February 5, 2019
Taiyo Nippon Sanso Corporation

Consolidated Financial Performancefor the First Three Quarters of Fiscal Year Ending March 31, 2019
(Based on IFRS)(Amounts less than ¥1 million are omitted)

1. Financial results for the First Three Quarters of FYE 2019 (April 1, 2018 – December 31, 2018)(1) Operating results(Percentages indicate year-on-year change)

Core operating
incomeRevenue

OperatingincomeNet income%

Net income
attributable toowners of theparentTotal
comprehensive
income(¥ million)%(¥ million)%(¥ million)%(¥ million)%(¥ million)%(¥ million)

First threequarters of
FYE2019

518,0309.9

43,871(4.0)

44,693(3.4)

29,018 (29.6)

27,234(31.9)

19,330(63.4)First threequarters of
FYE2018

471,460

13.4

45,705

11.8

46,268

12.6

41,22339,977

53.6

52,787

66.6

51.2(Reference) Income before income taxes
First three quarters of FYE2019: ¥42,200 million [(3.3)%]
First three quarters of FYE2018: ¥43,653 million [11.9%]
Core operating income is calculated as operating income excluding certain gains and expenses attributable to non-recurring
factors (non-recurring items).
Basic earnings
per share (yen)First three quarters of
FYE2019First three quarters of
FYE2018

Diluted net income
per share (yen)

62.93

―

92.38

―

Total assets(¥ million)

Total equity(¥ million)(2) Financial position

First three quarters of FYE2019(December 31, 2018)
FYE2018 (March 31, 2018)2.

Equity attributableto owners of theparent (¥ million)

Equity attributableto owners of theparent ratio (%)

1,759,620

424,304

396,508

22.5

931,047

412,072

386,457

41.5

Dividends
Annual Dividend
End of 1st

End of 2ndquarterquarter

End of 3rdquarter

Term
end

Total

Yen

Yen

Yen

Yen

Yen

FYE2018

―

11.00

―

FYE2019
FYE2019 (est.)

―

12.00

―

Note: No revisions have been made to recently announced forecasts.

1

12.00

23.00

12.00

24.00

3.

Forecasts for business operations for FYE2019 full term (April 1, 2018 – March 31, 2019)(Percentages indicate year-on-year change)

Revenue(¥ million)

Full
term

735,000%

13.7

Core operating
incomeOperating income(¥ million)(¥ million)

66,500%10.8%

67,00011.9

Net income(¥ million)

43,000%(15.3)Net income
Basic earnings
attributable to owners
per shareof the parent(¥ million)

41,000%(16.2)

(Yen)

94.74

Note: Revisions of the latest forecast of consolidated operating performance: Yes(Reference) Income before income taxes
FYE2019 full term: ¥61,500 million [10.0%]

4.

Explanation concerning the appropriate use of forecasts for business operations and other notable matters
This report contains business forecasts and other forward-looking statements that are based on information currently
available to the Company and certain assumptions judged to be reasonable by management. The Company gives noassurances that business forecasts will be attained. Moreover, actual results may differ materially from business forecasts
due to various factors.

5.

General information relating to the first three quarters results
In the first three quarters of the fiscal year under review (from April 1, 2018 to December 31, 2018), in the TNSCGroup’s business environment, the production activities in both domestic and overseas manufacturing industries werestrong, and shipments of air separation gases (oxygen, nitrogen, and argon) were steady. In the electronics-related field,
deliveries in some product fields displayed a tendency to slow down in Japan.
Against this backdrop, the Taiyo Nippon Sanso Group (TNSC Group) achieved the following results for the first
three quarters of the fiscal year under review. Revenue on a consolidated basis increased 9.9% year on year to ¥518,030
million, core operating income decreased 4.0% to ¥43,871 million, operating income decreased 3.4% to ¥44,693 million,
and net income attributable to owners of the parent decreased by 31.9% to ¥27,234 million.
The Company completed the acquisition of the European business of Praxair, Inc. of the United States on December
3, 2018. The adjusted amount of consolidated segment income for the first three quarters of the fiscal year under review
includes ¥2,762 million in acquisition-related expenses for the European business (advisory costs, etc.).
Core operating income is calculated as operating income excluding certain gains and expenses attributable to nonrecurring factors (non-recurring items).
A breakdown of business performance by reportable segment is as follows.
Segment income represents core operating income.
From the first quarter of the fiscal year under review, the TNSC Group changed its reportable segments. Therefore, tofacilitate the year-on-year comparisons shown below, the figures for the corresponding period of the preceding fiscal year
have been reclassified based on the changes to the reportable segments. Moreover, from the third quarter of the fiscal year
under review, the Gas Business in Europe has been added as a reportable segment, and the results of the European
business acquired from Praxair, Inc. of the United States have been presented in this segment.
Gas Business in Japan
In the industrial gas-related business, revenue from air separation gases, a core product, performed steadily for use
primarily in the key industries of steel and chemicals. In addition, revenue from on-site business increased since a new
on-site plant started operations in October 2017. Hard goods significantly expanded revenue, mainly due to metal
processing. In the medical business, there was a contribution to earnings from the medical equipment sales company, IMI
Co., Ltd., acquired in October 2018. In the electronics-related field, revenues from electronic materials gases declined.
As a result, in the Gas Business in Japan, revenue increased 7.1% year on year to ¥265,989 million, while segment
income decreased 9.4% to ¥21,331 million.
Gas Business in the United States
In the industrial gas-related business, revenue from bulk gas and hard goods increased significantly following a steady
performance in the manufacturing sector. In the on-site business, the start of operation at a new project contributed torevenue. In the electronics-related field, revenue from electronic materials gases declined.
As a result, in the Gas Business in the United States, revenue increased 8.0% year on year to ¥138,856 million, andsegment income rose 5.0% to ¥10,526 million.

2

Gas Business in Europe
The European business acquired from Praxair Inc. in the United States comprises the industrial gas business in Germany,
Spain, Portugal, Italy, Norway, Denmark, Sweden, the Netherlands and Belgium, the carbon dioxide gas business in the
United Kingdom, Ireland, the Netherlands and France, and the helium-related businesses.
In the Gas Business in Europe, revenue was ¥12,687 million and segment income was ¥560 million.
Gas Business in Asia & Oceania
In the industrial gas-related field, revenue from hard goods, primarily the energy sector, increased in Singapore andMalaysia. In Australia, sales of LPG and related equipment were brisk. In the electronics-related field, revenue declined
due to the impact of a change in accounting treatment in Taiwan, however, shipments of electronic materials gases werestrong.
As a result of the above, in the Gas Business in Asia & Oceania, revenue increased 5.4% year on year to ¥78,887
million, and segment income rose 17.7% to ¥8,559 million.
Thermos BusinessIn the Thermos Business, revenue increased year on year due to recovered sales of vacuum insulated portable mugs andsports-use vacuum bottles in Japan. Overseas, sales were favorable in South Korea.
As a result, in the Thermos Business, revenue increased 9.9% year on year to ¥21,609 million, and segment income
increased 12.4% to ¥7,205 million.
6.

Other
TNSC concluded a share purchase agreement with Praxair, Inc. of the United States (hereinafter “Praxair”) on July 5,2018 for acquiring the shares of the corporations running a part of Praxair’s European business. In accordance with thecontract, on December 3, 2018, TNSC acquired the business through its subsidiaries acquired or established in Europe,
TNSC Euro-Holding S. L. U. (renamed Nippon Gases Euro-Holding S.L.U on December 19, 2018) and TNSC Germany
GmbH, etc.
As a result, the net assets of Nippon Gases Euro-Holding S.L.U. and TNSC Germany GmbH have reached an amountthat corresponds to 30% or more of the Company’s net assets. Moreover, the capital stocks of Praxair NV, Rivoira
S.p.A., and Rivoira Gas S.r.l. have reached an amount that corresponds to 10% or more of the Company’s capital stock.
Accordingly, these companies now qualify as specified subsidiaries of the Company.

7.

Change in accounting policy
From the first quarter of the fiscal year under review, the TNSC Group applies IFRS 15, “Revenue from contracts withcustomers” (issued in May 2014) and “Clarifications to IFRS 15” (issued in April 2016) (hereinafter collectively referred
to as “IFRS 15”).
In accordance with the adoption of IFRS 15, the TNSC Group recognizes revenue, based on the following 5-stepmodel, in an amount that reflects the consideration to which the Group expects to be entitled in exchange for goods orservices transferred to customers.
Step 1: Identify the contract with the customer
Step 2: Identify performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) the performance obligations are satisfied
The TNSC Group conducts gas businesses in Japan and overseas, mainly for customers in the steel, chemical, andelectronics industries, and has built production and sales structures for its main products in Japan, the United States,
Europe, and Asia & Oceania. In addition, the TNSC Group conducts the manufacture and sales business of housewares
such as stainless steel vacuum bottles.
Regarding product sales in these businesses, because a customer acquires control over a product at the time the productis delivered, TNSC judges that its business obligations have been satisfied and recognizes its revenue, at the time theproduct is delivered.
Revenue is measured from the price promised in the contract with the customer, after deducting such amounts as
discounts, rebates and returns.
The amount of the price in the sales contract of a product is generally collected within one year from the time whencontrol over the product is transferred to a customer, and does not include the important element of the interest.
The impact of the adoption of IFRS 15 on the condensed consolidated financial statements of the TNSC Group was
negligible.
When IFRS 15 was adopted, a method, which was recognized as a transitional measure, was used to recognize thecumulative effect of adopting this standard on the date of starting the adoption. However, the cumulative financial impact
on the date of starting the adoption of this standard was negligible.

38.

Segment information
The TNSC Group conducts gas businesses in Japan and overseas, mainly for customers in the steel, chemical, andelectronics industries, and has built production and sales structures for its main products in Japan, the United States,
Europe, and Asia & Oceania. In addition, the TNSC Group conducts the manufacture and sales business of housewares
such as stainless steel vacuum bottles. Therefore, the Company has established the following five reportable segments:
Gas Business in Japan, Gas Business in the United States, Gas Business in Europe, Gas Business in Asia & Oceania, andThermos Business.
Changes to reportable segments
To display the results of the Thermos Business more clearly, from the first quarter of the fiscal year under review the
TNSC Group has changed the four existing reportable segments of Gas Business in Japan, Gas Business in the UnitedStates, Gas Business in Asia & Oceania, and Thermos & Other Businesses, to the four segments of Gas Business in Japan,
Gas Business in the United States, Gas Business in Asia & Oceania, and Thermos Business.
Furthermore, from the third quarter of the fiscal year under review, Gas Business in Europe has been added as a newreportable segment due to the acquisition of the European business of Praxair, Inc. of the United States.
To facilitate the year-on-year comparisons, the figures for the first three quarters of the preceding fiscal year havebeen reclassified based on the changes to the reportable segments.
The principal products and services included in the five segments are shown in the table below.
Business segment

Main products and services

Gas Business in Japan
Gas Business in the
United States
Gas Business in Europe
Gas Business in Asia &Oceania
Thermos Business

Oxygen, nitrogen, argon, carbon dioxide, helium, hydrogen, acetylene, gas- related
equipment, specialty gases (electronic materials gases, pure gases, etc.), electronics-related
equipment and installation, semiconductor manufacturing equipment, cutting and welding
equipment, welding materials, plants and machinery, liquid petroleum gas (LPG) and related
equipment, medical-use gases (oxygen, nitrous oxide, etc.), medical equipment, stable isotopes
Housewares

The accounting methods adopted for the reported operating segments are the same as the methods adopted to prepare theconsolidated financial statements for the preceding fiscal year. Revenue from inter-segment transactions and transfers isbased primarily on prevailing market prices.
(1) Figures of revenue and income (loss) by reportable segment
First Three Quarters, FYE2018 (April 1, 2017 – December 31, 2017)(¥ million)
Business segment
Gas
Business
in JapanGas Business
Gas Business
Gas Businessin the Unitedin Asia &in Europe
States
Oceania

Thermos
Business

Total

Amounts on the
Adjustments Consolidated(Note 1)
Statements ofIncomeRevenue(1) Revenue toexternal customers

248,396

128,549―

74,85819,656

471,460―

471,460(2) Revenue frominter-segment
transactions andtransfers

8,699

8,299

―

1,516

21

18,536(18,536)―

Total

257,095

136,848―

76,374

19,677

489,997(18,536)

471,460

Segment income(Note 2)

23,542

10,021

―

7,274

6,409

47,247(1,542)45,705

Notes:
1. The ¥1,542 million negative adjustment for segment income is comprised of ¥467 million of intersegment
eliminations and companywide expenses of ¥1,075 million that were not allocated to any particular reportablesegment. These companywide expenses related principally to basic research expenses that were not allocated to aparticular reportable segment.
2. Segment income represents core operating income, which is calculated as operating income excluding certain gains orlosses attributable to non-recurring factors (non-recurring items).

4First Three Quarters, FYE2019 (April 1, 2018 – December 31, 2018)(¥ million)
Business segment
Gas
Business
in JapanGas Business
Gas Business
Gas Businessin the Unitedin Asia &in Europe
States
Oceania

Thermos
Business

Total

Amounts on the
Adjustments Consolidated(Note 1)
Statements ofIncomeRevenue(1) Revenue toexternal customers

265,989

138,856

12,68778,887

21,609518,030―

518,030(2) Revenue frominter-segment
transactions andtransfers

6,498

10,090

―

3,004

31

19,625(19,625)―

Total

272,488

148,946

12,687

81,892

21,641

537,655(19.625)

518,030

Segment income(Note 2)

21,331

10,526

560

8,559

7,205

48,183(4,312)

43,871

Notes:
1. The ¥4,312 million negative adjustment for segment income is comprised of ¥345 million of intersegment
eliminations and companywide expenses of ¥1,203 million that were not allocated to any particular reportablesegment, as well as the expenses of ¥2,762 million to acquire the European business. These companywide expenses
related principally to basic research expenses that were not allocated to a particular reportable segment.
2. Segment income represents core operating income, which is calculated as operating income excluding certain gains orlosses attributable to non-recurring factors (non-recurring items).
(2) Reconciliation of segment income with income before income taxes(¥ million)
First three quarters of FYE2018(April 1, 2017 to December 31, 2017)

First three quarters of FYE2019(April 1, 2018 to December 31, 2018)

Segment income

45,70543,871Gain on sales of noncurrent assets
Share of income (loss) of associates
and joint ventures accounted forusing the equity method
Other
Operating income
Financial revenue
Financial expenses
Income before income taxes

1,020

948

(457)

―

5

―

(125)

46,26844,693

1,173

1,823

(3,788)(4,317)43,65342,2009.

Issuance conditions for hybrid bonds (public subordinated bonds)
On January 29, 2019, the Company issued Deferrable Interest and Callable Unsecured Subordinated Bonds. An overview
of the bonds is shown below.

(1) Amount of issue(2) Initial interest rate(3) Payment date(4) Maturity date(5) Early redemption(6) Replacement
restrictions(7) Optional suspensionof interest payment(8) Subordination(9) Method of issue(10) Use of funds

1st Series Deferrable Interest and Callable
Unsecured Subordinated Bonds¥100.0 billion
1.41% per annum (Note 1)
January 29, 2019
January 29, 2054
Early redemption is possible at TNSC’sdiscretion on each interest payment date fromJanuary 29, 2024 or upon the occurrence andcontinuation of a tax event or an equity creditchange event on or after the payment date.
In the case of early redemption, etc., of thesubordinated bonds, TNSC does not intend to
conduct early redemption, etc., unless it raises
funds through the issuance of replacement
securities, etc., within the 12-month period
preceding the date of early redemption, etc.
(However, this restriction will not apply if thedate of early redemption, etc., falls on or afterJanuary 29, 2024 and TNSC meets both of therequirements of (i) and (ii) below.)
As of the end of the fiscal year immediately
preceding the date of early redemption, etc., orat the end of any quarter of that fiscal year,(i) TNSC’s adjusted consolidated net debt toshareholders’ equity ratio is 1.00x or
lower.
(ii) The amount of consolidated shareholders’equity has increased by ¥100.0 billion ormore compared with the amount ofconsolidated shareholders’ equity as ofthe end of the second quarter of the fiscal
year ending March 31, 2019.

2nd Series Deferrable Interest and Callable
Unsecured Subordinated Bonds¥8.0 billion
1.87% per annum (Note 2)
January 29, 2019
January 29, 2059
Early redemption is possible at TNSC’sdiscretion on each interest payment date fromJanuary 29, 2029 or upon the occurrence andcontinuation of a tax event or an equity creditchange event on or after the payment date.

Note 3TNSC may defer all or part of interest payments at its discretion.
In terms of the order of repayment, the subordinated bonds are subordinate to TNSC’s ordinary
debt but have a higher priority than its ordinary shares.
Public issue in Japan
Repayment of borrowings

Notes
1. A fixed interest rate from the day following January 29, 2019 to January 29, 2024 and a variable interest rate fromthe day following January 29, 2024 (with a step-up in the interest rate scheduled for January 30, 2024).
2. A fixed interest rate from the day following January 29, 2019 to January 29, 2029 and a variable interest rate fromthe day following January 29, 2029 (with a step-up in the interest rate scheduled for January 30, 2029).
3. If the 2nd Series Deferrable Interest and Callable Unsecured Subordinated Bonds are redeemed early, TNSC expects
to raise funds through the issuance of replacement securities, etc., within the 12-month period preceding the date ofearly redemption, etc.
However, if the date of the early redemption, etc., falls on or after January 29, 2029, TNSC may forgo the issuanceof such replacement securities, etc., provided that TNSC meets both of the following requirements (i) and (ii):(i) TNSC’s adjusted consolidated net debt to shareholders’ equity ratio is 1.00x or lower.
(ii) The amount of consolidated shareholders’ equity has increased by an amount greater than or equal to theamount of funds raised from hybrid securities through March 2019, compared with the amount of consolidated
shareholders’ equity at the end of the second quarter of the fiscal year ending March 31, 2019.

6