Emerging ontoa Still Wider Stage

Consolidated Business Performancefor the Full-Year of the FYE2020
May 21, 2020

Contents

Business Performance for the Full-Year of the FYE2020
Overview of business performance for the full-year
Business performance by segment

Full-Year Forecasts for FYE2021
Assumptions for Forecasts
Overview of the Full-Year Forecast
Condensed Consolidated Statements of Cash Flows

Shareholder returns

Close-up on Business Initiatives

Business Performancefor the Full Year of FYE2020
Overview
Ortus Stage 2

3

Overview of business performance(Billions of yen)

FYE2019
ResultFYE2020
ResultMargin740.3

Revenue

Margin850.2

YoY

FYE2020
Forecast(Announced on Feb.5)

MarginChange+109.9855.0+14.8%

Core operating
income65.8

Non-recurring profit and loss

1.0

3.5

+2.5

3.5

Operating income

66.8

93.9

+27.1

95.0

90.3
8.9%

10.6%

9.0%

Net income attributable toowners of the parent

41.2

+24.5

11.0%

53.3
5.6%

+37.2%

10.7%+40.5%

+12.1
6.3%

91.5

11.1%

54.0

+29.2%

6.3%

Foreign currency translations (average rate during the period)（Yen）
FYE2019
FYE2020

USD (US$)111.07108.95

EUR (€)
125.70120.85

AUD (AU$)
80.77
73.81

In its FYE2019 results, the Company has recorded advisory costs of ¥2.7 billion on core operating income inconnection with the 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 U.S. HyCo business.
These contributions were partly offset by a decrease in revenue in the Thermos Business,in addition to a decline in demand for bulk gases in Japan and Asia.

+¥109.9billion（Up 14.8％）+110.4
-1.6

+11.5
740.3

FYE2019
ResultFYE2019 Result-7.8

Including foreignexchange impact

-3.6

-2.7

Including foreignexchange impact

Including foreignexchange impact

Including foreignexchange impact

-2.1

-3.9

-0.3

Gas
Business
in Japan

Gas
Businessin the U.S.

Gas
Businessin Europe

Gas Businessin Asia &Oceania

Thermos
Business

356.1

198.8

165.5

104.5

25.1

363.9

187.3

55.1

106.1

27.8

850.2

FYE2020
Result（Billions of yen）
FYE20205Result

55Overview of business performance: Reasons for Change in Core Operating Income
Earnings rose substantially due to a solid performance by the gas business in the U.S. andthe full-year contribution of earnings from the European businesses and the U.S. HyCO
business. These positive factors were partly countered by a decline in earnings due todecreased revenue in the bulk gas business in Japan and lower earnings in the Thermos
business.

+¥24.5billion+18.3

Including foreignexchange impact

+6.6

65.8

FYE2019
Result-1.1

Including foreignexchange impact+1.9 （Up 37.2％）

+0.8
-0.4

-1.9

90.3

Including foreignexchange impact-0.1

Including foreignexchange impact

-0.3

-0.3

Gas
Business
in JapanGas Business
Gas
Gas
in Asia &Business Business in
Oceania
Europein the U.S.

Thermos

Eliminations FYE2020
or Corporate Result（Billions of y en）

FY E2019 Result

28.7

22.2

24.8

9.9

7.2

-2.6

29.8

15.6

6.5

9.1

9.1

-4.5

FY E2020 Result＊*In its FYE2019 results, the Company has recorded advisory costs of ¥2.7 billion on core operating income in connection with the acquisition of European businesses.
66Business Performancefor the Full Year of FYE2020
Business Performance by Segment
Ortus Stage 2

7

Business Performance by Segment：Gas Business in Japan

Gas Business in Japan（Billions of yen)

FYE2019
ResultRevenue

363.9

FYE2020
Result356.1

YoY
ChangeRevenue

Segment profit margin

Segment income

363.9(core operating income)

29.8

28.7

-2.1%

356.1

-7.8
29.8

Segm ent incom e

8.1%

8.2%

-3.6%

28.7

-1.1
FYE2019
ResultReasons for changes in revenue
 Bulk & On-site (Air separation gases):

Earnings decreased, primarily in key industries
 Gas-related and plant, other (Medical):Contribution from acquisition of IMI Co., Ltd., a medical
equipment sales company

FYE2020
ResultReasons for changes in segment income Bulk & On-site (Air separation gases):

Lower earnings from decreased 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)

FYE2019
ResultFYE2020
ResultYoY
ChangeRevenue

Segment profit margin

Segment income

187.3
Revenue
Segm ent incom e(core operating income)

187.3
15.6

198.8
22.2

+11.5
+6.6

*Impact of foreign currency translation: negative impacts of ¥3.57 billion
on revenue and ¥0.30 billion on segment income.

11.2%

8.3%

15.6
FYE2019
Result

198.8
+6.2%

+42.4%

22.2

FYE2020
ResultReasons for changes in revenue

Reasons for changes in segment income Bulk: Firm shipments centered around air separation gases.

 Industrial gas-related business was generally firm, centered

Shipments of carbon dioxide gas increased due to the start ofoperation of a new plant.
 On-site: Start of operation of new projects, contribution fromon air separation gases.
 Production and logistics costs for bulk gases increased Contribution from acquisition of HyCO businessacquisition of HyCO business99Business Performance by Segment：Gas Business in Europe

Gas Business in Europe（Billions of yen)

Revenue
Segm ent incom e(core operating income)

FYE2019
ResultFYE2020
ResultYoY
Change

55.1

165.5

+110.4

Revenue

Segment profit margin

Segment income

15.0%

165.5
11.9%

24.8

55.1

6.5

24.8

+18.3

*Impact of foreign currency translation: negative impacts of ¥2.12 billion
on revenue and ¥0.25 billion on segment income.

6.5
FYE2019
ResultFYE2020
ResultRevenue increased 1.4% year on year to ¥163.4 billion for the Gas Business in Europe from April 1, 2018 to March 31, 2019, assuming
the acquisition date of the European business acquired from U.S. company Praxair, Inc. was April 1, 2018. The actual acquisition wascompleted in December 2018.
(The rate of €1=¥120.85 applicable for FYE2020 results has been used for conversions to yen)

Looking at year-on-year changes in revenue by key region (on a local currency basis), Iberia (Spain/Portugal) was down 2%, Italy was
down 1%, Germany rose 2%, Benelux (Belgium/Netherlands) increased 5% and Scandinavia (Norway/Sweden) grew by 1%.
Revenue in Spain, Italy and certain other countries decreased in March compared with the same month a year earlier due to the spread ofcoronavirus disease 2019 (COVID-19).

10
10

Business Performance by Segment：Gas Business in Asia and Oceania

Gas Business in Asia and Oceania（Billions of yen)

Revenue
Segm ent incom e(core operating income)

FYE2019
ResultFYE2020
ResultYoY
Change

106.1

104.5

-1.6

Revenue

8.6%

106.1
9.1

＊

9.1

Segment profit margin

Segment income

9.9

+0.8

*Impact of foreign currency translation: negative impacts of ¥3.91 billion
on revenue and ¥0.41 billion on segment income.

Reasons for changes in revenue
 Bulk (Air separation gases): Revenue decreased

9.5%

-1.5％

+8.8%

FYE2019
Result104.5
9.9

FYE2020
ResultReasons for changes in segment income

significantly, mainly in China

 Profitability improved in the LP gas business in Australia

 LP gas: Firm sales in Australia

 Earnings declined due to lower electronic materials gas

 Specialty gases: Lower shipments of electronic materials

gases due to deterioration in the market condition.

revenue.

 Electronics-related equipment and installation: Revenue in

Taiwan rose substantially* In the natural gas liquefaction business under way in Indonesia (a business to provide services to liquefy and transport natural gas for power generation),
the Company recorded impairment losses of ¥1.3 billion on assets related to this business due to a decline in future profitability following drastic changes
in the market environment surrounding raw material and fuel.
11

11

Business Performance by Segment：Thermos Business

Thermos Business（Billions of yen)

FYE2019
ResultFYE2020
ResultYoY
ChangeRevenue

Segment profit margin

Segment income

33.1%

27.8
Revenue

27.8

25.1

-2.7

Segm ent incom e

9.1

7.2

-1.9

(core operating income)*Impact of foreign currency translation: negative impacts of ¥0.30 billion
on revenue and ¥0.10 billion on segment income.

Reasons for changes in revenue Japan: Sales volume of key products were down due tounseasonable weather (cool summer, warm winter) andspread of COVID-19. Frying pan sales increased Overseas: Significant change in the sales environment inSouth Korea. Operating rate at production plants slumped

9.1

FYE2019
Result

28.8%

-9.6%

-21.4%

25.1

7.2
FYE2020
ResultReasons for changes in segment income Japan: Decreased earnings due to lower revenue
 Overseas: Decreased earnings due to lower revenue inSouth Korea. Decreased due to lower operation rate at
production plants. Sales slowed at group companies
accounted for by the equity method (exc. some regions).

1212

Full-Year Forecasts for FYE2021

Overview

Ortus Stage 2

13Assumptions for Business Forecasts
 In terms of the outlook, the Company assumes that the current deterioration in global

economic conditions caused by the spread of COVID-19 will persist until the first quarter

Basic approach(April-June). In the second quarter (July-September), economic conditions should start torecover in stages. From the third quarter onward, the Company assumes that economic
conditions will return to almost normal.
The exchange rate assumptions for business forecasts are US$1=¥108 and €1=¥120.

 Revenue from industrial gases and hard goods are expected to decrease by around 15% year

Main reasonsfor changes
in earnings

on year in the first quarter, decline by around 10% year on year in the second quarter, andstay mostly unchanged year on year from the third quarter onward. The impact on core
operating income is calculated based on the profit margin in each region.

 The direct impact on the operations of electronics-related customers is not very large at thistime. Based on this, the Company forecasts higher earnings from higher revenue in Japan andcertain other markets, as initially expected.

 In the Thermos business, the Company expects business performance to be impacted by the

spread of COVID-19, particularly in the first quarter, mainly in Japan, China and South Korea.

 In other areas, a correction in the prices of items such as bulk gases in Japan and cost

reductions in production and logistics operations are expected to push up earnings. Meanwhile,
the absence of a one-time gain recorded in the U.S. in the previous fiscal year is expected topush down earnings.

14
14

Full-Year Forecast(Billions of yen)
FYE2020
ResultFYE2021
Forecast

Margin

Revenue

850.2

YoY

Margin830.0

Change

-20.2
-2.4%

Core operating income

90.3

82.0
10.6%

-8.3
9.9%

-9.2%

Non-recurring profit and loss

3.5

0.0

-3.5

Operating income

93.9

82.0

-11.9

11.0%

Net income attributable toowners of the parent

53.3

9.9%

44.0
6.3%

-12.7%-9.3
5.3%-17.5%

Assumed exchange rate for FYE2021: (US$¥): $1=¥108, (EUR¥): €1=¥120

In FYE2020, the Company recorded non-recurring profit on the sales of its assets as part of efforts to improveasset efficiency.
15

15

Full-Year Forecasts for FYE2021

Condensed Consolidated
Statements of Cash Flows
Ortus Stage 2

16

Condensed Consolidated Statements of Cash Flows（Billions of yen）
FYE2020
Results

FYE2021
Forecast

YoY
ChangeProfit before incom e taxes

79.1

67.5

-11.6

Depreciation and am ortization

83.7

86.0

+2.3

Changes in w orking capital

3.1

-1.3

-4.4

Other

-16.0

-18.7

-2.7

150.0

133.5

-16.5

Capital expenditures

-72.8

-94.1

-21.3

Investm ent and loans

-0.7

－

+0.7

Other (sale of assets, etc.)

10.9

－

-10.9

Cash flow s from investing activities

-62.6

-94.1

-31.5

Free cash flow s

87.4

39.4

-48.0

Net interest-bearing debt*

898.3

881.8

-16.5

Adjusted net D/E ratio

1.45x

1.34x

-0.11pt.

Cash flow s from operating activities

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 longterm redemption periods and subordination during liquidation or bankruptcy procedures.
17

17

Shareholder returns

Ortus Stage 2

18

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

¥40

27.1%

26.8%
24.9%

24.3%

Interim27.1％*

Dividend payout ratio

30%

26.2%
22.7%

Japanese
GAAP

¥30

IFRS

25%

20.3%
20%

¥14

¥20
¥12

¥13

（Forecast）

¥11

¥10

10%

¥9
¥6
¥6

¥7
¥6

¥7

¥9

¥11

¥12

¥14

¥0

Net income
per share (yen)

15%

5%

0%
FYE2014

FYE2015

FYE2016

FYE2017

FYE2018

FYE2019

FYE2020

49.42

47.98

59.72

80.28

113.0495.42

123.26*Large-scale corporate income tax reductions 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%.

19
19

Close-up on Business Initiatives

Ortus Stage 2

20

Close-up on Business Initiatives
Gas Business in Japan

Ortus Stage 2

21

Close-up on Key Measures in Electronics
 Structural Reform—a key strategy in the Ortus Stage 2 medium-term management plan

Strategic
Direction

Total TNSC: Seek to maximize group power by augmenting collaboration
 Expand business in gas and peripheral areas (equipment business, etc.)
 Remain customer-oriented at all times and implement a total gas businessHighlights of specific achievements (Deepening ties with an electronics customer)

On-sitesupplySpecialty gas
supplyEquipment andinstallation
work, etc.

Name of company

Iwate Kurosawajiri Gas Center Corporation(Supply base)[Kitakami City, Iwate Prefecture]

Supply destination

Semiconductor memory manufacture

Major facilities

for joint production of oxygen and nitrogen

Three air separation units (ASUs)
12 backup tanks, 34 evaporators
Established

November 2018

Capital￥50 million

22
22

(Reference) About IGSS
In order to appropriately address the adoption of smart factories* by users, theCompany has developed an Intelligent Gas Supplying System (IGSS) together withusers by maximizing the gas handling know-how it has accumulated over the years.

System components
The Company has developed a supply system that supports users
by enabling them to use a tablet to carry out integrated managementof a full range of operations related to gas supply, so that they canuse gas simply, safely and steadily.

Tabletoperated

Highperformancemonitoring
systemCylindermanagement
databasesystemExample of a system component(Labor-saving measure: automated cylinder transport system)

AutomatedcylindertransportsystemIntelligent Gas Supplying System

IGSS
Daily
inspection
supportOperation
recorder Robots automatically transport gas cylinders weighing

more than 50 kg per cylinder.
 Robots identify and map the surrounding space, andthen transport and load gas cylinders into operatordesignated spaces (containment units).

*A smart factory generally refers to a factory that continuously and progressively realizes business process transformation23
and improvements in quality and productivity through such means as the use of digital data.

23

Business Measures Introduction
Gas Business in Overseas（in the U.S. / Asia and Oceania）

Ortus Stage 2

24

Gas Business in the U.S.: Major Capital Investment Projects
Seek to increase the Company’s presence further by leveraging its industrial gas production
network throughout the U.S.
ActionPlan

 Operations of 2 air separation units and 1 carbon dioxide plant started in the previous fiscal year.

Continuously expand production capacity in the bulk gas and carbon dioxide businesses.
 Improve profitability by expanding sales from new plants and managing prices.
On-site

Bulk

Completed construction ofan air separation unit in Nebraska(October 2019)

Carbondioxide gas

Dry IceCompleted construction of acarbon dioxide gas plantin Denison, Iowa (June 2019)

Carbondioxide gas

Dry Ice

Plans to expand carbon
dioxide supply capacity in the
East are under consideration.

LegendCorporate
headquarters
Air separation units
Carbon dioxide plants
Business bases

BulkCompleted the addition ofan air separation unit in Vernon,
California (November 2019)25

Carbondioxide gas

On-siteDry Ice

Bulk

Air separation units and carbon dioxide plants are being
planned in the Southeast. (Scheduled to start operations in 2021)

25

Business in Southeast Asia: Expand the piping business in Vietnam
The third air separation unit was completed and an underground piping network spanning 20 km(including branch pipes) was laid in Ba Ria-Vung Tau Province in Vietnam’s southern region.
Build a robust backup system, with a fourth air separation unit starting operation in 2021.

Hanoi

My XuanApprox.8.5km
Ho Chi Minh City

Ba Ria-Vung Tau Province

Phu My 1(Approx. 60 km from the central business district of Ho Chi Minh City)

Approx.7.5km

Phu My 3

Underground piping network
・Oxygen gas
・Nitrogen gas
・Hydrogen gas
Piping supply
to seven companies centeredon the steel and chemicals
industries

Air separation unit
Long Sơn Island

Phu My 3 air separation unit installed in an industrial park
(Completed September 2019)26［under construction］(Scheduled to start supply in 2021)

26

Business Measures Introduction
Thermos Business

Ortus Stage 2

27

Awareness of Business Environment
and Response Measures Sharp decrease in inbound tourism demand

・Sales of vacuum insulated portable mugs and soup jars decreased primarily at discount home electronics retailers
and tax-free/duty-free shops due to a sharp decrease in inbound tourists visiting Japan.

Changesin theenvironment

 Stay-at-home requests and temporary school closures due to declarationof a state of emergency

・Decrease in leisure demand (vacuum insulated portable mugs, picnic lunch boxes)
・Sluggish sales of products for the new academic year (vacuum insulated kids’ beverage bottles and lunch boxes)
・Sluggish growth in peak-season sales due to the cancellation of school team activities and sports day events(sports-use vacuum insulated beverage bottles)

 Focus on stay-at-home consumption

・With the increase in telework and children staying indoors, items that help people live comfortably in their homes
are gaining attention.

Active roll-out of sales promotion approaches
Media exposure

Information shared on official
social media accounts

E-commerce promotions

THERMOS MEMBERS

In-store campaigns

2828

Specific sales promotion approaches
Stimulate demand for the period after the reopening of schools

Respond to fees for plastic shopping bags from July

(In-store promotions)
Expand sales of sports-use vacuum insulated beverage bottles(Items to protect against heat stroke)
Propose uses for products based on new concepts

29
29

Specific sales promotion approaches
Measures to expand sales centered on new autumn products

Vacuum insulated portable mugs

Vacuum insulated soup jars

Frying pans / Shuttle Chef

Tumblers / Tabletop pots

30
30

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.