October 31, 2018
Taiyo Nippon Sanso Corporation

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

1. Financial results for the First Half of FYE2019 (April 1, 2018 – September 30, 2018)(1) Operating results(Percentages indicate year-on-year change)

Core operating
incomeRevenue

Operatingincome

Net income

Net income
attributable toowners of theparent

Total
comprehensive
income(¥ million)%(¥ million)%(¥ million)%(¥ million)%(¥ million)%(¥ million)%

First half ofFYE2019

329,426

7.8

28,145(4.0)

28,967(2.2)

18,7222.0

17,6770.0

36,14742.0

First half ofFYE2018

305,71413.7

29,30513.8

29,60414.1

18,3596.0

17,671

7.3

25,461―(Reference) Income before income taxes
First half of FYE2019: ¥27,073 million [(2.2)%]
First half of FYE2018: ¥27,681 million [12.8%]
Core operating income is calculated as operating income excluding certain gains and expenses attributable to nonrecurring factors (non-recurring items).
Basic earnings
per share (yen)Diluted net
income per share(yen)First half of FYE2019

40.85

―

First half of FYE2018

40.83

―

(2) Financial position
Total assets(¥ million)

Total equity(¥ million)

Equity attributableto owners of theparent (¥ million)

Equity attributableto owners of theparent ratio (%)

First half of FYE2019(September 30, 2018)977,997442,589

416,487

42.6

FYE2018 (March 31, 2018)

931,047

412,072

386,457

41.5

12.

Dividends
Annual Dividend
End of 1stquarterEnd of 2ndquarterEnd of 3rdquarter

Termend

TotalYenYenYenYenYen

FYE2018―

11.00

FYE2019
FYE2019 (est.)

―

12.00

―

12.00

23.00

―

12.00

24.00

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

3.

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

Core operating
incomeRevenue(¥ million)%(¥ million)%

Operating income(¥ million)

Full term
670,000
3.7
64,0006.6
64,500Note: No revisions have been made to recently announced forecasts.
(Reference) Income before income taxes
FYE2019 full term: ¥60,000 million [7.3%]

Net income%(¥ million)%

7.7

42,000(17.2)

Net income
Basic earnings
attributable to owners
per shareof the parent(¥ million)

40,000%(Yen)(18.2)

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. TheCompany gives no assurances 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 half results
In the first half of the fiscal year under review (from April 1, 2018 to September 30, 2018), in the TNSC Group’sbusiness environment, the production activities in both domestic and overseas manufacturing industries weregood, 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, but overseas the demand forsemiconductors was strong.
Against this backdrop, the Taiyo Nippon Sanso Group (TNSC Group) achieved the following results for the firsthalf of the fiscal year under review. Revenue on a consolidated basis increased 7.8% year on year to ¥329,426
million, core operating income decreased 4.0% to ¥28,145 million, operating income decreased 2.2% to ¥28,967
million, and net income attributable to owners of the parent increased by 0.0% to ¥17,677 million.
On July 5, 2018, TNSC concluded a share purchase agreement with Praxair, Inc. of the United States toacquire the shares of the company engaged in its European business, and is moving ahead with preparing to closethat transaction. As a result, acquisition-related expenses (advisory fees, etc.) of ¥1,331 million have beenrecorded under selling, general and administrative expenses for the first half of the fiscal year under review.
Core operating income is calculated as operating income excluding certain gains and expenses attributable tonon-recurring 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, to facilitate 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.

292.43

Gas Business in Japan
In the industrial gas-related business, revenue from air separation gases, a core product, performed steadily foruse 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 electronics-related field, revenue from electronic materials gases decreased.
In the energy-related field, revenue from liquid petroleum gas (LPG) increased year on year due to a higher
sales price following an increase in the import price.
As a result, in the Gas Business in Japan, revenue increased 8.3% year on year to ¥171,989 million, while
segment income decreased 13.6% to ¥12,700 million.
Gas Business in the United States
In the industrial gas-related business, revenue from bulk gas and hard goods increased significantly following asteady performance in the manufacturing sector. Shipments of carbon dioxide gas also increased due to bolsteredproduction capabilities.
In the electronics-related field, revenue from electronic materials gases declined year on year.
As a result, in the Gas Business in the United States, revenue increased 8.4% year on year to ¥91,488 million,and segment income rose 7.4% to ¥6,897 million.
Gas Business in Asia & Oceania
In the industrial gas-related field, in China sales increased due to favorable shipments of air separation gases. InSingapore and Malaysia, revenue from air separation gases and hard goods increased due to the recovery of theenergy sector. In Australia, shipments of LPG grew and sales increased.
In the electronics-related field, revenue from electronics-related equipment and installation decreased inTaiwan.
As a result of the above, in the Gas Business in Asia & Oceania, revenue increased 5.7% year on year to¥52,383 million, and segment income rose 31.3% to ¥6,358 million.
Thermos BusinessIn the Thermos Business, revenue increased year on year due to recovered sales of vacuum insulated portablemugs and sports-use vacuum bottles in Japan.
As a result, in the Thermos Business, revenue increased 4.1% year on year to ¥13,564 million, and segment
income increased 4.9% to ¥4,503 million.
6.

Change in accounting policy
From the first quarter of the fiscal year under review, the TNSC Group applies IFRS 15, “Revenue fromcontracts with customers” (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 5step model, in an amount that reflects the consideration to which the Group expects to be entitled in exchange
for goods or services 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,and electronics industries, and has built production and sales structures for its main products in Japan, the UnitedStates, and Asia & Oceania. In addition, the TNSC Group conducts the manufacture and sales business ofhousewares such as stainless steel vacuum bottles.
Regarding product sales in these businesses, because a customer acquires control over a product at the time
the product is delivered, TNSC judges that its business obligations have been satisfied and recognizes its
revenue, at the time the product is delivered.
Revenue is measured from the price promised in the contract with the customer, after deducting such amounts
as discounts, rebates and returns.

3

The amount of the price in the sales contract of a product is generally collected within one year from the time
when control over the product is transferred to a customer, and does not include the important element of theinterest.
The impact of the adoption of IFRS 15 on the condensed consolidated financial statements of the TNSCGroup was negligible.
When IFRS 15 was adopted, a method, which was recognized as a transitional measure, was used to recognize
the cumulative 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.
7.

Segment information
The TNSC Group conducts gas businesses in Japan and overseas, mainly for customers in the steel, chemical,and electronics industries, and has built production and sales structures for its main products in Japan, the UnitedStates, and Asia & Oceania. In addition, the TNSC Group conducts the manufacture and sales business ofhousewares such as stainless steel vacuum bottles. Therefore, the Company has established the following four
reportable segments: Gas Business in Japan, Gas Business in the United States, Gas Business in Asia & Oceania,
and Thermos 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 inthe United States, Gas Business in Asia & Oceania, and Thermos & Other Businesses, to the four segments ofGas Business in Japan, Gas Business in the United States, Gas Business in Asia & Oceania, and ThermosBusiness. To facilitate the year-on-year comparisons, the figures for the first quarter of the preceding fiscal year
have been reclassified based on the changes to the reportable segments.
The principal products and services included in the four segments are shown in the table below.
Business segment
Gas Business in Japan
Gas Business in theUnited States
Gas Business in Asia &Oceania
Thermos Business

Main products and services
Oxygen, nitrogen, argon, carbon dioxide, helium, hydrogen, acetylene, gas- related
equipment, specialty gases (electronic materials gases, pure gases, etc.), electronicsrelated equipment and installation, semiconductor manufacturing equipment, cutting
and welding equipment, welding materials, plants and machinery, liquid petroleumgas (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 toprepare the consolidated financial statements for the preceding fiscal year. Revenue from inter-segment
transactions and transfers is based primarily on prevailing market prices.

4(1) Figures of revenue and income (loss) by reportable segment
First Half, FYE2018 (April 1, 2017 – September 30, 2017)(¥ million)
Gas
Businessin Japan

Gas Business Gas Businessin the United in Asia &States
Oceania

Thermos
Business

Total

Amounts on theAdjustments Consolidated(Note 1)
Statements ofIncomeRevenue(1) Revenue toexternal customers(2) Revenue frominter-segment
transactions andtransfers
TotalSegment income(Note 2)

158,760

84,37849,546

13,029305,714―305,714

6,340

5,012

963

12

12,329―165,100

89,39050,51013,041

318,043(12,329)

14,694

6,421

4,842

4,291

30,249(12,329)(944)

305,714
29,305

Notes:
1. The ¥944 million negative adjustment for segment income is comprised of ¥263 million of intersegment
eliminations and companywide expenses of ¥681 million that were not allocated to any particular reportablesegment. These companywide expenses related principally to basic research expenses that were not allocatedto a particular reportable segment.
2. Segment income represents core operating income, which is calculated as operating income excluding certain
gains or losses attributable to non-recurring factors (non-recurring items).
First Half, FYE2019 (April 1, 2018 – September 30, 2018)(¥ million)
Gas
Businessin Japan

Gas Business Gas Businessin the United in Asia &States
Oceania

Thermos
Business

TotalAmounts on the
Adjustments Consolidated(Note 1)
Statements ofIncome

Revenue
171,989

91,48852,383

13,564329,426―

329,426

3,494

6,506

2,094

11

12,107―

Total

175,484

97,99554,47813,576

341,534(12,107)

Segment income(Note 2)

12,700

6,897

6,358

4,503

30,460(1) Revenue toexternal customers(2) Revenue frominter-segment
transactions andtransfers(12,107)(2,314)329,426
28,145

Notes:
1. The ¥2,314 million negative adjustment for segment income is comprised of ¥98 million of intersegment
eliminations and companywide expenses of ¥884 million that were not allocated to any particular reportablesegment, as well as the expenses of ¥1,331 million to acquire the European business. These companywide
expenses related principally to basic research expenses that were not allocated to a particular reportablesegment.
2. Segment income represents core operating income, which is calculated as operating income excluding certain
gains or losses attributable to non-recurring factors (non-recurring items).

5(2) Reconciliation of segment income with income before income taxes(¥ million)
First Half of FYE2018(April 1, 2017 to September 30, 2017)

First Half of FYE2019(April 1, 2018 to September 30, 2018)

29,30528,145299

948

Segment income
Gain on sales of noncurrent assets
Other
Operating income
Financial revenue
Financial expenses
Income before income taxes

―

(125)

29,60428,967754

890(2,677)(2,784)

27,681

6

27,073