Report on Business Performance for the First Two Quartersof the Fiscal Year Ending March 2011
(FY2011)

November 15, 2010

Taiyo Nippon Sanso Corporation

1

2010/11/15

Performance for the First Two
Quarters of FY2011

2

2010/11/15

Performance for the First Two Quarters of FY2011

SalesstBillions of yen

Reporting 1
two quarters

Reporting 1st
two quarters

Ratio to sales(targets)(Results)

204.1

230.0

237.3

Previous 1st
two quarters

YoY change% change

Change fromtargets% change

+33.1

+7.3

+16.2%

Operating
Income12.7

Ordinary
Income

12.3

15.0

6.3%

Net Income

+5.2

18.0

6.5%7.6%

17.8

14.2

6.1%

6.2%

6.8
3.3%

8.0
3.5%

+3.2%

+3.0

+41.3%+20.0%

+5.4

7.5%

10.2

+3.6

+44.3%+25.4%

+2.2

+3.3

4.3%

+49.7%+27.5%

2010/11/15

3

Quarterly Business Performance
160,000

Millions of yen
6.0%

140,000
120,000

Millions of yen

8.1% 8.2%

8.4%

14,000

6.9%
7.3%

16,000

6.1%

6.3%

3.1%
7.2%

8.0%

7.3%

6.6%

5.2%

100,000

12,00010,00080,0008,000

60,0006,000

40,0004,000

20,000

2,000

00
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q1Q
2Q
3Q
4Q
1Q
2Q
4-1Q
4-2Q
4-3Q
4-4Q
09/1Q
09/Q
09/Q
09/4Q
10/1Q
10/2Q
10/3Q
10/4Q
11/1Q
11/2Q

FY2008* Percentage denotes operating income margin.

FY2009FY2010

Sales
売上高

4

FY2011

Operatingincome
営業利益

2010/11/15

Performance by Segment

2010/11/15

5

Performance by Segment in FY2011
Billions of yen

First two quarters ofFY2010
Sales

Operating
IncomeIndustrial gases

124.9

8.4

Electronics

51.0

EnergyOther

MarginSales

Operating
Income

6.8%

142.9

11.0

7.7%

2.6

5.1%

61.7

5.2

8.4%

13.3

0.5

4.3%

16.60.4

2.8%

14.7

1.9

13.4%

15.8

2.0

13.1%

(0.8)

Adjustments

Total

MarginFirst two quarters ofFY2011

204.1(0.7)

12.7

6.3%
6237.318.0

7.6%
2010/11/15

Industrial Gas-Related Businesses
Billions of yen

142.9

Sales
150

Operating Income+18.0 (+14.4%)

15124.9
46.9

100

37.7

+9.2 (+24.4%)

87.1+8.9 (+10.2%)

8.4

11.0+2.6 (+31.0%)

1096.0500

FY2010 Apr-Sept

50FY2011 Apr-Sept

FY2010 Apr-Sept

FY2011 Apr-Sept

Japan Overseas* The graph contains figures for both Japan and overseas sales.

2010/11/157Major Industrial Gas-Related Businesses (Sales)
Separated Gases
52.46030060

12.3
40.1+3.8 (+9.6%)

FY2010 Apr-Sept
Japan38.9

13.7+1.4 (+11.3%)

Billions of yen

Other Gases

57.6 +5.2 (+10.0%)

31.2
30

43.9

0

FY2011 Apr-SeptOverseas≪Overseas≫◆ Sales in North America increased partly
due to newly consolidated subsidiaries there◆ Sales of bulk gases were strong in Asia

+7.7 (+24.9%)

12.5

8.8+3.7 (+41.7%)

22.4+4.0 (+18.3%)

26.4

FY2010 Apr-Sept FY2011 Apr-Sept
Japan Overseas≪Overseas≫◆ North American and Asian markets followed
recovery paths≪Japan≫◆ Sales to steel and chemicalindustries continued to be strong◆ Sales of bulk gases to small andmedium-sized enterprises also followed
recovery path

≪Japan≫◆ Sales of carbon dioxide to steelmaking andauto industries for welding use were strong◆ Sales of hydrogen, helium, etc. to electronicsrelated industries also held firm8

2010/11/15

Major Industrial Gas-Related Businesses (Sales)
Cutting and Welding Equipment and Materials
25

16.8

Billions of yen

Air Separation Plants

20.1 +3.3 (+19.7%)

1510.9102015105059.2

8.6+ 0.6 (+7.0%)

FY2010 Apr-Sept
Japan0FY2011 Apr-Sept

7.4 +0.8 (+12.5%)

6.5+2.8 (+34.6%)

8.1

1.0

1.7

5.5

5.7+0.7 (+69.9%)+0.1 (+2.1%)

FY2010 Apr-Sept
JapanOverseas

FY2011 Apr-Sept
Overseas≪Overseas≫◆ Sales in North America increased partly
due to newly consolidated subsidiaries
there≪Overseas≫◆ TNSC’s principal customer industries, particularly
steel and chemicals, followed a recovery path◆ New inquiries about capital investment increased≪Japan≫◆ Installation and repair demand increased◆ Sales of welding machinery and robots aswell as materials followed a moderate
recovery path≪Japan≫◆ Installation projects subject to the percentage-ofcompletion method performed steadily◆ Received order for air separation plant fromleading electric arc furnace steel manufacturer

2010/11/15

9

Electronics-Related Businesses
Sales

Operating Income

Billions of yen

880

61.7 +10.7 (+21.0%)
60

51.0

6+4.5 (+46.0%)

9.7

440

2.6

47.4+6.2 (+15.1%)

200

5.2 +2.6 (+100.7%)

14.3241.30
FY2010 Apr-Sept
JapanFY2011 Apr-Sept

FY2010 Apr-Sept

FY2011 Apr-Sept

Overseas10

2010/11/15

Major Electronics-Related Businesses (Sales)
Separated Gases
3030

12.9

11.9
1500.4

0.6

11.5

12.3+3.5 (+42.9%)+0.2 (+71.9%)

15.2

14.8+0.4 (+2.7%)+0.7 (+6.4%)

Japan

0+3.9 (+17.0%)

11.7

15

FY2011 Apr-Sept

26.9

23.0
8.2+1.0 (+8.4%)

FY2010 Apr-Sept

Billions of yen

Gases for Electronic Device Production'09/4-9OverseasJapan'10/4-9Overseas◆ In Asia sales of both nitrogen andargon followed a recovery path≪Overseas≫◆ Sales to LCD and semiconductor manufacturers
inTaiwan, South Korea, and China were strong◆ Increased storage facility capacity in Singapore≪Japan≫◆ Sales of nitrogen to semiconductor and LCD
manufacturers held firm
◆ Sales of argon to semiconductor silicon
manufacturers were strong≪Japan≫◆ Demand for gases for semiconductor and LCD
production was strong≪Overseas≫

2010/11/15

11Major Electronics-Related Businesses (Sales)
Electronics-Related Equipment and Installation

1510

10.6

10.5

10+0.1 (+1.0%)

1.6

3.5

2.3
+0.7 (+40.8%)

58.9

0.8

8.3
0FY2010 Apr-Sept FY2011 Apr-Sept
Japan+2.7 (+331.7%)

5-0.6 (-6.5%)

0Billions of yen

MOCVD Equipment

Overseas00.8+2.6 (+319.3%)

FY2010 Apr-Sept FY2011 Apr-Sept
Japan≪Overseas≫◆ Sales in Asia are on a recovery trend,
partly due to new investment in solar
cells.

0.1+0.1 (+2800.0%)
3.4
Overseas≪Overseas≫◆ Shipments to Taiwan≪Japan≫◆ Steady shipments of large-scale,mass-production equipment◆ Brisk inquiries continued≪Japan≫◆ Sales declined due to delays in plans forsome installations, and other factors.

12

2010/11/15

Energy-Related Businesses
Sales

Operating Income

Billions of yen

1.020

16.6+3.3 (+24.7%)
13.3

0.8

0.6

0.5

0.4

10-0.1 (-17.8%)

0.4

0.20

FY2010 Apr-Sept

0.0

FY2 011 Apr-Sept

FY2010 Apr-Sept

FY2011 Apr-Sept

2010/11/15

13

Major Energy-Related Businesses (Sales)
ＬＰ GasEquipment and Installation

202

14.9 +3.4 (+30.3%)

1.3

11.4
100

Billions of yen

1.2 -0.1 (-10.5%)

1FY2010 Apr-Sept

0FY2011 Apr-Sept≪Japan≫◆ Raised sales prices due to rise in importprices◆ Due to record-breaking heat waveconsumers demand stagnated, but industrial
demand held firm
◆ Consolidation of regional distributors isunderway

FY2010 Apr-Sept

FY2011 Apr-Sept≪Japan≫◆ Capital demand declined in theindustrial sector(Fiscal 2001: 28 companies → fiscal 2010: 8 companies)

14

2010/11/15

Other Businesses
Sales

Operating Income

Billions of yen

320

15.8+1.1 (+7.5%)

14.7

1.9

0.9

0.4+0.5 (+93.4%)

2.0 +0.1 (+5.2%)

2

10

14.9

14.3

0+0.6 (+4.5%)

10FY2010 Apr-Sept

FY2010 Apr-Sept FY2011 Apr-Sept

JapanFY2011 Apr-Sept

Overseas

2010/11/15

15Major Other Businesses (Sales)
Thermos Business

106.9

7.8

7.3 +0.4 (+6.3%)

50

Billions of yen

Other10

8.5 +0.7 (+8.9%)5FY2010 Apr-Sept

0FY2011 Apr-Sept

FY2010 Apr-Sept

FY2011 Apr-Sept≪Overseas≫≪Japan≫◆ Developed medical gas business in China andaiming to expand business through new productlines◆ Sales of portable mugs, etc. heldfirm◆ New products launched thisautumn were also well-received≪Japan≫◆ Sales of oxygen for medical use held firm
◆ Sales of household equipment were strong

16

2010/11/15

First Half Highlights

2010/11/15

17

First Half Highlights (Japan and Overseas)
April

SeptemberJapan

October: Creation ofSogo Kariya Sanso
through a merger

June: Received orders for air separation plants fromelectric arc furnace steel manufacturers
September: Installation of biogas refining units for use in project
to demonstrate potential of supplying biogas and city gas usingsame pipelines, the first project of its kind in Japan

Construction of large air separation plant for blast furnace steelmanufacturer (scheduled completion: June 2011)

May: Acquired largest acetylene manufacturer and wholesaler inUnited States
July: Completed air separation plant on Changxing Island, DalianOverseas

March: Matheson Tri-Gas (MTG) acquires
Indian distributor K-air

August: Concluded contract for on-site supply of nitrogen to foreignowned manufacturer in Dalian
August: Established industrial mixed gas manufacturing and sales
company in Tainan, Taiwan
July: Concluded contract for on-site supply of nitrogen toelectronics manufacturer in the Philippines
July: Completed facility for storage and supply of gases for electronic
device production in Singapore
Construction of new plant on island of Mindanao, Philippines (scheduledcompletion: September 2011)
Construction of new plants in south and north of Vietnam (scheduledcompletion: March 2011)18

2010/11/15

TOPICS

2010/11/15

19

TOPICS
Plan to Install Testing Equipment for Mass Production (UR-26K)
For LEDs 6 inch×10 wafers
8 inch× 6 wafers
For Power Devices
Global Market for LED Chips (including non-blue LED chips)
In 2008, the global market for LED chips amounted to ¥560 billion,of which ¥340 billion was accounted for by blue LED chips.
In 2012, the global market for LED chips is expected to reach ¥800 billion,of which ¥600 billion is expected to be accounted for by blue LED chips.

(Billions of yen)

Decreasing
unit prices
offset byrisingshipments

900
Unit prices
for LEDlighting
rise

800
700
600
500

Increasing shipments
offset by declining unit
pricesDemand foruse in mobile
phonesand digital
cameras rises
sharply

400
300

520

100

* Picture: large-scale, mass-production equipment “UR-25K”

600

545

530

540

2005

2006

2007

560

370

200
150

2000

Results in2009
expected toexceed initial
estimates

220

2001

2002

2003

2004

2008

2009
(Estimate)2012(Estimate)(Source: The Semiconductor Industry News estimate)202010/11/15

TOPICS
Planning to enhance gas production capacity for CIGS solar cells (H2Se)
Outlook for the CIGS thin-film solar cell market••••••

Japanese manufacturers lead in CIGS market
Global production volume: 500MW in 2010 ⇒ 3,500MW in 2015
Estimated demand for H2Se in 2015 :150 tons/year or moreHigh conversion efficiency and low unit price per watt compared to thin silicon film ⇒ becoming a rival to crystalline solar cells
Taiwan semiconductor foundry giant, TSMC has declared its entry into CIGS business
Many electronic device, equipment and material manufacturers in and outside Japan are currently considering this business

Production Volume [WM]

生産量予測Volume Forecast
W.W.Production
CIGS CIGS太陽電池
Solar Cells Global

Roadmap for Solar Power Generation “PV2030+” (Currentand future target value for conversion efficiency (%))

4,000
Current

3,500

2017 (Target value)

Cell type

ModuleCrystallinesilicon

Up to 1625

2025

Thin silicon
film

Up to 11

15

14

18

1,500
1,000

CIGS

Up to 11

20

1825

CompoundUp to 25413545Dyesensitized-

111015

Organic-

51012

2010-2015 CAGR
forecast value: 48%3,0002,5002,00050002007

2008

20092010

2011

2012

2015

Source: Present Status and Future Outlook of Solar Cell
Technologies and Market 2010 (Fuji-Keizai: July 23, 2010)

Cell

ModuleCell

Source: EE Times Japan, October 20102010/11/15

21

TOPICS
Completion of Latest Plant on
Dalian Changxing Island

Oil refining zone
(25.4 km2)

Taiyo Nippon Sanso● Completion of largest liquefied gas manufacturing plant innortheast China● Changxing Island is most important area in the national
project to develop northeast China (Five Points, One Linedevelopment strategy)

Shippingequipment
industrial zone
(46.3 km2)

Shipbuilding
industrial zone
(9 km2)

Changxing
IslandĀnshnshāān andShenyang

Wafangdian

PulandianDalian Taiyo Nippon Sanso Gas
Dalian Development Zone
Lüshunkou

22

Dalian city center

2010/11/15

TOPICS
Contribution to the JAXA Hayabusa Project◆ Taiyo Nippon Sanso’s space environmental testing
equipment (space chamber) contributed to the developmentof Hayabusa◆ Highly-purified liquid nitrogen made by TNSC contributed
to analysis of the inside of recovered capsuleSpace chambers

Capsule after landingin Woomera Desert

Picturesprovided by:Largest space chamber in Japan installedat JAXA Tsukuba Space Center

Inner-Planet Thermal Vacuum Environment
Simulator, a compact space chamber

2010/11/15

23

Highlyighly-purified liquid nitrogen produced in Sagamihara
used in the Hayabusa clean chamber“Of all the 99.99995 percent
pure nitrogen being sold forindustrial use in Japan, theliquid nitrogen made at Taiyo
Nippon Sanso’s newSagamihara Plant was thecleanest.”
Excerpt from page 232

24

2010/11/15

TOPICS
Contribution to the XMASS Project (Institute for Cosmic Ray Research, University of Tokyo)
TNSC manufactured and delivered vacuum heat-insulating containers containingequipment central to the detection of dark matter in the universe, as well as xenon
rectification equipment, and other peripheral equipment

4%23%
73%

© Kamioka Observatory, Institute for Cosmic Ray Research, University of Tokyo

Dark energy

Pictures provided by:

Dark matter

Ordinary matter

Institute for Cosmic Ray Research, University of Tokyo25

2010/11/15

The New Medium-termBusiness Plan(Fiscal 2011 to Fiscal 2013)26

2010/11/15

Basic Approach of New Medium-term Business Plan (i)A new start for the 101st year ofTNSC
Back to its origins
Solidify the foundation for further
development going forward and toprepare the company for the next
50 to 100 years
27

2010/11/15

Basic Approach of the New Medium-term Business Plan (ii)
1) Strengthen compliance and ensure safety and quality control
2) Efficient management rigorously focusing on cost- and laborbenefit performance3) Strengthen regional sales base4) Focus on cylinder business5) Strengthen R&D
6) Continue proactive investment

Create and improve corporate value
28

2010/11/15

Basic Priority Strategies≪Continue basic priority strategies of current medium-term business plan≫

1. Concentrate management resources in growth markets and regions
2. Strengthen upstream strategies
3. Strengthen M&A strategy
4. Implement cost reductions
5. Strengthen group management

Picture: Air separation plant under construction in Vietnam (Hanoi)

29

2010/11/15

Fiscal 2011 Consolidated FullTerm Forecasts

30

2010/11/15

Fiscal 2011 Consolidated Full-Term Forecasts
Billions of yen

FY2010FY2011FY2011

YoY

Ratio to sales(targets)(Forecast)% change

480.0

480.0

433.3

Sales

Change fromtargets% change±0+46.6+10.8%

Operating
Income27.5

Ordinary
Income27.0

Net Income

6.4%

32.5

32.5+4.9

6.8%

6.8%

30.530.5

6.2%

6.4%

15.7
3.6%

17.0
3.5%

±0.0%±0+17.9%±0.0%±0+3.4

6.4%+12.7%±0.0%±0+1.2

17.0
3.5%

±0.0%

+7.9%

2010/11/15

31

Fiscal 2011 Consolidated Full-Term Forecasts by Segment
Sales
500
400300Operating Income

480.0
50

433.3

30.9
36.6

29.4
32.3

27.5

126.2

111.1

32.5

40

2.8

30

3.3
200
1000260.4

286.3

FY2010FY2011

Industrial gases

Billions of yen

Electronics

Energy20

6.3

1017.4

1.2

1.3

8.6
21.4

0

OtherFY2010

FY2011

Industrial gases Electronics Energy Other* Total operating income is the amount after consolidated
eliminations.
32

2010/11/15

Disclaimer
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 future plans, strategies,activities and performance of Taiyo Nippon Sanso Corporation.
Forward-looking statements reflect management’s assumptions andbeliefs based on information available as of the time of writing. 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.
Actual results may thus differ substantially from the said forwardlooking statements, and investment decisions should not be madesolely on the basis of the information provided herein.

33

2010/11/15

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