Emerging ontoa Still Wider Stage

Consolidated Business Performancefor the First Half of the FYE2020
November 15, 2019

Contents
Business Performance for the First Half of the FYE2020
Overview of Business Performance for the first halfBusiness performance by segment

Full-Year Forecasts for FYE2020
Overview of the Full-Year Forecast
Condensed Consolidated Statements of Cash Flows

Starting the Four-hub Global Network
Overview of European Businesses

Shareholder Returns

Business Performancefor the First Half of FYE2020

Overview
Ortus Stage 2

3

Overview of business performance（ Billions of y en）

Revenue

FY E2019 1H
Results

FY E2020 1H
Results

MarginMargin

329.4

422.8

FY E2020 1H
Y oY
ChangeAnnounced targets

+93.4

435.0

Margin+28.4%

Core operating
income28.1

Non-recurring profit and loss

0.8

1.2

+0.4

0.0

Operating income

28.9

46.7

+17.8

46.0

45.4
8.5%

10.8%

8.8%

Net income attributable to ownersof the parent

17.6

+17.3

11.1%

27.7
5.4%

+61.6%

10.6%+61.4%

+10.1
6.6%

46.0

10.6%

25.5

+56.9%

5.9%

Foreign currency translations (US$→¥) FYE2019 Q2 rate: US$1=¥110.71, FYE2020 Q2 rate: US$1=¥108.67(€→¥) FYE2020 Q2 rate: €1=¥120.91(AU$→¥) FYE2019 Q2 rate: AU$1=¥81.79, FYE2020 Q2 rate: AU$1=¥74.75
In its FYE2019 Q2 results, the Company had recorded advisory costs of ¥1.3 billion on core operating income in connection withthe acquisition of European businesses.
44Overview of Business Performance: Reasons for Changes in Revenue
Revenue expanded significantly due to contributions made by the purchase of Praxair,
Inc.’s European operations in the previous fiscal year and Linde AG’s US HyCO
business. In Japan, revenue also increased due to the effects of the acquisition of
medical equipment sales company IMI Co., Ltd.

+¥93.4billion（28.4％ up）

+85.2
+2.1
329.4

FYE2019
1H Results

-0.8

+7.5
Including foreignexchange impact-0.5

Including foreignexchange impact

Including foreignexchange impact

-2.1

-0.14

Gas Businessin Asia &Oceania

Thermos
Business

422.8

-1.7

Gas
Business
in Japan

Gas
Businessin the U.S.

Gas
Businessin Europe

FYE2020
1H Results（Billions of yen）

FYE2019
1H Results

174.0

98.9

85.2

51.5

13.0

171.9

91.4

－

52.3

13.5

FYE2020
1H Results

55Overview of Business Performance: Reasons for Change in Core Operating Income
Earnings rose substantially owing to the acquisitions made during the previous fiscal
year despite a decrease in revenue in the bulk gas business in Japan due to an
overall softening of demand and the impact of lower earnings due to reduced
shipments of Specialty gases in East Asia+¥17.3billion＋1.0 （61.6％ up）

+13.2
-1.0

+4.9

Including foreignexchange impact

Gas
Business in
Asia & Oceania

Thermos
Business

-0.3

28.1

-0.4

Including foreignexchange impact

FYE2019
1H Results

Gas
Business
in Japan

Gas
Businessin the U.S.

FYE2019
1H Results-0.4

Including foreignexchange impact

45.4

-0.05

-0.1

Gas
Businessin Europe

Eliminations
or Corporate

12.3

11.7

13.2

5.3

4.1

-1.3

12.7

6.8

－

6.3

4.5

-2.3

FYE2020
1H Results（Billions of yen）
FYE2020
1H Results＊*In its FYE2019 Q2 results, the Company had recorded advisory costs of ¥1.3 billion on core operating income in connection with the acquisition of European businesses.

66Business Performancefor the First Half of FYE2020

Business Performanceby Segment
Ortus Stage 2

7

Business Performance by Segment：Gas Business in Japan
Gas Business in Japan(Billions of yen)

Revenue

Segment profit margin

Segment income

FYE2019 1H FYE2020 1H
Results
Results

YoY
Change

7.4%

171.9

Revenue

171.9

174.0

+2.1

Segment income

12.7

12.3

-0.4

(core operating income)

12.7

7.1%

+1.2％

-3.0％

174.0

12.3

FYE2019 1H

FYE2020 1H

Results

Results

Reasons for changes in revenue

Reasons for changes in segment income

Bulk & On-site (Air separation gases): Revenue decreased primarily
in the key industries of steel, non-ferrous metals and metal
processing.

Bulk & On-site (Air separation gases): Earnings decreased due tohigher costs from rising fuel prices and logistics expenses.

Gas-related and plant, other: Electronics-related equipment andinstallation: Revenue decreased due to a fall in the number ofprojects. Contribution from acquisition of IMI Co., Ltd, a medical
equipment sales company.

Electronics-related equipment and installation: Lower earnings fromdecreased revenue.
Contribution from acquisition of IMI Co., Ltd, a medical equipment
sales company.

88

Business Performance by Segment：Gas Business in the U.S.
Gas Business in the U.S.
(Billions of yen)

Revenue

Segment profit margin

Segment income

FYE2019 1H FYE2020 1H
Results
Results

91.4

Revenue

98.9

YoY
Change

+7.5

11.9％
7.5%

98.9

+8.2％

91.4
Segment income(core operating income)

6.8

11.7

+4.9

*Impact of foreign currency translation: negative impacts of ¥1.67 billion
on revenue and ¥0.12 billion on segment income.

6.8

11.7
+70.3％

FYE2019 1H

FYE2020 1H

Results

Results

Reasons for changes in revenue

Reasons for changes in segment income

Bulk: Favorable shipments centered around air separation gases.

Industrial gas-related business was generally favorable, centeredOn-site: Start of operation of new projects, contribution fromon air separation gases.

acquisition of HyCO business.

Contribution from acquisition of HyCO business.

99Business Performance by Segment：Gas Business in Europe
Gas Business in Europe(Billions of yen)

Revenue

Segment profit margin

Segment income

FYE2019 1H FYE2020 1H
Results
Results
Revenue
Segment income(core operating income)

-

85.2

YoY
Change

15.5%

85.2

+85.2

13.2
None

-

13.2

+13.2
FYE2019 1H

FYE2020 1H

Results

Results

Revenue increased 2.9% year on year to ¥82.8 billion compared to the business performance for the Gas Business in Europe from
April 1, 2018 to September 30, 2018, assuming the acquisition date of the European business acquired from U.S. company Praxair,
Inc. was April 1, 2018. The actual acquisition was completed in December 2018.
(The rate of €1=¥120.91 applicable for the FYE2020 Q2 has been used for conversions to yen)
Looking at revenue by key regions (on a local currency basis), Iberia (Spain/Portugal) was on a par year on year, Italy was up 1%,
Germany rose 4%, Benelux (Belgium/Netherlands) increased 3% and Scandinavia (Norway/Sweden) grew by 2%.

1010Business Performance by Segment：Gas Business in Asia and Oceania
Gas Business in Asia and Oceania(Billions of yen)

Revenue

Segment profit margin

Segment income

FYE2019 1H FYE2020 1H
Results
Results

YoY
ChangeRevenue

52.3

51.5

-0.8

Segment income

6.3

5.3

-1.0

(core operating income)*Impact of foreign currency translation: negative impacts of ¥2.15 billion
on revenue and ¥0.32 billion on segment income.

Reasons for changes in revenue

12.1%

52.3
6.3

-1.5％

-15.4％

10.4%

51.5
5.3

FYE2019 1H

FYE2020 1H

Results

Results

Reasons for changes in segment income

Bulk (Air separation gases): Revenue in Asia decreased slightly.

Profitability improved in the LP gas business in Australia.

LP gas: Firm sales in Australia.

Earnings declined due to lower electronic materials gas revenue.

Specialty gases: Lower shipments of electronic materials gases.
Electronics-related equipment and installation: Revenue in Taiwan
rose substantially.

11
11

Business Performance by Segment：Thermos Business
Thermos Business(Billions of yen)

Revenue

Segment profit margin

Segment income

FYE2019 1H FYE2020 1H
Results
Results

YoY
ChangeRevenue

13.5

13.0

-0.5

Segment income

4.5

4.1

-0.4

(core operating income)

33.2%

13.5
4.5

*Impact of foreign currency translation: negative impacts of ¥0.14 billion
on revenue and ¥0.05 billion on segment income.

Reasons for changes in revenue

-3.8％

31.7%

13.0
-8.1％

4.1

FYE2019 1H

FYE2020 1H

Results

Results

Reasons for changes in segment income

Japan: Sales of vacuum insulated mobile mugs were solid.

Japan: Earnings decreased due to lower revenue from sports

Sales of sports bottles were sluggish.

bottles.

Overseas: Decline in the number of shipments at Thermos

Overseas: Sales of companies accounted for by the equity method

production plants for overseas sales companies.

have been somewhat weak excluding a portion of regions.

1212Full-Year Forecasts for FYE2020

Overview

Ortus Stage 2

13

Full-Year Forecasts for FYE2020 by Segment
Overall performance in the first half of the fiscal year under review was generally as initially forecast
and the Company’s full-year forecast remains unchanged. However, for performance by segment,
results have been taken into account and the initial forecast has been revised. Assumptions ofearnings by each reportable segment are as follows.
Gas Business inJapan

Gas Business in
the U.S.

Gas Business in
EuropeGas Business in
Asia and Oceania

Thermos
Business

Bulk gas demand is sluggish and second half performance is expected to be on a par withthe first half. Some improvement is envisaged through the effects of price revisions.
Demand for electronic materials gases, equipment and installation is weak, with recovery
assumed from the following fiscal year.
Year on year shipments of industrial gases are projected to continue to increase as
production in U.S. manufacturing industries is strong.
Second half earnings from the HyCO business acquired from Linde AG of Germany are
expected to be about the same as those from the first half.
Euro-based business is expected to perform as initially forecast though some differences
exist in regional earnings environments.
Yen-based performance has been revised due to a revision of the conversion rate(from €1=¥125 to €1=120).
Industrial gas is expected to perform as initially forecast though some differences exist in
regional earnings environments.
Demand for electronic materials gases is weak, with the second half envisaged to be in linewith the first half. Recovery is assumed from the following fiscal year.
Frying pan sales are expected to increase as demand for cookware is highest in December
and March.
Overseas, sales are strong in China, but forecast to be sluggish in North America due tocompetition and other factors.

14
14

Full-Year Forecast(Billions of yen)

FYE2019
Results

FYE2020
Forecast

Margin

Revenue

740.3

Margin890.0

YoY
Change+149.7+20.2%

Core operating incom e

65.8

95.0
8.9%

+29.2
10.7%

+44.3%

Non-recurring profit and loss

1.0

7.0

+6.0

Operating incom e

66.8

102.0

+35.2

9.0%
Net income attributable toowners of the parent

41.2

11.5%

57.0
5.6%

+52.6%+15.8
6.4%+38.0%

Assumed exchange rate for FYE2020: (US$ ¥): $1=¥110, (EUR ¥): €1=¥120
In FYE2020, the Company plans to record non-recurring profit of ¥7.0 billion on the sale of its assets as part ofefforts to improve asset efficiency.
15

15

Business Performance Forecast: Reasons for Changes in Revenue+149.7billion+112.9
+11.1

+19.7

Gas
Business
in Japan

Gas
Businessin the U.S.

+3.9

+2.2 （20.2％ up）
890.0

740.3

FYE2019
Results

Gas
Businessin Europe

Gas Businessin Asia &Oceania

Thermos
Business

FYE2020
Forecast（Billions of yen）

FYE2019
Results

FYE2020

375.0

207.0

168.0

110.0

30.0

Revised forecast

375.0

201.0

173.0

111.0

30.0

Initial forecast

363.9

187.3

55.1

106.1

27.8

*

*For the business performance in FYE2019, the European business acquired from U.S. company Praxair, Inc. only accounts
for a four-month period from December 2018 to March 2019.

16
16

Business Performance Forecast: Reason for Changes in Core Operating Income+¥29.2billion

+19.0

+1.9

Gas
Businessin Europe

Gas
Business in
Asia & Oceania+0.3+2.5 （44.3％ up）

950

+6.4

65.8

-0.7

FYE2019
ResultGas
Business
in JapanFYE2019
Results

Gas
Businessin the U.S.

Thermos
Business

Eliminations
or Corporate

29.1

22.0

25.5

11.0

9.4

-2.0

30.6

19.0

26.5

11.5

9.4

-2.0

29.8

15.6

6.5 *1

9.1

9.1-4.5 *2

FYE2020
Forecast（Billions of yen）
FYE2020
Revised forecast

Initial ｆorecast*1 For the business performance in FYE2019, the European business acquired from U.S. company Praxair, Inc. only accounts for a four-month
period from December 2018 to March 2019.
*2 In its FYE2019 full-year results, the Company has recorded advisory costs of ¥2.7 billion on core operating income in connection withthe acquisition of European businesses.
17

17Full-Year Forecasts for FYE2020

Condensed Consolidated
Statements of Cash Flows
Ortus Stage 2

18

Condensed Consolidated Statements of Cash FlowsFYE2019
Results

FYE2020
Forecast(Announced on November 15)

YoY
Change（Billions of yen）
FYE2020
Forecast(Announced on May 23)

Profit before incom e taxes

62.0

86.5

+24.5

86.5

Depreciation and am ortization

56.1

86.0

+29.9

83.0

Changes in w orking capital

-2.4

-3.5

-1.1

-3.5

Other

-17.0

-33.5

-16.5

-35.5

98.6

135.5

+36.9

130.5

Capital expenditures

-74.1

-92.5

-18.4

-103.4

Investm ent and loans-691.1-0.3+690.8－Other (sale of assets, etc.)

10.3

7.4

-2.9

8.0

Cash flow s from investing activities-754.9-85.5+669.4-95.4

Free cash flow s-656.250.0+706.235.1

Net interest-bearing debt*

945.7

933.5

-12.2

922.8

Adjusted net D/E ratio

1.54x

1.44x

-0.1 pt.

1.38x

Cash flow s from operating activities* As a result of the application of IFRS 16 for FYE2020, the carrying amount of the TNSC Group‘s lease liabilities in net interest-bearing debt increased by ¥34.6 billion
compared to FYE2019. Furthermore, the increased amount of lease liabilities under IFRS 16 was not included as part of net interest-bearing debt in the full-year forecast
for FYE2020 (announced on May 23, 2019).

19

Net interest-bearing liabilities: Interest-bearing debt – cash and cash equivalents
Adjusted net D/E ratio: (Net Interest-bearing debt – equity-type debt) / (equity attributable to owners of the parent + equity-type debt)
Equity-type debt: The amount of debt procured by hybrid finance that has been recognized as equity credit by rating agencies. (50% of the procured amount)
Hybrid finance: A form of debt financing that has features resembling equity, such as voluntary deferral of interest, extremely long-term redemption periods andsubordination during liquidation or bankruptcy procedures.

19Starting the Four-hub Global Network

Overview of European Businesses

Ortus Stage 2

20

Overview of the European Businesses – Development Region
Nippon Gases Europe has its business mainly in Spain and Portugal, Italy and Germany.
Stable base business in key industrial zones. Solid combination of onsite/ piping, merchant,
and package lines of business across key European industrial zones.
Revenue composition by region

Business areas and assets held

(1H results for FYE2020)(As of October 1, 2019)

2,725 Employees
Over 100,000 Customers

Regional headquarters

5%

Key company bases

2%

11%

14 Pipelines

28%

5 Specialty Gases Laboratories
27 Air Separation Units
6 Hydrogen plants

11%

44 Small On-Site
14 CO2 plants
Over 600 trucks

22%

24%

Over 2.6 million cylinders
38 Filling Stations
17 Dry Ice Plants
7 CO2 Terminals
3 CO2 Ships
21*Diagram excludes -3% elimination of intra-company transactions
within the Group
Spain & Portugal

Italy

Germany

Benelux

Scandinavia

UK, Ireland & France

Offshore21

Overview of European Businesses – Supply Destinations and mode

Revenue composition by supply destination

Revenue composition by supply mode
(1H results for FYE2020)(1H results for FYE2020)

Nippon Gases Europe supplies various industries in common
with other industrial gas business segments.

On-site/piping business - stable and large scale supply
system with supply contract for mid and long term accounts
for 16% of the whole.

Manufacturing and metal (including Steel and Non-ferrous)
accounts for around 40% of the end user in Nippon Gases
business.

Bulk business - supply for diversified customers : Steel,
Chemical, Transportation machinery (Shipbuilding andautomotive), Food, Drink etc. accounts for 40% of the whole.

10%

14%

22%

Manufacturing

3%

34%

Metals5%

Food & Bev.

16%

Package

Bulk

ChemicalOnsite/Piping
Healtcare

13%

15%

Other

EnergyElectronics

12%

17%

Other

40%

22
22

Norway ASU* investment for Aquaculture*ASU: Air separation unit

With the increasing worldwide demand for food fish and fishery products, Nippon Gases
Europe decided to invest in a new ASU for the booming aquaculture industry in Norway.
Background and purpose of the investment

Trends indemand for
seafood

Regionalbusiness
environmental
awareness

Industrial gas
applications

The health trend in advanced countries and increased population indeveloping countries has increased and is expected to continued toincrease the demand of fish and fishery products. This trend boosts
the global demand in aquaculture for sustainable fish supply morethan the wild capture of fish.

In Norway, we expect to see CAGR 6% growthin the salmon production by aquaculture.
In Northern West coast of Scandinavian peninsula,aquaculture and sea food processing
industries grow strongly.

Area of active oceanic
aquaculture operations
New ASUExisting ASU

Malm
NorwayRanked No. 2
in NOR industrial gas market share

In aquaculture, oxygen is used forincreasing the concentration in fish-pond due togrowth promotion and activating of fishes.
In sea food processing, nitrogen is used for
encapsulated gas when food is packaged
due to freshness keeping of processed foods

By installing the new ASU near consumption area,
Nippon Gases Europe enhances its reliable supply networkand captures the growing demand of industrial gas.
23

Business area in Norway

23

(Reference) The supply environment for the aquaculture industry in Norway

24
24

Initiatives to Improve the Group’s Comprehensive Capabilities
Steadily progressing toward complete comprehensive integration*1 for the TNSC Group.
The Group’s comprehensive capabilities will increase by way of mutual benefits anddemonstration of synergistic effects among the European business bases and existing
businesses bases.
*1 Main target fields: IT networks, accounting and management systems, rebranding, purchasing, and human resource systems→ Integration into the TNSC Group

Separation from Praxair Inc.

TNSC promoted integrated work shared by 12 project teams
for Post Merger Integration (PMI).

EHSQ*2→Demonstration of
the Group’s comprehensive capabilities

To demonstrate the Group’s comprehensive capabilities TNSC ispursuing mutual benefits and synergistic effects for each businessbase and undertaking initiatives for the below seven key themes.

Electronics

Branding
Finance &Accounting

Legal

Productivity
Engineering

Tax

Operations

Treasury

HeliumSupplyChain

HeliumGlobal
Account

Supply Chain

IT
SupplyChain

HR*2 EHSQ: Environment Health(occupational health) Safety Quality

25

Gas
Application

Engineering

Medical25

Initiatives to Improve the Group’s Comprehensive Capabilities

Electronics

Incorporate Europe into the existing
strategy for Total Electronics, build an
optimal supply and sales system.

Gas
Application

Share gas application technology that theCompany accumulated in Europe andJapan, promote expansion for customers.

HeliumSupply Chain

Utilize new sources obtained from theacquisition in Europe, promote optimizationof the supply chain.

Productivity

Develop knowledge of cost reduction
accumulated in Europe and programs andknowledge on improving productivity forother regions.

Global
Account

Promote sales development in otherregions that have companies from manydifferent countries, including Japanesecompanies.

Engineering

Development in Europe, such as
installations of the Company’s own air
separation units and related engineering
technology.

MedicalPromote evaluations of various types of
medical equipment, mutual utilization ofhandling knowledge and joint purchasing.

Further improvement to the satisfaction levels of customers
through demonstrating the TNSC Group’s comprehensive capabilities.
26

26

Shareholder Returns

Ortus Stage 2

27

Shareholder Returns
Implement a dividend policy linked to business performance,
while maintaining a stable dividend.
Year-end¥40

Interim

27.1%

Dividend payout ratio

26.8%

24.3%
Japanese
GAAP

¥30

24.9%
IFRS

27.1％*

30%

26.2%
21.3%

20.3%

20%

¥14

¥20
¥12

¥13

¥11
¥10

¥6
¥6

¥7
¥6

¥7

¥11

¥12

¥14

¥0

Net incom e
per share (yen)

15%
10%

¥9
¥9

25%

5%
0%

FYE2014

FYE2015

FYE2016

FYE2017

FYE2018

FYE2019

FYE2020(Forecast)

49.42

47.98

59.72

80.28

113.0495.42

131.71* Large-scale corporate income tax deductions arose from a reform of the U.S. tax system that resulted in a lowering of the federal corporate tax rate during FYE2018.
Excluding the effects of the above, the dividend payout ratio was 27.1%.

28
28

Thank you

Ortus Stage 2

Reminders
The information contained here is not disclosure information for securities trading.
The accuracy and completeness of this information are not guaranteed.
The briefing session and this material describe future plans and strategies, as well
as forecasts and outlooks of business performance. These plans and strategies, aswell as forecasts and outlooks, are made by Taiyo Nippon Sanso based on its
judgments and estimations made in accordance with the information available atpresent. Actual performance will be subject to changes caused by a variety of risks
and uncertainties (such as economic trends, market demand, exchange rates,
taxation systems and various other systems and institutions, but not limited tothem).
We wish to remind you, therefore, that the actual business performance may differ
from the forecasts and outlooks made at this time. Please refrain from making
investment judgments based solely on this information.