Consolidated Business Performancefor the Full-Year of the Fiscal Year Ended
March 2016 (Fiscal 2016)

May 12, 2016TAIYO NIPPON SANSO Corporation
11

Contents
1. Business Performance for the
Full-Year of FYE2016
1) Overview of business performancefor the full-year2) Business performance by segment

2. Full-Year Forecasts for FYE2017
1) Overview of forecasts for the full-year2) Forecasts by segment

3. Topics
1) Expansion of onsite supply businessin Japan2) U.S. growth strategies
3) Thermos business strategies4) Strengthening of corporate governancesystem2

4. Medium-Term Management
Plan Ortus Stage 1
1) State of Progress2) Strategic Direction
3) Progress with transformation
4) Innovation
5) Networking(Globalization and M&A)

5. Investment and Financial
Strategies/Shareholder Returns1) Investment strategy
2) Financial strategy3) Shareholder returns policy

1-1. Overview of business performance for the full-year(Billions of yen)

FYE2015
Margin

Sales

559.3

FYE2016
Margin641.5

YoY

FYE2016

Change(Announced

Margin+82.1

targets)
Margin655.0+14.7%

Operating
IncomeOrdinary
IncomeNet income attributable toowners of the parent

3

35.2
6.3%

34.2
6.1%

20.7
3.7%

43.3
6.8%

43.1
6.7%

25.8
4.0%

+8.0
+22.8%+8.8+25.9%+5.0+24.5%

42.5
6.5%

41.3
6.3%

27.0
4.1%

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

FYE2015

FYE2016% change

Sales

344.6

332.2

-3.6%

Operating Income

25.0

27.5

+10.0%

Operating Margin

7.3%

8.3%

+1.0pt【Reasons for Change in Sales】➢ Sales of gas equipment increased as Hydrogen Refueling Station sales were favorable➢ Sales were recorded for a large project in electronics equipment and installation➢ Sales of LP gas fell significantly due to the impact of the falling oil price【Reasons for Change in Operating Income】➢ Increased profit by the sales increase of electronics equipment and installations, and Hydrogen
Refueling Stations➢ Cost declined along with declining oil prices➢ Improve earnings through promoting transformation, including the strengthening of supply
chains4

1-2. Business performance by segment: Gas Business in the U.S.
(Billions of yen)

FYE2015

FYE2016% change

Sales

130.9

188.5

+44.0%

Operating Income

5.7

6.8

+17.6%

Operating Margin

4.4%

3.6%

-0.8pt【Reasons for Change in Sales】➢Sales of separate gas supplied in bulk and carbon dioxide gas were firm, but helium sales fell
➢In electronics, shipments for major users were strong➢Sales increased along with strategic investments including in continuing M&A and air separation
units (ASU)➢Impact of foreign currency translation: +¥17.6 billion➢Impact of change in business-year ends: +¥38.7 billion【Reasons for Change in Operating Income】➢Earnings increase resulting from sales increase of carbon dioxide gas and electronics gas➢Decreased profit due to decreased sales of helium➢Impact of foreign currency translation: +¥0.8 billion➢Impact of change in business-year ends: +¥2.2 billion51-2. Business Performance by Segment: Gas Business in Asia & Oceania(Billions of yen)

FYE2015

FYE2016% change

Sales

61.9

93.1

+50.3%

Operating Income

2.4

4.4

+80.7%

Operating Margin

4.0%

4.8%

+0.8pt【Reasons for Change in Sales】➢Profits grew in Vietnam and the Philippines, but were soft in Singapore and Malaysia➢Two acquisitions in Thailand and Australia contributed to sales growth.
➢Shipments of electronics gas were strong in China and South Korea➢Impact of foreign currency translation: +¥3.7 billion➢Impact of change in business-year ends: +¥12.6 billion【Reasons for Change in Operating Income】➢Two acquisitions in Thailand and Australia contributed to profit increase.
➢Increased profit along with increased sales of electronics gas➢Impact of foreign currency translation: +¥0.2 billion➢Impact of change in business-year ends: +¥0.7 billion61-2. Business Performance by Segment: Thermos & Other Businesses(Billions of yen)

FYE2015

FYE2016% change

Sales

21.7

27.5

+26.5%

Operating Income

3.4

5.9

+74.3%

Operating Margin

15.8%

21.8%

+6.0pt【Reasons for Change in Sales】◆Thermos Business➢Sales of new products launched every year in February and August were firm
➢Inbound demand continued to make a contribution【Reasons for Change in Operating Income】◆Thermos Business➢Earnings increase resulting from sales increase.
➢Improved utilization rate of plant in Malaysia, and improved product mix

7

2–1. Full-Year Forecasts for FY2017
FYE2016(Billions of yen)Japan GAAP
Margin

Sales

641.5

FYE2016
IFRS
Margin594.4

FYE2017(forecast)IFRS

FYE2016

YoY

Japan GAAP and IFRS

Changeadjusted amounts

IFRS

Margin

610.0

-47.1

+15.6
+2.6%

Operating Income

43.3
6.8%

Net income attributable toowners of the parent

25.8
4.0%

49.0
8.2%

29.0
4.9%

52.0

+5.7

8.5%

30.0

+3.0
+6.1%

+3.2

4.9%

+1.0
+3.4%

Change from Japan GAAP to IFRS (below, for year ended March 2016)→ Net sales: -¥47.1 billion (under IFRS, Matheson Tri-Gas, Inc. recorded a loss of -¥42.7 billion for a 12-month
period, and -¥4.2 billion for some domestic subsidiaries outside the scope of consolidation)→Operating income: +¥5.7 billion (Impact of 12-month period on Matheson Tri-Gas, Inc.: a loss of -¥2.7 billion,
non-amortization of goodwill of +¥6.2 billion, equity earnings of +¥2.6 billion, and other of -¥0.4 billion)

Impact of change in business-year ends: (IFRS basis for FYE2017)→For FYE2017, net sales of -¥8.6 billion and operating income of -¥0.2 billion* The actual figures according to IFRS for FYE2016 are approximate calculations and may be changed dependingon the result of an accounting audit.
8

2-2. Full-Year Forecasts for FY2017 by Segment【Sales】【Business Plan】

Gas Business in JapanFYE2016

FYE2017

IFRS

IFRS

Gas Business in Japan

328.0

334.0

+1.8%

Gas Business in the US

149.8

160.0

+6.8%

89.1

88.0

-1.2%

Thermos & Other Businesses

27.5

28.0

+1.8%

➢ Strive to recover earnings in the industrial gas business andSales Total

594.4

610.0

+2.6%

maintain earnings in the electronics business➢ Expand business by building a sales network by M&As in areas(Billions of yen)

Gas Business in Asia &Oceania【Operating Income】% change

FYE2017

IFRS

IFRS

Gas Business in Japan

27.2

27.6

+1.5%

Gas Business in the US

9.2

11.3

+22.8%

5.0

7.7+54.0%

Thermos & Other Businesses

9.0

7.0

-22.2%

Eliminations

-1.4

-1.6

Operating Income Total

49.0

52.0

Gas Business in Asia &Oceania% change

rationalization of domestic businesses

Gas Businss in the US

Gas Business in Asia & Oceania➢ Expand the businesses of API (Thailand) and RGP (Australia), whichbecame subsidiaries last fiscal year
➢ Promote the earnings reform policy at Leeden National Oxygen
Ltd.
➢ Expand earnings in the Philippines, where business is good

Thermos & Other Business➢ Expand sales and utilize sales channels of alfi (Germany), which we+6.1%*Impact of change in business-year ends of some subsidiaries in the Gas
Business in Asia & Oceania in FYE2016 comprises net sales of ¥8.6 billion
and operating income of ¥0.2 billion

918

product shipments from the Water- O No.3 Plant➢ Promote measures related to transformation such as thewe have not yet entered, and win orders for large onsite projects

FYE2016(Billions of yen)

➢ Expand sales in the stable isotope business by startingare acquired in the fiscal year before last
➢ Establish a stable supply system by such measures as starting a
manufacturing plant in the Philippines

３. Topics

1) Expansion of onsite supply business in Japan
2) U.S. growth strategies
3) Thermos business strategies4) Strengthening of corporate governance system10３-1. Expansion of Onsite Supply Business in Japan
Acquire new onsite projects from Nippon Steel & Sumitomo Metal Corporation and JFE SteelCorporation
Build one large ASU in Yahata, and two large ASUs in Kurashiki
Yahata Sanso Center

TNSC’s large onsite bases

Investment ratio: TNSC 50%, Nippon Steel &17 plants in 12 companies nationwide

Sumitomo Metal Corporation 50%
Established: January 2016
New ASU operations start date: Early 2017

Shunan Sanso
Shin Nanyo Sanso

Yahata SC

NisshinSanso

New ASU production capacity：

Sendai SC

JFE SC
Kurashiki

Gaseous oxygen: 35,000 Nm3/h
Iwaki SCTM Air Mizushima

Liquefied nitrogen: 1,250 Nm3/h

JFE SC
Fukuyama

TM Air Kashima
Chiba SC Goi &Sodegaura

TM AirKurosaki

JFE SC Keihin
Nagoya SC

Oita SC

Tsurusaki
SC

TM Air Yokkaichi

Make the joint venture partner gas supply system more
effective, and plan to build the optimum production system ineach region
11

Nitrogen gas: 50,000 Nm3/h
Crude argon gas: 1,220 Nm/h

JFE Sanso Center Kurashiki Plant
Investment ratio: TNSC 60%, JFE SteelCorporation 40%
Established: October 2017
New ASU operations start date: End of 2018
New ASU production capacity：
Gaseous oxygen: 60,000 Nm3/h(For each plant) Nitrogen gas: 83,000 Nm3/h

3-2. U.S. Growth Strategies
・Participate in regions that TNSC has not yet enteredInstall ASUs in regions possessing
sales networks built by M&As

・Build strong businesses in regions that TNSC has already entered・Expand product lineups (acetylene, carbon dioxide gas)

M&A
Conduct M&As in order to raise
ASU operating rates andenhance business density

Business expansion
Large-scale,ASU*

on-siteinstallation
TNSC can participate in largescale, on-site business because it
has built a backup system*ASU: Air Separation Unit
12business

3-2. U.S. Growth Strategies（２）Participate in large-scale, on-site business in the U.S.

【Aims and effects of investment】【New plant overview】
Plant location: Lake Charles City, Louisiana
Output capacity: 3,600 t/day
Start of operations: 2017

Expansion of business•Secure a stable earnings infrastructure by on-site supply
contracts•Expand sales of liquefied argon acquired as a Company
source•Expand sales to new customers in Louisiana and southeast
Texas by expanding output capacity

Cost reductions

Index•Reduce power costs by using economies of scale•Reduce delivery costs by reviewing and changing the delivery
area of each plant

ASU (Air Separation Unit)
Newly installed ASU

Strengthen the Company's business infrastructure in the southern U.S. byinstalling large-scale ASUs

13

3-2. U.S. Growth Strategies（３）Based on the U.S. growth strategy, build an ASU supply network in the core areas
stretching from California to Florida

February 2015:
Purchased a
distributor in southern
California

November 2015:
Purchased a distributor
in central Texas
Installed a new ASU insouthern California(Operations start in2017)

February 2015:
Purchased an industrial
gas business in Hawaii

Large-scale on-siteorder was received from
Sasol Chemicals (USA)(Supply starts in 2017)

Looking ahead, TNSC will promote its strategy of installing ASUs after conducting
M&As, and aims to expand business by acquiring large-scale on-site projects following
Sasol Chemicals
14

Index

Corporate
headquarters
ASU (Air Separation
Unit)
Business bases

3-3. Thermos Business Strategy
To drastically increase sales from the fiscal year ended March 2014 against the backdrop ofbrand penetration, regular new product launches, and a powerful production system
Aim to further expand sales by establishing a new plant in the Philippines【Thermos Group Global Network 】

Output capacity: 45million units/year

alfi (Germany)★Plant in
Malaysia

Output capacity: 10
million units/year
Singapore sales
company

20
American and Canadiansales company★Korean sales
company

Hong Kong
sales
company

Indonesia sales
company(Billions of Yen)
(単位：億円)25

Plant in China:
Output capacity: 25
million units/year

Chinesesales
company【Net sales*】15★Japanese

Head Office10

Taiwan sales
company★New plant in thePhilippines
Output capacity: 10
million units/year

Australian sales
company

50
FYE2012 FYE2013 FYE2014 FYE2015 FYE2016*Net sales of Thermos Business for thealigned business years of the TNSC
Group

Ship products to over 120 countries globally through various regional bases★Indicates the aligned business years of the TNSC Group (Japan Head Office, Korean sales
15 company, Malaysian and Philippine plants)

3-4. Strengthening the Corporate Governance Organization
Strengthen functions of Board of
Directors

Annual Meeting of Shareholders
Appoint/
dismiss

Appoint/
dismiss

Appoint/dismiss

Select/dismiss

Accounting
auditSupervise

Strengthening the Compliance Risk
Management System

President and CEO

Collaborate
Audit & Supervisory Board

Collaborate

The chairperson of the Board of Directors shall be thechairperson and not the CEO, and Outside Directors
shall be selected (0 -> 2 people)

ReportBoard of Directors

Accounting Auditor

Accounting
audit
Businessaudit

Make effective the Board of Directors’ supervisory
function of the execution of duties by separatingsupervision and execution

Ensure the effectiveness of compliance with laws andregulations, and risk management
Assistant

ＣＣＯ※

Management
Committee
Corporate Audit OfficeInternal Control OfficeControl

The Compliance Committee

・Appoint the CCO
・Establish the Internal Control Office to assist the
CCO・Strengthen the functions of the Compliance
Committee, the Risk Assessment Committee, and theTechnology Risk Management Committee

Engage in constructive dialogue
with shareholders

Internal
audit※CCO…Chief Compliance
Officer

16

The Risk Assessment Committee
The Technology
Risk Management Committee

Each division/Group company

To achieve sustained growth and raise medium- tolong-term corporate value, TNSC proactively engages
in dialogue with shareholders and investors, anddiscloses accurate information in a timely manner
・Formulate the disclosure policy・Strengthen feedback to management4-1. Ortus Stage 1: State of Progress
Right axis: Operating Income(Billions of Yen)

Left axis: Sales(Billions of Yen)

800

Sales
Operating Income

700Japan GAAP

ＩＦＲＳ

600

80

60

500
400

40

300
200

20

100
0

FYE2013FYE2014

FYE2015

FYE2016

FYE2017

FYE2017

468.3

522.7

559.3

641.5

614.0

610.0

(Result)

Sales(Result)(Difference versus initial plan)

Operating Income（+9.3）

24.8

31.4(Difference versus initial plan)

Operating Margin(Result)

35.2（+0.2）

5.3%

6.0%(Difference versus initial plan)

6.3%（-0.1％）(Result)（+71.5）43.3（+5.3）

6.8%（+0.1％）(Forecast)(Forecast)（+14.0）

44.5

52.0

（-0.5）

7.2%

8.5%（-0.3％）

Overseas Sales Ratio

27.6%

31.4%

35.0%

44.4%

41.1%

41.4%

ROCE

5.5%

6.2%

6.2%

7.4%

7.4%

8.6%

※ The fiscal year ended March 31, 2016 includes the impact of changes in the accounting
period of some subsidiaries (net sales +¥51.3 billion, operating income +¥2.9 billion)

170

4-2. Ortus Stage 1 Strategic Policy

1. Transformation

・Reduce fixed costs by ¥6 to ¥7 billion

Core targets

2. Innovation･Create new businesses that will be the coreof the next generation･Accelerate the commercialization of new
products into global markets.

Overseas
markets

3. Globalization･Strategically place management resources
globally to increase overseas ratio to 50%
or above by FYE 2023

4. M&A･Aggressively pursue acquisitions and venturesto accelerate business expansion globally

18

Growthmarkets

4-3. Progress with Transformation

Reduce personnel
expenses in Japan

・Encourage leaving early at Taiyo Nippon Sanso andengineering subsidiaries

Strengthen supply chains・Strengthen infrastructure of carbon dioxide gas
・Strengthen product management
・Replace plants to reduce power costs, repair costs, etc.

Rationalize other domestic
businesses, etc.

・Strengthen plant engineering
・Bolster competitiveness by establishing the SI Innovation Center・Streamline by integrating liquid petroleum gas (LPG) subsidiaries

Rationalize overseas
businesses

・Rationalize the businesses in Vietnam, the Philippines and China
・Conduct various types of rationalizations at a consolidated
subsidiary in Thailand

The initial target for this fiscal year is ¥6 to ¥7 billion (compared to the fiscal year ended March
31, 2014) as a result of the transformation and cost reductions centered on domestic
business, and TNSC now expects to achieve about ¥6 billion

194-4. Innovation
Accelerate the innovation strategy focused on launching new strategic products and venture
capital investment
Commercialization of new
strategic products into growthmarkets

Open innovation

Development of new energy
businesses

Create new business synergy
with Mitsubishi Chemical Holdings
Group

20

・Expand sales of hydrogen refueling stations (net sales of ¥3.1 billion for the
fiscal year ended March 31, 2016)
・Start product shipment at Water-18O No. 3 Plant (March 2016)
・Start sales of the CryoLibrary iMaster integrated temperature history
information management system
・Invested in SulfaTrap LLC , a U.S. venture company engaged in the developmentof desulfurization sorbents (January 2016)
・Invested in Jilin OLED Material Tech Co. Ltd, a venture capital company engaged
in the development of OLED materials in China (February 2016)

・In process of entering new businesses related to energy

・Mitsubishi Chemical and Taiyo Nippon Sanso started marketing zeolite
membranes for bioethanol production in the U.S. (December 2015)
・Nippon Ekitan Corporation will obtain feedstock gas from Mitsubishi Chemical
Corporation Mizushima Plant, and manufacture high-grade carbon dioxide gas(plant completion in October 2017)
・Strengthened collaboration with Mitsubishi Tanabe Pharma Corporation in thehealthcare field

4-4. Networking (Globalization/M&A)
Search for opportunities for M&As, including areas we have not yet entered,and aggressively invest in ASUs
Philippines(southern part of Luzon Island)
Built an manufacturing plant toincrease our stainless steel bottle
supply capacity by 30％(Manufacturing started in 2016)

ThailandIn May 2015, acquired Air
Products Industry Co.,
Ltd., an industrial gas
manufacturer in Thailand

Indonesia (Java)Two contracts for pipelines toJapanese-affiliated firms were
unofficially announced (Supply
started in 2016 and 2017)21

United States(California)

In the U.S., installed the 19th air
separation unit (ASU) in southern
California (Supply starts in 2017)

United States(Louisiana)

Received an order for a large
pipeline for an ethane cracker
project for Sasol(Supply starts in 2017)

Philippines (southernpart of Luzon Island)

Received pipeline contract
orders for two projects(Supply started in 2016)

Australia

United States (Texas)

July 2015
Acquisition of Renegade
Gas Pty Ltd, a
distributor, in Australia

In November 2015, acquisitionof 3-D Welding & Industrial
Supply Inc., the largest
independent distributor incentral Texas

4-4. Networking (Globalization/M&A)【Overseas sales】(Billions of yen)

300

39.6%

Asia & Oceania
the United States

250

41.1%

40.0%

35.0%

Overseas sales ratio

35.0%

31.4%
27.6%

200
22.8%

23.6%

45.0%

30.0%

24.3%

25.0%

150
20.0%
100

15.0%
10.0%

50
5.0%
0

FYE2010 FYE2011 FYE2012 FYE2013 FYE2014 FYE2015 FYE2016 FYE2017* Calculated by excluding the effects of changes in fiscal-year end in
FYE2016 at U.S. and Asian subsidiaries
22(Forecast)0.0%

5-1. Investment Strategies
TNSC plans to conduct capital expenditures, and investments and loans, totaling ¥200
billion, during the three years of its medium-term plan
(Billions of yen)

1,000
800

FiscalInvestments
and loans・Plant in Mesa, Arizona (U.S.)
2015

Capitalexpenditures

2000・Water- 18 O No. 3 Plant (Shunan City, Yamaguchi Prefecture)・Replace liquefied gas plant (Hitachinaka City, Ibaraki Prefecture)
2016

57
590

536

・Replace the on-site plant (Yokkaichi city, Mie Prefecture)・Acquired the Hawaii business, Sims Welding Supply, and 3-D
Incorporated (U.S.)・Acquired Air Products Industry Co., Ltd. (Thailand)352

・On-site for Sasol (U.S.)FYE2015

FYE2016
25％

Japan
・New on-site businesses

・Strengthening the supply chain

23

・Clark Plant in northern Luzon Island (The Philippines)
・Acquired alfi (Germany)

329

600
400

Main capital expenditures, and investments and loans

year

2017

FYE2017

Allocating priority
to overseas

75％

onward・JFE Yahata Sanso Center Kurashiki Plant (Kurashiki City,
Okayama Prefecture)
・Carbon dioxide recovery facility at Nippon Ekitan's Mizushima
Plant (Kurashiki City, Okayama Prefecture)

Overseas・Large-scale on-site project・Liquefied gas manufacturing plant

５-2. Financial Strategies
Cash Flows

Net debt-to-equity ratio(Billions of yen)
100

40

28.0

80
60
40

(Units: times)(Billions of yen)

13.2

20

350

1.20

1.12
1.03

30

300

20

250

10

200

-0.5 0

1.4
-3.3

-40
-60
-80
-100
FYE2012FYE2013FYE2014

FYE2015

317

150

0.60

313

274
229

207

220

213

224

0.40

-10

100

-20

50

0.20

-30

0

0.00

FYE2016

Cash flows from operating activities

Cash flows from investing activities

Cash flows from financing activities

Free cash flows

201

FYE2012204

FYE2013

Shareholders' equity

FYE2014

FYE2015Interest-bearing debt

FYE2016

Net debt-to-equity ratio

Build a robust financial structure to support proactive investment strategies

24

0.71 0.80

0.67

0
-20

1.00

0.80

5-3. Shareholder Returns
37.7%

¥16
¥14
29.1%

¥12
¥10
¥8

24.0%

22.0%

¥7

End of fiscal year
Interim
Dividend payout ratio

30.5%
27.1%

¥6

¥6

35.0%
¥9

26.8%

24.3%

22.5%
¥6

40.0%

¥6

¥6

25.0%

¥7

20.0%

¥6

¥6

¥6

15.0%

¥4
¥2
¥0

¥5

¥6

¥6

¥6

¥6

¥6

¥6

¥6

¥6

¥7

10.0%
5.0%
0.0%

FYE2007 FYE2008 FYE2009 FYE2010 FYE2011 FYE2012 FYE2013 FYE2014 FYE2015 FYE2016
TNSC makes shareholder returns in line with a dividend policy linked toconsolidated performance and based on sustained payment of a stable dividend

25

30.0%

Disclaimer●This material is not intended for purposes of disclosure forsecurities transactions, and it is impossible to guarantee that the
information contained in this presentation is accurate andcomplete.
●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 ofwriting. Actual results reflect a variety of risk and uncertainties.
These risks and uncertainties include, but are not limited 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 thistime. With this in mind, please refrain from relying solely on thesematerials when making investment decisions.

26