% of the procured amount).
*2 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.

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Condensed Consolidated Statements of Financial Position

FYE2019

FYE2020

Results

Q1 results

Cash and cash equivalents

59.6

59.4

-0.2

Trade receivables

197.9

186.2

Inventories

66.2

OthersFYE2019FYE2020

Results

Q1 results

Interest-bearing liabilities

1,005.4

1,023.8

+18.4

-11.7

Trade payables

105.9

99.2

-6.7

70.1

+3.9

Others

223.7

223.0

-0.7

23.2

27.5

+4.3

Total liabilities

1,335.1

1,346.0

+10.9

347.1

343.4

-3.7

Share capital and capitalsurplus, etc

429.5

440.5

+11.0

Property, plant and equipment*

639.3

663.5

+24.2

Other components of equity

-22.9

-42.2

-19.3

Goodwill

437.7

431.3

-6.4

Intangible assets

253.8

247.8

-6.0

406.6

398.3

-8.3

Others

92.9

88.1

-4.8

Non-controlling interests

29.2

29.9+0.7

Total non-current assets

1,423.8

1,430.9+7.1

Total equity

435.8

428.3

-7.5

Total assets

1,771.0

1,774.3+3.3

1,771.0

1,774.3+3.3(Billions of yen)

Total current assets

YoY Change

Equity attributableto owners of parent

Total liabilities
and equity* As a result of the application of IFRS 16, the carrying amount of the TNSC Group’s lease-related assets increased by ¥34.1 billion
and lease liabilities simultaneously increased by ¥34.6 billion on the day starting the application of IFRS 16.

16

YoY ChangeKey Performance Indicators (Consolidated)
FYE2019
Q1 results

FYE2020
Q1 results

FYE2019
Results

FYE2020
Forecast

Basic earnings per share (Yen)

22.38

28.24

95.42

131.71

Overseas sales ratio

44.5%

57.5%

47.9%

55.0%

ROE

－－

10.4%

13.4%

ROCE

－－

6.2%

6.6%

Annual dividends per share (Yen)

－－

25

26

Dividend payout ratio

－－

26.2%

19.7%

Capital expenditures

17,885

19,667

74,152

103,400

560

268

691,126－

11,241

20,515

56,111

83,000337,562

1,023,805

1,005,402

983,700

286,120960,054

941,117918,100(fund basis)(Millions of yen)

Investments and loans*(Millions of yen)

Depreciation and amortization(Millions of yen)

Balance of interest-bearing liabilities(Millions of yen)

Net interest-bearing liabilities(Millions of yen)

* Investment and loans shown above represent investment and loans under cash flows from investing activities(purchase of investment securities, purchase of shares of subsidiaries, and payments for acquisition of businesses).

17

Sales mix by business

Energy6%
Medical8%

Electronics
16%

FYE2020
Q1 results¥203.7 billion(excluding Thermos)

IndustrialGases
70%18

TNSC’s Gas Supply Structure
Separate gases

Supplied via pipeline(on-site)
OxygenNitrogen

CEArgonEvaporator

Tanker trucks(bulk gases)
OxygenArgon

NitrogenAir separation unit (ASU)
OxygenNitrogen

Argon

Filling station
Packaged gases

Supply via cylinders(packaged gases)

Other gases
OxygenNitrogen

Argon

Supply via tanker trucks, cylinders(bulk and packaged gases)
Chemicalplant offgas

Import fromoverseas incontainers, etc.

Carbondioxide gas

HydrogenHeliumLPG

Specialtygases

Acetylene

19

Packaged gases
Dewar
vessel(liquid)

Customers

Carbondioxide gas

HydrogenHeliumLPG

Specialtygases

Acetylene

・Steel andnonferrous metals
・Electronics
・Petroleum andchemicals
・Automobiles andindustrial
machinery・Glass and paper・Medical care・Food・Other

Disclaimer●These materials are 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 marketconditions, 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.

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