Supplementary Materials forConsolidated Business Performancefor the First Half of FYE2019

October 31, 2018TAIYO NIPPON SANSO Corporation
11Contents
１. Business Performance for First Half of FYE2019
1) Overview of business performance2) Business performance by segment
２. Full-Year Forecasts for FYE2019
1) Overview of forecasts for the full-year2) Forecasts by segment for the full-year
３. Reference Materials
1）Statement of non-recurring profit and loss2）Key performance indicators
3）Sales mix by industry
4）TNSC’s Gas Supply Structure21-1. Overview of business performance(Billions of yen)

FYE2018Q2 Results
Margin305.7

Revenue

FYE2019
Q2 Results

FYE2019
Q2 Forecast
YoY Change

Margin329.4(Announced May 9)

Margin+23.7

328.0

+7.8%

Core operating income

29.3

28.1

Non-recurring profit and loss

0.2

0.8

+0.6

0.7

Operating income

29.6

28.9

-0.7

31.2

Finance costs

-1.9

-1.8

+1.0

Income before income taxes

27.6

27.0

-0.6

Income tax expenses

-9.3

-8.3

-1.0

Net income

18.3

18.7

+0.4

19.0

17.6

17.6

+0.0

18.0

9.6%

-1.2
8.5%

9.7%

30.5
-4.0%

8.8%

9.3%

-2.2%

9.5%

(Attribution of net income)Net income attributable to owners of theparent※Eliminations or Corporate：

Net income attributable to non-controlling interests

5.8%

0.6

5.4%

1.0

+0.0%

+0.4

Impact of foreign currency translations (US$→¥): FYE2018 Q2 rate: $1=¥111.29 FYE2019 Q2 rate: $1=¥110.71→Impact of currency gains led to decreases of ¥1.0 billion in revenue and ¥0.1 billion in core operating income
European business acquisition-related expenses (advisory fees, etc.) of ¥1.3 billion have been recorded
for the first half of the fiscal year.

35.5%

1-1. Overview of business performance【Revenue】
FYE2018
Q2 Results

FYE2019
Q2 Results% Change

Gas Business in Japan*

158.7

171.9+8.3%

Gas Business in the U.S.

84.3

91.4+8.4%

Gas Business in Asia and Oceania

49.5

52.3+5.7%

Thermos Business*

13.0

13.5+4.1%

Revenue Total

305.7

329.4+7.8%

FYE2018
Q2 Results

FYE2019
Q2 Results% Change

Gas Business in Japan*

14.6

12.7

-13.6%

Gas Business in the U.S.

6.4

6.8+7.4%

Gas Business in Asia and Oceania

4.8

6.3+31.3%

Thermos Business*

4.2

4.5+4.9%

Eliminations or Corporate※-0.9-2.3－

Core operating income Total

29.3

28.1-4.0%

Non-recurring profit and loss

0.20.8－Operating income Total

29.6

28.9-2.2%(Billions of yen)

【Operating income】(Billions of yen)

※Eliminations or Corporate：European business acquisition-related expenses (advisory fees, etc.) of ¥1.3 billion have been recorded for the first half of the fiscal year.
* From FYE2019, businesses other than the Thermos business that had previously been classified under the “Thermos and Other Businesses” segment have beentransferred to the “Gas Business in Japan.” .The columns in the above table have been adjusted to reflect the transfer in order to use the same basis of comparison.

41-2. Business Performance by Segment: Gas Business in Japan(Billions of yen)

Industrial Gas

RevenueElectronics

EnergyFYE2019

Q2 Results

Q2 Results% Change

Bulk gases

39.9

40.4

+1.2%

On-site gases

24.5

35.3

+44.0%

Packaged gases

5.4

5.4

-1.3%

Hard goods

10.9

12.1

+11.2%

Plants and Equipments

19.0

19.1

+0.1%

Medical

10.5

10.6

+0.9%

Total110.5

123.1+11.4%

Gases

24.1

23.1-4.3%

Equipment and Installation

10.8

11.4

+5.2%

Total

35.0

34.5-1.4%

LP gas

11.7

13.0+10.4%

Related Equipment

1.3

1.2-7.5%

Total

13.1

14.3

+8.6%

Revenue Total

158.7

171.9

+8.3%

14.6

12.7

-13.6%

Segment income

Reasons for changes in revenue
・ On-site: JFE SANSO CENTER Kurashiki Factory
contributed to revenue
・Hard goods: Favorable sales of laser cutting machinefor metal processing
・Electronics gas: Weaker shipments for some productareas
5FYE2018

Reason for change in segment income
・Higher costs due to rising crude oil prices
・Higher costs mainly due to a lack of a raw material gas
for carbon dioxide gas
・Electronics gas: Decreased shipments for someproduct areas1-2. Business Performance by Segment: Gas Business in the U.S.
FYE2018
Q2 Results(Billions of yen)

Industrial Gas
RevenueElectronics

FYE2019
Q2 Results% Change

Bulk gases

35.5

39.9

+12.2%

On-site gases

4.4

4.7

+5.8%

Packaged gases

22.4

22.9

+2.3%

Hard goods

16.1

17.7

+9.8%

Total

78.6

85.3

+8.5%

Gases3.9

3.4-13.1%

Equipment and Installation

1.8

2.7+50.4%

Total

5.7

6.1+6.9%

Revenue Total

84.3

91.4

+8.4%

6.4

6.8+7.4%

Segment income※Impact of yen appreciation on currency translations
Revenue decreased by ¥0.4 billion and segment income by ¥0.0 billion

Reasons for changes in revenue
・Bulk gas: Increased shipments of air separation
gases, and increased shipments carbon dioxide
gas by reinforcement of production capacity
・Hard goods: Favorable sales for constructionand energy industry
・Electronics equipment: Increased sales forsemiconductor related equipment

6Reason for change in segment income
・Industrial gas-related business: Generally favorable
Higher segment income due to increased revenue frombulk gas, packaged gas and hard goods

1-2. Business Performance by Segment: Gas Business in Asia and Oceania
FYE2018
Q2 Results(Billions of yen)

Industrial Gas
RevenueElectronics

FYE2019
Q2 Results% Change

Bulk gases

17.4

21.0

+20.9%

On-site gases

1.4

1.5+6.5%

Packaged gases

2.6

2.6

-0.8%

Hard goods

2.3

2.5+7.2%

Plants and Equipment

6.3

7.8+24.3%

Total

30.2

35.6

+17.9%

Gases

15.6

14.5-7.2%

Equipment and Installation

3.62.2-39.7%

Total

19.3

16.7-13.4%

Revenue Total

49.5

52.3

+5.7%

4.8

6.3

+31.3%

Segment income※Impact of yen appreciation on currency translations
Revenue decreased by ¥0.7 billion and segment income by ¥0.1 billion

7

Reasons for changes in revenue

Reason for change in segment income◆Industrial gas-related business・Leeden NOX: Favorable sales safety goods
・Higher revenue for industrial gases in China andPhilippine◆ Electronics-related business・Taiwan: Revenue from electronics-related
equipment and installation decreased◆Industrial gas-related business・Increased segment income due to higher revenue
from Leeden NOX・Increased segment income from China and Philippine◆Electronics-related business・Profits were flat although decreased revenue

1-2. Business Performance by Segment: Thermos Business
FYE2018
Q2 Results(Billions of yen)

% ChangeJapan

11.3

11.3

-0.4%

Asia

1.6

2.2

+34.7%

Revenue Total

13.0

13.5

+4.1%

4.2

4.5

+4.9%

ThermosRevenue

FYE2019
Q2 ResultsSegment income※Impact of yen appreciation on currency translations
Revenue increased by ¥0.0 billion and segment income by ¥0.0 billion

8Reasons for changes in revenue

Reason for change in segment income

・Japan: Sales of mainstay products of vacuum insulated
portable mugs and Sports bottles recovered during the2nd quarter
・Overseas: Sales in South Korea were firm

・Japan: Segment income increased due to recoverin sales volume
・Overseas: Business performance recovered byGroup companies accounted for by the equity method

2-1. Full-Year Forecasts for FYE2019(Billions of yen)

FYE2018
ResultsMargin

Revenue

646.2

FYE2019Forecast(Announced May 9)

YoY Change% Change

Margin670.0+23.8+3.7%

Core operating income

60.0

64.0
9.3%

+4.0
9.6%

+6.6%

Non-recurring profit and loss

-0.1

0.5+0.6

Operating income

59.8

64.5

+4.7

9.3%

9.6%

+7.7%

Finance costs-3.9-4.5-0.6

Income before income taxes

55.8

60.0+4.2

Income tax expenses

-5.1

-18.0

+12.9

Net income

50.7

42.0-8.7

Net income attributable to owners of
the parent

48.9

40.0-8.9

Net income for the year attributable to noncontrolling interests

1.8(Attribution of net income)

7.6%

6.0%

2.0

Assumed exchange rate (US$→¥): $1=¥110 *FYE2018 rate: $1=¥110.70
In FYE2018, income tax expenses decreased by ¥12.2 billion due to the reversal of deferred tax
liabilities at a subsidiary based in the U.S.

9-18.2%0.2

2-2. Full-Year Forecasts for FYE2019 by Segment【Revenue】(Billions of yen)

FYE2018
Results

FYE2019
Forecast% Change(Announced Oct. 31)

FYE2019
Forecast(Announced May 9)

Gas Business in Japan*

345.0

355.0

+2.9%

360.0

Gas Business in U.S.

172.6

181.0+4.8%

175.0

Gas Business in Asia and Oceania

103.1

107.0

+3.7%

107.0

Thermos Business*

25.3

27.0+6.5%

28.0

Revenue Total

646.2

670.0

+3.7%

670.0

FYE2018
ResultsFYE2019
Forecast% Change

FYE2019
Forecast【Operating income】(Billions of yen)

10

(Announced Oct. 31)(Announced May 9)

Gas Business in Japan*

31.3

30.3-3.4%

31.8

Gas Business in U.S.

13.5

14.4

+6.2%

14.0

Gas Business in Asia and Oceania

9.2

12.1

+31.0%

10.7

Thermos Business*

7.7

9.0

+16.1%

9.3

Eliminations or Corporate-1.8-1.8－-1.8

Core operating income Total

60.0

64.0

+6.6%

64.0

Non-recurring profit and loss

-0.10.5－0.5

Operating income Total

59.8

64.5

+7.7%

64.5

* From FYE2019, businesses other than the Thermos business that had previously been classified under the “Thermos and Other Businesses”
segment have been transferred to the “Gas Business in Japan” segment.
The columns in the above table have been adjusted to reflect the transfer in order to use the same basis of comparison.

(Reference Materials)

11Non-recurring Income and Expense Items
FYE2018
Q2 Results

FYE2019
Q2 Results

YoY changeCore operating income

29.3

28.1

-1.2

Non-recurring profit and loss

0.20.8+0.6

Operating income

29.6

28.9

-0.7

(Billions of yen)【Non-recurring Income and Expense Items】
FYE2018 Q2 Results
Item
Gain on sales of domestic land

Total

12

FYE2019 Q2 Results
Amount
Item(Billions of yen)
0.2 Gain on sales of domestic land

Amount(Billions of yen)
+0.9

Other-0.1

0.2 Total

0.8Key Performance Indicators (Consolidated)
FYE2018
Q2 Results

FYE2019
Q2 Results

FYE2018
Results

FYE2019
Forecast

Basic earnings per share (Yen)

40.83

40.85

113.04

92.43

Overseas sales ratio

44.4%

44.4%

43.3%

－ROE

－－

13.3%

9.6%

ROCE

－－

8.4%

8.5%

Annual dividends per share (Yen)

－－

23

24

Dividend payout ratio

－－

20.3%

26.0%

Capital expenditures

27,282

34,73062,56979,000

2,890

5,168

4,556

－

21,44322,92343,26647,000348,608

343,549

326,959

350,000

300,620

288,580

274,968

300,000(construction base)(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)With regard to FYE2018 full-year results, excluding the effects of the significant decrease in income taxes resulting from the reduction ofthe federal corporate income tax rate under the Tax Cuts and Jobs Act in the U.S., basic earnings per share would be ¥84.87, ROE
10.1%, ROCE 8.5% and the dividend payout ratio 27.1%.

13

Sales Mix by Industry【Sales Volume Mix by Industry】
1%
Steel and other metals

67%

Oxygen15%

38%

Nitrogen22%

44%

Argon0%10%

20%

19%

3%
30%

40%

16%
50%

5%

15%
60%

70%

15%

2%

ChemicalsElectronic equipment &semiconductors
Shipbuilding, machinery,transportation equipment
Others

16%

22%
80%

90%

100%

【Net Sales Mix by Industry】
Steel and other metals

SeparateGases(O2, N2, Ar)

29%

15%

Total Sales

0%

14

10%

21%

12%
20%

21%
30%

40%

16%

9%

8%
50%

25%

ChemicalsElectronic equipment &semiconductors
Shipbuilding, machinery,transportation equipment
Others

44%
60%

70%

80%

90%

100%

TNSC’s Gas Supply Structure
Separate gases

Supplied via pipeline(on-site)
OxygenNitrogen

CE

Argon

Evaporator

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

15

Packaged gases
Dewarvessel(liquid)

Customers

Carbondioxide gas

HydrogenHeliumLPG

SpecialtygasesAcetylene

・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 containedin this presentation is accurate and complete.
●This presentation and report contain forward-looking statements(estimates and forecasts) regarding the future plans, strategies, activities
and performance 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 a variety
of risk and uncertainties. These risks and uncertainties include, but are notlimited to, changes in general economic and specific market conditions,currency exchange rate fluctuations, tax systems, and regulations.
●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.

16