Emerging ontoa Still Wider Stage
Consolidated Business Performancefor the Full-Year of the FYE2017
May 24, 2017

Contents
Business Performance for the Full-Year of theFYE2017
Overview of business performance for the full-year
Business performance by segment
Achievement status of the Medium-Term
Management Plan Ortus Stage 1

Full-Year Forecasts for FYE2018
Full-Year Forecasts for FYE2018 by segment
Gas Business in Japan
Gas Business in the U.S.
Gas Business in Asia & Oceania
Thermos & Other Businesses

Shareholder returns

Business Performance for the FullYear of the FYE2017

Ortus Stage 23

Overview of business performance(Billions of yen)
FYE2016
Results(IFRS)
Margin

Revenue

594.4

FYE2017
Results(IFRS)YoY Change(Announced Feb. 7)

Margin581.5

FYE2017
Forecast(IFRS)
Margin-12.9

580.0-2.2%

Core operating
income47.4

Non-recurring profit and loss

1.4

-1.0-2.4

1.0

Operating income

48.9

53.6

+4.7

55.0

54.7
8.0%

9.4%

8.2%
Net income attributable toowners of the parent

29.0

+7.3

9.2%

34.7
4.9%

+15.3%

9.3%

+9.7%

+5.7
6.0%

54.0

+19.7%

9.5%

33.0
5.7%

44

Business performance by segment

Gas Business inJapanFYE2016
Results(IFRS)FYE2017
Results(IFRS)% change

Revenue

327.9

321.4

-2.0%

Segment
income27.8

29.4

+5.7%

(Billions of yen)

Factor➢Sales of LP gas decreased due to the impact of the falling oil price➢Strong shipments of electronics gas for LCDs and semiconductors➢Segment income increased in line with higher revenue from electronics gas➢Reduced costs due to the falling oil price➢Sales of bulk gases were firm (particularly CO2), but hard goods fell

RevenueGas Business inthe U.S.

149.5

147.2

-1.5%➢Recognition of business acquired from Air Liquide contributed ¥14.7 billion from Sep➢Impact of foreign currency translation: -¥14.2 billion

Segment
income➢Higher segment income from brisk sales of CO2 to food and beverage manufacturers

9.2

12.0

+30.7%➢Recognition of business acquired from Air Liquide contributed ¥1.9 billion➢Impact of foreign currency translation: -¥0.9 billion➢Philippines business was strong

Revenue

89.3

85.8

-3.9%

➢Contribution from M&A (T hailand and Australia) : ¥7.0 billion➢Impact of change in business-year ends (T hailand, Australia & Singapore) : -¥5.5 billion➢Impact of foreign currency translation: -¥9.1 billion

Gas Business inAsia and Oceania➢Contribution from M&A (T hailand and Australia) : ¥1.1 billion

Segment
income➢Impact of change in business-year ends (T hailand, Australia & Singapore) : -¥0.3 billion

3.0

5.1

+71.6%➢Impairment loss on gas manufacturing facility & businesses:FYE2016 ¥1.8 billion
FYE2017 ¥0.2 billion➢Impact of foreign currency translation: -¥0.5 billion

Thermos andOther businesses

Revenue

27.5

27.0-1.9%

Segment
income9.0

10.0+11.3%➢Growth in inbound demand settled down
➢Impact of foreign currency translation: -¥0.3 billion➢Cost reduction effect on imports due to appreciation of the yen➢quity in earnings of affiliates increased due to strong performances by overseas affiliates➢Impact of foreign currency translation: -¥0.3 billion※ Segment income: Numerical value calculated by subtracting losses (nonrecurring items*) produced by nonrecurring factors from operating
income.
55

Achievement status of the Medium-Term ManagementPlan Ortus Stage 1
JGAAP

IFRS

641.5
522.7

581.5

559.3

610.0

Sales revenue(Units: ¥ billion)

31.4

35.2

54.7

52.0

43.3

OperatingIncome(Units: ¥ billion)

FYE2014
ActualFYE2015
ActualFYE2016
ActualFYE2017
ActualFYE2017
Projection

JGAAP: Sales revenue
IFRS: Revenue

522.7

559.3

641.5

581.5

610.0

JGAAP: Operating income
IFRS: Core operating income

31.4

35.2

43.3

54.7

52.0

JGAAP: Operating income ratio
IFRS: Core operating income ratio

6.0%

6.3%

6.8%

9.4%

8.5%

JGAAP: Overseas sales ratio
IFRS: Overseas revenue ratio

31.4%

35.0%

44.4%

40.8%

41.4%

ROCE※

6.2%

6.2%

7.4%

8.4%

8.6%

* ROCE (Return on capital employed) = Core operating income /(Outstanding Interest-bearing Debt + Equity attributable to owners of parent)
66Full-Year Forecasts for FYE2018

Ortus Stage 27Full-Year Forecasts for FY2018(Billions of yen)
FYE2018
Result(IFRS)FYE2018
Forecast(IFRS)

Margin

Revenue581.5

YoY Change

Margin

620.0

+38.5
+6.6%

Core operating income

54.7

56.5
9.4%

+1.8
9.1%

+3.2%

Non-recurring profit and loss

-1.00.5

1.5

Operating income

53.6

57.0+3.4

9.2%

Net incom e attributable to ow nersof the parent

34.7

9.2%

34.5
6.0%

+6.2%

-0.2
5.6%

-0.7%

88

Full-Year Forecasts for FYE2018

Gas Business in JapanOrtus Stage 29Gas Business in Japan（Billions of yen）
350.0
Revenue
330.0

Segment Income

327.9

Revenue¥338.0 Billion（FYE2018）

310.0

55%

45

338.0
321.4

+5.2％
35290.0
270.0

40

30

27.8

29.4

▲3.2％

28.5
25

250.0

20

FYE2016
ResultFYE2017
ResultFYE2018
ForecastFuture Outlook
Although demand for domestic industrial gas can be expected in some industries such as electronics,
overall there are no prospects for a significant increase in demand
Costs are expected to rise due to rising energy prices
Operations scheduled to start at two onsite plants—for Nippon Steel & Sumitomo Metal Corporation’s
Yawata Works, and for JFE Steel Corporation’s West Japan Works
The Company will strengthen its information system foundation and increase expenditure to promote
R&D1010

Gas Business in Japan
By business

Key Operational Strategies

Expand business areas (equipment business, etc.)
Expand sales of electronics gas
Industrial Gas

Improve earnings of bulk gases through unification ofproduction and logistics
Begin full-scale operation of the JFE Sanso Center Kurashiki Plant
Strengthen production capacity of carbon dioxide gas

MedicalExpand sales and provide a stable supply of Water-18O
Expand sales of home care and respiratory care products

EnergyIncrease customers in the direct-sales business centered on consumer
useConsider to propose fuel conversion (switching from heavy oil toLPG/LNG)
1111

Gas Business in Japan: Large On-site Project【Mizushima Complex】
Overview of on-site project
Company name:
JFE Sanso Center Kurashiki Plant(TNSC 60%, JFE Steel Corporation 40%)

Supplied to:West Japan Works, JFE Steel Corporation

West Japan Works,JFE Steel Corporation

Business commencement:
October 2017

New plant capacity:
Gaseous oxygen: 60,000 Nm3/h x two plants
Nitrogen gas: 83,000 Nm3/h x two plants

Air separation units

Largest oxygen production capacity inJapan

In Japan, where a large demand for industrial gas cannot be expected togrow, the Company will strengthen its main business by incorporating
business consignment needs
1212

Gas Business in Japan: Carbon
Dioxide Gas【Manufacturing bases of Nippon Ekitan Corporation】

Initiatives for a Stable Supply ofCarbon Dioxide
BackgroundThere was a lack of raw materials sources due
to a decrease in fuel oil demand and the haltingof domestic ammonia manufacturing
Long-distance transportation and purchasingfrom overseas have become the norm

Nippon Ekitan's Mizushima
Plant

Initiatives

Plant location: Mizushima City,
Okayama Prefecture
Production capacity: 250
tons/day
Investment: ¥5,000 million
Completion: October 2017

Chugoku, Shikoku & Kansai region
Construct collection and refining facility for lowconcentration carbon dioxide gas sources inMizushima, thereby achieving a stable supply inthe region
Chita Tansan Co., Ltd.
Plant location: Chita City, Aichi
Prefecture
Production capacity(Increasedproduction volume): 70 tons/day
Investment: About ¥1,200 million
Completion: December 2018

※Manufacturing bases includes the acquisition
framework and the investment plant
13

Central Japan & East Japan
Increase the production capacity bystrengthening Chita Tansan Co., Ltd., thereby
achieving a stable supply in the region

13

Full-Year Forecasts for FYE2018

Gas Business in the U.S.

Ortus Stage 214

Gas Business in the U.S.
（Billions of yen）
180.0

160.0

27%

Revenue¥166.0 Billion（FYE2018）

140.030Revenue
Segment Income

149.5

166.0
147.2

120.0

+12.7％

2015+14.3％

13.8

12.0

100.0

25

109.2
80.05

FYE2016
ResultFYE2017
ResultFYE2018
ForecastFuture Outlook
In the United States, the economy will recover moderately against the backdrop of an improving
consumer spending and investment activities of companies. At the same time, industrial gas demand
will also on the rise.
Business acquired from Air Liquide in September 2016 contributes full year.

1515

Gas Business in the U.S.
Key Operational Strategies

By business

Bulk gas business expansion through new plant installation (CA, TX, LA）
Industrial Gas

Stable operation of the Sasol on-site plant
Synergy creation from the acquired business from Air LiquideElectronics

Enhanced sales activities focused on the strategic
customers

Stable launch of a new manufacturing facility in Pennsylvania
CarbonDioxideContinued efforts to expand the sales channel along with price andplant capacity improvements

1616

Gas Business in the U.S.
：Synergies from acquired Air Liquide’s gas business

Optimize production
and logistics costs
through centralized
plant operations

Streamline the existing
and acquired businessbase in the East andMidwest

Remote Operation Center（Irving, Texas）

Reduce costs bychanging from external
to internal supply ofbulk gas in the Eastand Midwest

Expand business in theEast and Midwest witha vertically integrated
product offering

Acquired ASU（Toledo, Ohio）
1717

Gas Business in the U.S. ：CO2
Company name：Continental Carbonic Products, Inc.
Matheson Acquired Continental Carbonic Products, Inc. in February 2014
2nd largest U.S. dry ice supplier
12 liquid CO2 plants in the U.S. (8 CCPI plants, 4 plants acquired from Air Liquide, 1 plant under construction)Product Portfolio

Full Block

High Density Blasting Ice

Cut Block

Blasting Equipment

LegendCCPI head office
LCO2 plant
LCO2 plant(under construction)

Dry Ice Pellets

Liquid CO2

CCPI business base

Expand carbon dioxide business with strong demand for foodand beverages
18

18

Full-Year Forecasts for FYE2018

Gas Business in Asia & Oceania

Ortus Stage 219

Gas Business in Asia & Oceania（Billions of yen）
100.0

14%

90.0

25

Revenue
Segment Income

20

89.3

Revenue¥89.0 Billion（FYE2018）

85.8

80.0

+3.6％

89.0
15

70.0

10+39.4％
7.2

60.0
50.05.13.0
FYE2016
Result50

FYE2017
ResultFYE2018
Forecast

Future Outlook
Industrial gas demand will expand in Southeast Asia including the Philippines and VietnamSupagas Holdings Pty Ltd, which was purchased in December 2016, will make a full-year contribution
The absence of benefits from the 15-month settlement by Thailand's Air Products Industry Co., Ltd.
and Australia's Renegade Gas Pty Ltd.

2020

Gas Business in Asia & Oceania
By region

SoutheastAsia

Key Operational Strategies
Expand sales of Company brand hard goods, and safety goods(Singapore)
Expand sales of carbon dioxide gas at the Company's plant (Singapore)
Expand sales of bulk gases and piping businesses (Philippines, Vietnam)

East Asia

Industrial gas: Plan piping business in special economic zone of Jiangsu Province,
ChinaElectronics: Strengthen marketing capabilities for major users
Expand sales of food, mining and manufacturing industries

Oceania

Integrate management of two purchased companies (RGP and Supagas),including by centralizing purchasing and improving delivery efficiency

Expand sales of bulk gases or which expansion of demand can be expected
India

Secure helium market share
Expand product lineup (carbon dioxide gas, standard gas)

2121

Gas Business in Asia & Oceania: Philippines【Industrial gas supply system of Luzon Island】
Maintain production bases north and south
across Manila
No. 1 share in liquid production capacity

Expand on-site business against a
backdrop of overwhelming backup
capacity
FYE2017 (up to March 2017)
Piped nitrogen gas for solar panel manufacturers(supplied from new plant)

Clark, Pampanga

Piped nitrogen gas for Japanese electronics parts
manufacturers (supplied from existing plant)

FYE2018 (April 2017 onwards)
ManilaPiping nitrogen gas for electronics parts
manufacturers (supplied from new plant)
Piping nitrogen gas for electronics parts
manufacturers (supplied from piping from ClarkPlant)

San Jose, Batangas
22

Tanauan, Batangas

22Gas Business in Asia & Oceania: Australia
Renegade Gas Pty Ltd
Business territory:

New South Wales, Australian CapitalNorthern
Territory

Territory, and Queensland
Sales composition:

LPG gas 58%, industrial gases 30%,
helium 6%, otherStrengths:

Outdoor heaters, helium

Queensland
WesternAustralia
SouthAustralia

Supagas Holdings Pty Ltd(Australia)
Business territory:

Victoria, South Australia, Western
Australia, Tasmania, Northern Territory

Sales composition:

LPG gas 54%, industrial gases 33%,carbon dioxide 6%, otherStrengths:

Industrial gases, dry ice, hard goods

New SouthWalesLegendＶ

Renegade Gas Headquarters
Renegade Gas Business bases
Supagas Headquarters

Victoria

Supagas Air separation units

Tasmania

Supagas Business bases

The Company aims to expand business by expanding sales by leveraging
its nationwide sales network, and by pursuing synergies by supplementing
the two companies’ merchandise2323

Full-Year Forecasts for FYE2018

Thermos & Other Businesses

Ortus Stage 224

Thermos & Other Businesses（Billions of yen）
40.0

4%

20Revenue
Segment Income

30.0

27.5Revenue¥27.0 Billion（FYE2018）

15

▲0.1％
27.0

20.0

27.0
1010.09.0▲10.2％

9.0

10.0

50.00
FYE2016
ResultFYE2017
ResultFYE2018
Forecast

Future Outlook
Inbound demand for portable mugs will stop, causing the market to soften
Desktop pots will continue to grow amid a shift to more economizing
Vacuum insulated tumblers and mugs are now well-established items in Japanese households,
but competition is fierce due to low barriers to entry
2525Thermos & Other Businesses
By business

Key Operational Strategies
Develop highly specialized products and launch them on the market

Japan

Expand lineup of alfi products
Utilize directly managed stores and direct-sales shopping websites
Implement themed events

Increase sales by supermarket and TV mail orderSouthKorea

Strengthen sales structure for new sales channels
Advertise in magazines, the Internet, etc.

Southeast
Asia
production
plantsIntroduce production management system (Malaysia plant)
Strengthen production system by reinforcing facilities and securing
key personnel (new plant in the Philippines)

2626

Thermos & Other Businesses

27

New plant in the Philippines

Launch of alfi's new product (February 22,2017)

Launch of bicycle-exclusive bottles(February 22, 2017)

Open directly managed store in Futako
Tamagawa (March 24, 2017)27

Shareholder returns

Ortus Stage 228

Shareholder returns
The Company maintains a stable dividend and is improving a dividend policy
tied to performance
Japanese GAAP

Year-end
30 YenInterim

27.1%

Dividend payout ratio

IFRS

27.6%

26.8%

30.0%

24.9%

24.3%
22.5%
20 Yen20.0%

11 Yen11 Yen
9 Yen
10 Yen

6 Yen

6 Yen6 Yen

10.0%

7 Yen

6 Yen

6 Yen

6 Yen

6 Yen

7 Yen

FYE2012FYE2013FYE2014

FYE2015

FYE2016

9 Yen

11 Yen0 Yen

0.0%
FYE2017

FYE2018(Forecast)2929

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.