Consolidated Business
Performance for the First Half of
the Fiscal Year Ending March 2016
(Fiscal 2016)
November 6, 2015
TAIYO NIPPON SANSO Corporation
1

Contents
1. Consolidated Business Performance for
the First Half of FY2016
2. Segment Report
3. Topics
4. Consolidated Full-Year Forecasts for
FY20162

Consolidated Business Performance for the First Half of FY2016(Billions of yen)First half of First half of First half of
FY2016FY2016FY2015(Announced targets)

MarginMargin(Results)

MarginYoY
Change% change

Sales

268.9

293.0

285.6

+16.8

Operating
Income

16.4

17.6

18.9

+2.5

Ordinary
Income

16.5

17.7

19.4

+2.8

9.9

12.8

13.3

+3.4

Net income
attributableto owners of
the parent

6.1％

6.2％

3.7％

6.0％

6.0％

4.4％

6.6％

6.8％

4.7％

+6.2％

+15.3％+17.2％+34.2％

Achieved the revised operating income forecast announced on August 4
with sales and profits increasing year on year.
3

Net income attributable to owners of the parent increase as a result of again on step acquisition recorded on an M&A in Thailand

Analysis of Year-on-Year Change (1)
Sales
300.0

(Billions of yen)

280.0
260.0
240.0

Including foreign exchange impact of+15.7billion yen

268.9（Gas Business in the U.S.+11.6
Gas Business in Asia & Oceania +4.0
Other Businesses +0.1）

220.0
200.0

First Half of
FY2015285.6

Gas Businessin JapanGas Businessin the U.S.

Gas Businessin Asia &Oceania

Other
Businesses

First Half of
FY2016

Sales fell with falling oil prices pushing unit prices down in the Gas Businessin Japan
Sales grew steadily in the U.S. and Asia
4

Revenues in Other Businesses were driven by sales increasing in the
Thermos BusinessAnalysis of Year-on-Year Change (2)Operating Income
20.0(Billions of yen)

19.0
18.0
17.0
16.0
15.0

18.9
Including foreign exchange impact of+0.9billion yen

16.4
First half of
FY2015（Gas Business in the U.S.+0.5 Gas Business in
Asia & Oceania +0.3 Other Businesses +0 ）Gas Business Gas Business Gas Businessin Japanin U.S.

in Asia &Other

Elimination

First half ofBusinesses

Oceania

FY2016

The Gas Business in Japan saw profits increase as falling oil price drove
costs down
Profits grew in the U.S. but were flat in Asia on a local currency basis
5

Profits in Other Businesses grew in line with increasing sales in the
Thermos BusinessAnalysis of Year-on-Year Change (3)Ordinary Income
22

Net Income(Billions of yen)

16

20

14

18

12

16
14
12

(Billions of yen)

19.4
16.5

FirstHalf
Half of Operating
OperatingFirst
of FY2015
incomeFY2015
Income108InterestandInterest
dividend
andincomeOtherFirstHalf
Half ofFirst
of FY2016
FY2016

dividend

6

13.3
9.9

First
Half
First
Half
ofofFY2015
FY2015

Ordinary
incomeExtraordinaryFirst Half
Extraordin Income
First Halfaryandgain
FY2016
Gain
Loss taxes, etc. of of
FY2016and lossincomeDividend income increased in linewith improved corporate earning

6

Acquisition of a Thai equitymethod affiliate for consolidation
resulted in a ¥1.8 billion gain on
step acquisition

Other Financial Results for the First Half of FY2016(Billions of yen)Mar.2015

Sept.2015

ChangeTotal assets

782.3

809.5

+27.2

Shareholders' equity

317.2
212.8
0.67

322.6
233.7
0.72

+5.4
+20.9
+0.05

Net interest-bearing debt

Net D/E ratio

Sept.2014 Sept.2015 Change

Capital expenditure

14.8

22.6

+7.8

Investment and loan

1.8
20.2
2.4
1.4
10.6

19.6
22.4
2.9
1.3
-5.6

+17.8
+2.2
+0.5
- 0.1
- 16.2

Depreciation and amortization(Amortization of goodwill)

R&D expenses
FCF (investing activities)
7

Loans to promote M&A
and the recording of loansof newly consolidated
subsidiaries drove thebalance of interest-bearing
debt higher
Capital expenditures atMatheson Tri-Gas, Inc.
and others increased
Rose substantially as aresult of M&As in the U.S.,
Thailand, and Australia
Despite a major increasein cash flows fromoperating activities, FCF
was negative due to anincrease in capital
expenditures, andinvestments and loans

Contents
1. Consolidated Business Performance for
the First Half of FY2016
2. Segment Report
3. Topics
4. Consolidated Full-Year Forecasts for
FY2016
8

Segment Information: Breakdown of Sales and Operating Income
Sales(Billions of yen)First HalfFirst Halfof FY2015

of FY2016

Gas Business in Japan

165.5

157.8

-4.6%

Gas Business in the U.S.

62.6

77.5

23.9%

Gas Business in Asia & Oceania

30.3

36.4

20.1%

Other

10.3

13.7

33.0%

Segment Total

268.9

285.6

6.2%

Operating Income(Billions of yen)First Halfof FY2015

of FY2016

Gas Business in Japan

11.3

11.7

+3.7%

Gas Business in the U.S.

2.6

3.4

+28.2%

Gas Business in Asia & Oceania

1.4

1.7

+17.8%

Other

1.7

2.7

+55.1%

Elimination or corporate

-0.8

-0.7

+12.2%

9

16.4

18.9

(Billions of yen)

% change

First Half

Segment Total

Sales% change+15.3%First HalfFirst HalfFirst HalfFirst HalfFirst HalfFirst Halfof FY2015 of FY2016

of FY2015 of FY2016

of FY2015 of FY2016

Gas Business

Gas Business

Gas Businessin Japanin the U.S.

in Asia & Oceania

Operating Income

First HalfFirst HalfFirst HalfFirst HalfFirst Halfof FY2015 of FY2016

Other(Billions of yen)First HalfFirst HalfFirst Halfof FY2015 of FY2016

of FY2015 of FY2016

of FY2015 of FY2016

Gas Business

Gas Business

Gas Businessin Japanin the U.S.

in Asia & Oceania

First HalfFirst Halfof FY2015 of FY2016

Other

Gas Business in Japan

Sales

Industrial
Gas(Billions of yen)First HalfFirst Halfof FY2015

of FY2016

Bulk/On-site

67.6

65.0

- 3.9% ➢Sales of oxygen on-site declined as steel manufacturers

Package/Hard goods

15.9

16.6

+4.5% ➢Welding-related sales were brisk

Plants and Equipment

16.7

16.1

- 3.2% ➢Sales from air separation unit (ASU) declined

Medical

10.8

11.3

+4.2% ➢Sales for medical equipment were strong

Total

111.1

109.1

- 1.8%

Gases

25.7

24.2

- 6.1% ➢Sales of nitrogen gases and electronic materials gases

9.2

10.0

+8.5% declined➢Recorded sales from a large-scale project

Total

35.0

34.3

- 2.2%

Gases

17.8

13.0

- 27.2% ➢LPG gas prices fell in line with oil prices declining

Related Equipment

1.4

1.4

- 4.1%

Total

19.3

14.4

- 25.4%

Segment Total

165.5

157.8

- 4.6%

Electronics Equipment and Installation

Energy% change

Factors

Operating Income(Billions of yen)First HalfFirst Halfof FY2015

of FY2016% change

Factors➢Profits increased due mainly to LPG procurement costs
Segment Total

11.3

11.7

+3.7% declining and cost reductions resulting from structuralreforms and falling oil prices

10Gas Business in the U.S.

Sales

(Billions of yen)

Bulk/On-site

First HalfFirst Halfof FY2015

of FY2016

19.7

24.1

% change

Factors+22.3% ➢In addition to the M&A effect, carbon dioxidesales were brisk
Industrial Gas Package/Hard goods

40.2

47.3

+17.6%

Plants and Equipment

0

1.0

ー

Total

60.0

72.5

+20.9%

Gases

1.9

4.2 +116.1% ➢Sales of electronics materials gases were brisk

Electronics Equipment and Installation

0.6

0.8

+22.4%

2.6

5.0+92.2%

62.6

77.5+23.9%

Total
Segment Total➢Recorded construction sales➢Positive ¥11.6 billion impact of foreign currencytranslation

Operating Income(Billions of yen)First HalfFirst Halfof FY2015

of FY2016% change

Factors➢Profits increased due mainly to a fall in LPG
Segment Total

2.6

3.4

+28.2% procurement costs, in addition to a positive ¥0.5

billion impact of foreign currency translation

11

Gas Business in Asia & Oceania

Sales(Billions of yen)First HalfFirst Halfof FY2015

of FY2016% change

Factors

Bulk/On-site

7.8

10.4

+33.7% ◆Apart from the addition of Thailand’s Air

Package/Hard goods

6.2

6.0

- 3.5%

Plants and Equipment

4.1

4.3

+4.3%

Total

18.2

20.8

+14.2% sales

Gases

11.2

13.7

+21.8% ➢Sales of semiconductor material gases were

Equipment and Installation

0.7

1.8 +133.7% ➢Equipment and construction sales were strong

Total

12.0

15.5

+28.9%

Segment Total

30.3

36.4

+20.1% ➢Positive ¥4.0 billion impact of foreign currency

Industrial Gas

Electronics

Products Industry Co., Ltd. to the scope of
consolidation, Growth in the industrial gas
business in Vietnam and the Philippines drove

Operating Income(Billions of yen)First HalfFirst Halfof FY2015

of FY2016% change

Factors➢In addition to a positive ¥0.3 billion impact offoreign currency translation, strong conditions in
Segment Total

1.4

1.7

+17.8% the industrial gas business in Vietnam and theelectronics business in China, South Korea, andTaiwan drove profits

12

Other Businesses

Sales(Billions of yen)First HalfFirst Halfof FY2015

of FY2016% change

Factors

7.7

11.1+44.7% ◆Thermos Business

Thermos Asia

1.3

1.2

- 7.2%

Total

9.0

12.4

+37.0%

1.2

1.3

+5.2%

10.3

13.7

+33.0%

Japan

Other
Other Business Total

・In Japan, in addition to brisk sales of new
products, there was inbound demand

Operating Income

Other Business Total

13(Billions of yen)First HalfFirst Halfof FY2015

of FY2016

1.7

2.7

% change+55.1%

Factors◆Thermos Business
Earnings increase resulting from sales increaseBreakdown of Segment Sales and Operating Income

Sales(Billions of yen) SalesFirst Half of First Half of
FY2015FY2016% change

Industrial Gas

189.4

202.6

+6.9%

Electronics

49.7

54.8

+10.3%

Energy19.3

14.4- 25.4%

Other

10.3

13.7

+33.0%

Sales Total

268.9

285.6

+6.2%

Operating Income(Billions of yen)First Half of First Half of
FY2016

Industrial Gas

11.9

11.2

- 5.4%

Electronics

2.7

4.7

+74.4%

Energy0.5

0.8+40.6%

Other

1.7

2.7

+55.1%

Eliminations or

-0.5

-0.6

- 13.3%

16.4

18.9

+15.3%

Operating Income Total

14

First HalfFirst HalfFirst HalfFirst HalfFirst HalfFirst HalfFirst Halfof FY2015 of FY2016

of FY2015 of FY2016

of FY2015 of FY2016

Industrial Gas

Electronics

EnergyOther

Operating Income% change

FY2015

corporate

First Halfof FY2015 of FY2016First HalfFirst HalfFirst HalfFirst HalfFirst HalfFirst HalfFirst HalfFirst Halfof FY2015 of FY2016

of FY2015 of FY2016

of FY2015 of FY2016

of FY2015 of FY2016

Industrial Gas

Electronics

EnergyOther

Contents
1. Consolidated Business Performance for
the First Half of FY2016
2. Segment Report
3. Topics
4. Consolidated Full-Year Forecasts for
FY201615

TOPICS[Structural Reform]◆ Progress with structural reform[Innovation]◆Participation in a project to industrialize regenerative medicine◆Progress with the hydrogen station business[Globalization and M&A]
◆Construction of a new U.S. plant in California◆Acquisition of an industrial gas manufacturer in Thailand◆Penetration of the market in Oceania

16Progress with Structural Reform (1)Implemented early retirement at Taiyo Nippon Sanso in FY2015
Continue to reduce personnel expenses and strengthen the
supply chain in FY2016(Billions of yen)

Measures15/3
results

16/3
planned

Reduce personnel expenses in Japan

1.2

1.3

Strengthen supply chains

0.3

0.4

Rationalize other domestic businesses

0.1

1

Rationalize overseas businesses

0.1

0.2

1.7

2.0

Total
*All figures are changes from FY2014
17

Profitimprovement

Progress with Structural Reform (2)Organized a structural reform project to speed up effectiveness ofOrtus Stage 1 structural reforms

18

Engineering

Promote consolidation of overlapping local engineeringfunctions between Taiyo Nippon Sanso and engineeringsubsidiaries

Optimize the personnel
headcount of domestic
Group companies

Organize overlapping functions at each company througha system of collaboration between domestic Group
companies, and optimize the headcount of all domestic
Group personnel

Consolidate or abolishdomestic affiliates

Strengthen business development capabilities, reduce
administrative cost and rationalize Group management
through the consolidation or abolishment of domestic
affiliates

Supply chains

Optimize the number of production bases by taking into
the account supply and demand balance and market
conditions of each region

Rationalize back-officedivisions

Consolidate the routine work of back-office divisions withshared-service subsidiaries and standardize the clerical
process

Participation in a Project to Industrialize Regenerative Medicine
Taiyo Nippon Sanso is participating in a R&D team for industrializing regenerative
medicine, which the Stem Cell Evaluation Technology Research Association has beendelegated by the Japan Agency for Medical Research and Development (AMED) to
conduct.

[Project overview] The project plans to systematically integrate the separation and refinement, culture, preservation and administration, stem cell
evaluation and pre-clinical testing stages for developing mesenchymal stem cells (which can differentiate into a variety of cells types including bone cells,
fat cells, heart muscle cells, and nerve cells). These mesenchymal stem cells are strongly expected to find application in regenerative medicine.

Taiyo Nippon Sanso has developed the CryoLibrary iMaster integrated temperature history information
management system for preserving and administering (transporting) the stem cells.

[Visual image of the system in use]

The system continuously and comprehensively
keeps track of the cryogenic environment for
preserving and transporting stem cells

Cryogenicpreservation

Cell extraction facility

Cryogenic transport

・Cell culturing
・Cell processing

Cell transplant
operation facility

Contribute to the establishment of a safe and secure supply chain of products used inregenerative medicine
19

Product commercialization planned
for April 2016

Progress with the Hydrogen Station Business
100
80

Cumulative Number ofHydrogen Stations Established
Construction of 81 stations havebeen finalized in relation to aplan to develop around 100
stations over three years

60
40

81

20

18 of these stations
have adopted Taiyo
Nippon Sanso’s
equipment

0

43
16
2013

2014

2015

A mobile hydrogen station Taiyo Nippon Sanso
delivered began operation in Minamirokugo,
Ota-ku, Tokyo in September 2015

To promote the spread of fuel cell vehicles (FCVs), the Company is promoting thesale of the Hydro Shuttle packaged hydrogen station it developed in August 2013,
and strengthening R&D for further reducing the cost of hydrogen stations.

Sales target in FY2020: ¥4.5 billion
20

Expansion of U.S. Operations: New Plant in California
Build the Company’s 19th ASU in the U.S. in California (4th in California)[Plant overview]
Location: Veron, California
Output capacity: 600 tons/day(Approx. 17,500 Nm3/h)
Launch: 2017

California[Market trend]
California accounts for 13%, the largest
proportion, of U.S. GDP
It is a promising market expected to continue
outpacing the average growth rate of GDP in
the U.S.
Legend：Corporate
headquarters：Existing plant：New plant：Filling station/
Distribution facility /Manufacturing bases

Steady progress is being made in the Company’s key U.S. strategy of leveraging theconstruction of new ASUs and M&A to expand business21

Consolidation of the Operating Company in Thailand
Promote growth strategies by consolidating an affiliate company in Thailand, thesecond largest industrial gas market in Southeast Asia
[Company overview]

Name: Air Products Industry Co., Ltd.
Establishment：1977
Major shareholder: Taiyo Nippon Sanso Group 97%(32% before acquisition)
Major operating bases: Headquarters (Bangkok suburbs),
Chonburi Province, Ayutthaya Province, Chang Mai suburbs

Current
statusAfter
consolidation

22

For the past 10 years, emphasized stable earnings
and investment recoupment over business expansion
under a policy of sound management
Concentrated on the core bulk gas business

Capture growth opportunities in cylinder gas, othergas, and welding-related gas, in addition to bulkgas, and integrate the upstream business withdownstream businesses
Become a general gas manufacturer encompassing
equipment and construction
Strengthen the framework for safety and quality
control(Billions of yen)

8

Sales Plan for API

6

4

2

0

FY2014(results)

FY2017(plan)

Penetration of the Australian Industrial Gas Market
Acquisition of Renegade Gas Pty Ltd, a distributor, in Australia[Company overview]

Name: Renegade Gas Pty Ltd
Employment: 277 employees
Business territory: 20 business bases in New South Wales,
Australian Capital Territory, and Queensland
Business content: Sales of LPG and industrial gasses, and rental of the equipment
Net sales: 81 million Australian dollars (Year ended June 2015)
Sales composition: LPG 58%, industrial gases 30%, helium 6%, other 6%

Basic Policy: Aim to expand scale of industrial
gas business by leveraging RGP's network
Develop the package gas business on the LPG bases
Expand business territory by opening new bases
Launch business initiatives in gas hardware and medical
oxygenSwitch from outside procurement to procurement within the
Taiyo Nippon Sanso GroupRGP acquisition is a bridgehead for entering the Oceania market
23

Contents
1. Consolidated Business Performance for
the First Half of FY2016
2. Segment Report
3. Topics
4. Consolidated Full-Year Forecasts for
FY201624

Consolidated Full-Year Forecasts for FY2016(Billions of yen)

FY2015(Results)
MarginFY2016
forecast

FY2016
forecast(May 8, 2015)
Margin(August 4, 2015)
MarginYoY
Change% change

Sales

559.3

650.0

655.0

+95.6

Operating
Income

35.2

41.0

42.5

+7.2

Ordinary
Income

34.2

39.3

41.3

+7.0

24.0

27.0

+6.2

Net income
attributable toowners of theparent

20.7

6.3％

6.1％

3.7％

6.3％

6.0％

3.7％

6.5％

6.3％

4.1％

+17.1％+20.4％+20.5％+30.0％

Change in the fiscal year-end of Matheson Tri-Gas, Inc. (U.S.) and
Leeden National Oxygen Ltd. (Asia) will have an upward impact of ¥50.0
billion on net sales and ¥3.0 billion on operating income
25Full-Year Forecasts for FY2015 by Business Segment
Sales(Billions of yen) Sales
FY2014FY2015Full-Year

Full-Year

Gas Business in Japan

344.6

340.0

- 1.3%

Gas Business in the U.S.*

130.9

192.0

+46.6%

Gas Business in Asia & Oceania*

61.9

98.0

+58.1%

Other Businesses

21.7

25.0

+14.9%

Segment total

559.3

655.0

+17.1%% change

15/3

Operating Income(Billions of yen)

FY2014FY2015Full-Year

Full-Year

Gas Business in Japan

25.0

25.5

+1.8%

Gas Business in the U.S.*

5.7

8.7

+50.1%

Gas Business in Asia & Oceania*

2.4

5.5 +122.8%

Other Businesses

3.4

4.2

+22.2%

Eliminations or

-1.4

-1.4

+3.4%

35.2

42.5

+20.4%

corporate

Operating Income Total% change

15/3

16/3

15/3 16/3

15/3 16/3

Gas Business

Gas Business

Other

in Japanin the U.S.

in Asia & Oceania

Businesses

Operating Income*Figures for Matheson Tri-Gas, Inc. and Leeden National OxygenLtd. are for 15 months due to a change in the accounting period

26

16/3

Gas Business

15/3

16/3

15/3

16/3

15/3

16/3

15/3 16/3

Gas Business

Gas Business

Gas Business

Other

in Japanin the U.S.

in Asia & Oceania

Businesses

FY2016 Business Assumptions and Objectives.
Gas Business in Japan
Production cutbacks amount steel manufacturers are expected to begin recovering from thefourth quarter in the industrial gas market
Aim to expand sales of new commercial products including hydrogen stations
Launch projects to raise the effectiveness of structural reforms the Company is promoting
SI Innovation Center

Gas Business in the U.S.

(Tama City, Tokyo)

Promote business scale expansion through the continued use of M&A strategies
Make progress establishing separate gas manufacturing platforms while targeting theacquisition of on-site projects

Gas Business in Asia & Oceania
Profitability is expected to improve as a result of structural reforms implemented in China,
the Philippines, and Vietnam.
Strengthen the earnings base by expanding business domains through newly consolidated
subsidiaries

Manufacturing facility ofRenegade Gas (Australia)

Other Businesses
Expand and enhance manufacturing facilities in the Thermos Business in response torobust demand
Aim to expand sales of Thermos products through proactive advertising in the second half

27

Thermos products

Disclaimer

28●

This material is 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 (estimates and forecasts) regarding the futureplans, 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 not limited to, changes ingeneral 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.