Consolidated Business Performance for
FY2014 (Year Ended March 2014)

May 14, 2014

Contents
Full-Year Financial Results for FY2014
Consolidated Business Performance for FY2014
Segment Information
Profitability Improvement Results
Business Alliance with Mitsubishi Chemical Holdings
Personnel Changes in Representative Directors
New Medium-Term Management Plan “Ortus Stage 1”
Consolidated Full-Year Forecasts for FY2015

1

1

Consolidated Business Performance for FY2014

2

Consolidated Business Performance for FY2014(Billions of yen)
FY2013
Ratio to sales

FY2014
Announced
targets (Nov. 5)

FY2014(Results)

Sales

468.3

514.0

522.7

Operating
Income24.8

30.0

Ordinary
Income

23.0
4.9%

28.8

-2.0

19.4

Net Income

5.3%

-0.4%

31.4

YoY change% change+54.3+11.6%

%

6.0%

+6.6
+26.5%

%

30.5
5.8%

+7.4
+32.5%

20.1

+22.2
－

%

3.9%

2

Consolidated Business Performance for FY2014
Analysis of year-on-year change (1)+¥54.3 billion+¥19.4 billion Industrial Gas +¥8.2 billion, Electronics +¥0.8 billion
Energy +¥4.5 billion, Other +¥5.9 billion
Overseas +¥34.9 billion North America +¥25.2 billion, Asia +¥9.7 billion(of which, exchange rate effects +¥28.3 billion [North America +¥21.2 billion,
Asia +¥7.1 billion])【Sales】
Japan【Operating Income】 +¥6.6 billionJapan+¥2.6 billion Electronics earnings recovered, but plants andmachinery sales decreased
Overseas +¥4.4 billion North America +¥3.6 billion, Asia +¥0.8 billion(of which, exchange rate effects +¥1.5 billion [North America +¥1.1 billion,
Asia +¥0.4 billion])
Elimination of intra-company transactions -¥0.4 billion【Ordinary Income】+¥7.4 billion
Investment return from equity method +¥0.7 billion

Consolidated Business Performance for FY2014
Analysis of year-on-year change (2)【Extraordinary Gain and Loss (before tax)】 +¥27.3 billion
FY2013

Loss on liquidation of business, etc.

+¥23.5 billion

FY2014Gain on sales of Shimbashi building and others+¥3.8 billion

Gain on sales of investment securities+¥3.6 billion

Loss on liquidation of subsidiaries and affiliates -¥0.5 billion
Early retirement expenses-¥1.7 billion

Impairment loss-¥1.2 billion

Loss on valuation of investment securities, etc.

-¥0.2 billion【Net Income】 +¥ 22.2 billion

3Consolidated Business Performance for FY2014
Other results(Billions of yen)
FY2013

Capital expenditure
Investment and loan
Depreciation andamortization(Amortization of goodwill)

FCF (operating cash flow investment cash flow)

Total assets
Shareholders' equity
Net interest-bearingdebt
Net D/E ratio

FY2014

Change

31.7
5.6

32.5
35.7

+0.8
+30.1

32.1

37.1

+5.0

2.7

3.6

+0.9

-3.2

1.4

+4.6

March 2013 March 2014

Change

615.8
203.7

731.6
274.3

+115.8
+70.5

228.6

219.7

-8.9

1.12

0.80

-0.32

・Investment and loan:
Large-scale acquisition of a carbon
dioxide gas company in North
America・Depreciation and amortization:
Increased due to exchange rate
effects, etc.
・Free Cash Flow (FCF):
Increased due mainly to more profit
and less tax, despite large-scaleacquisition
・Net interest-bearing debt:
Debt reduced (¥30.8 billion) as aresult of allocation of new sharesto a third party was offset by debt
increased (¥15.0 billion) from yendollar exchange rate and others⇒Net D/E ratio:
At less than one times due toshareholders’ equity increase

Performance by Segment

4FY2014 Performance by Business Segment(Billions of yen)

FY2013Sales

FY2014

Operating
IncomeRatio to
sales

Sales

Operating
IncomeRatio tosales

Industrial Gas

298.0

21.3

7.2%

338.6

21.9

6.5%

Electronics

96.5

-0.5

-0.6%

98.3

5.2

5.4%

Energy

40.0

1.8

4.5%

44.5

1.6

3.8%

Other

33.7

3.2

9.8%

41.2

3.7

9.2%

-1.0

Adjustments
Consolidated

468.3

24.8

-1.1
5.3%

522.7

31.4

Industrial Gas Segment

Segment Total
Japan
Overseas
Bulk/On-site
Japan
Overseas
PackageJapan
Overseas
Equipment andPlantsJapan
Overseas

FY2013

FY2014

Operating Ratio to
Sales
Income
sales
298.0
21.3
7.1%
193.7
104.3
158.0
126.0
32.0
98.4
30.7
67.7

Operating Ratio to
Sales
Income
sales
338.6
21.9
6.5%
201.9
136.6
173.2
131.4
41.8
118.5
32.4
86.1

(Billions of yen)
ChangeSales+13.6%+4.2%+31.0%+9.6%+4.3%+30.3%+20.4%+5.4%+27.2%

41.5

46.7+12.7%

36.9
4.5

38.0
8.6

+3.0%
+92.3%

Bulk/On-site
Japan：
On-site demands from steel industry were strong,but liquefied gas was down year on year due toslow demand recovery
Overseas：Exchange rate effects and sales volume increase in
North America, and new consolidations in Asia

6.0%

Operating
Income+2.9%

Package
Overseas： Exchange rate effects and sales volume increase in
North America
Equipment and plants
Japan：
Revenue from plant business decreased, butrevenue from gas-related equipment increased
Overseas： Revenue increase in Leeden Limited, and newconsolidations5Electronics Segment

Segment Total
Japan
Overseas
Gases
Japan
Overseas
Equipment andInstallation
Japan
Overseas

FY2013Operating Ratio to
Sales
Income
sales
96.5
-0.6
-0.7%
72.5
23.9
71.9
51.3
20.5

FY2014
Operating Ratio to
Sales
Income
sales
98.3
5.2
5.4%
73.3
25.0
72.1
50.5
21.5

(Billions of yen)

ChangeOperating
Sales
Income
+1.9%
+1.1%
+4.4%
+0.4%
-1.4%
+4.9%

24.6

26.2

+6.4%

21.2
3.3

22.7
3.4

+7.2%
+1.5%

Gases
Japan：
Sales of specialty gases and argon gas decreased
Overseas： Revenue increased due to exchange rate effects in North America and Asia
Equipment and Installation
Japan：
Installation sales increased and MOCVD was delivered to Nagoya Institute of Technology
Overseas： Revenue increased due to exchange rate effects in North America and Asia, but revenue
decreased in Taiwan due to the change in accounting period in the previous fiscal year

Energy Segment

Segment Total

FY2013Operating Ratio to
Sales
Income
sales
40.0
1.8
4.5%

FY2014
Operating Ratio to
Sales
Income
sales
44.5
1.6
3.8%

(Billions of yen)

ChangeOperating
Sales
Income+11.2%
-7.4%

Gases

36.2

40.8

+12.7%

Related Equipment

3.7

3.6

-3.7%

Gases
Sales prices rose in line with increased costs due mainly to the weak yen
Consumer demand declined amid an extremely hot summer although the total sales
volume of LP gas remained flat year on year

6

Other Segment

Segment Total
Japan
Overseas
MedicalJapan
Overseas
Thermos
Japan
Overseas
Other
Japan
Overseas

FY2013Operating Ratio to
Sales
Income
sales
33.7
3.2
9.8%
32.8
0.8
18.4
18.4
0.0
12.8
12.0
0.8
2.3
2.3
0.0

(Billions of yen)

FY2014
Operating Ratio to
Sales
Income
sales
41.2
3.7
9.2%
38.8
2.4
22.1
21.9
0.2
16.4
14.2
2.2
2.5
2.5
0.0

ChangeOperating
Sales
Income+22.2%+14.9%+18.0%+182.0%+20.0%+18.9%+28.2%+18.9%+158.1%
+6.9%
+6.9%
-

MedicalContribution from newly-consolidated Pacific Medico Co., Ltd.
Equipment-related sales to hospitals and home healthcare equipment sales were steady
Thermos
New product sales in Japan and sales from a newly-consolidated South Korean subsidiary were strong

Performance by Geographic Segment in FY2014(Billions of yen)

FY2013

FY2014
Ratio to
sales

Sales
(% change)

Operating
Income(% change)

Ratio to
sales

Sales

Operating
Income

Japan

339.2

22.1

6.5%

358.6
5.7%

24.7
11.6%

6.9%

North America

90.6

2.0

2.3%

115.8
27.8%

5.6
171.7%

4.9%

Other

38.4

1.8

4.8%

48.1
25.3%

2.6
44.5%

5.6%

-1.2

Adjustments

Consolidated

468.3

24.8

-1.6
5.3%

522.7
11.6%

31.4
26.5%

6.0%

7

Profitability Improvement Results(Billions of yen)

FY2014Full-Year
Target

FY2014Full-Year
Results

Improve profitability of industrial gases in
response to electric power rate hikes

0.5

0.0

Strengthen partnerships with distributors

0.8-

Improve profitability in the domestic
electronics businesses

0.8

1.92

Improve profitability of the North
American business

2.5

*3.59

Expand our business in Asia

0.5

* 0.82

Total

5.1

6.33

* Full-year results include effects of exchange rates and new consolidations

Strengthening the Capital Alliance8

Contents
1. Scheme for Strengthening the Capital Alliance
2. Schedule for the TOB
3. Capital Structure After Completion of the TOB

Scheme for Strengthening the Capital Alliance
MCHC will make a TOB of the Company’s shares on the condition of thecompletion of necessary procedures and approval based on relevant domestic
and overseas laws and regulations.
MCHC plans to keep the Company’s shares listed on the stock exchange evenafter the TOB. The maximum number of shares purchased will be 51% of
outstanding shares combined with the shares currently held by the Group. The
minimum will be a number that exceeds 50%.
Number of shares currently held
Number of Shares
Held

Ratio

Number of sharesissued433,092,837－

Number of shares heldby MCHC Group

116,797,870

26.97%

TOB price: ¥1,030 /share (28% premium added to May 12 closing price ¥802)
Number of shares to be purchased: 104,079,476 (up to 51%)
99,748,549 shares (min. above 50%)9

Schedule for the TOB
Schedule

ActionSign the basic agreement
Announce the strengthening of
the capital allianceMay 13, 2014

Application based on the competition law
in Japan and applicable countries
Early November 2014
(Scheduled)Start the TOB

End of December 2014
(Scheduled)Complete the TOB* The schedule and other plans may change given the necessary procedures and responses based on
relevant laws in Japan and overseas.

Capital Structure after Completion of TOB
Mitsubishi Chemical Holdings Corporation**: Publicly traded company**: Total shareholding ratio in the MCHC Group
Value of sales, capital, and the number of employees
represent those of the FY ended March 31, 2014.
[Data from the Life Science Institute, Inc. is from after
reorganization.]100%

MCHC: FY ended March 2014
Consolidated sales: ¥3,498.8 billion
Consolidated operating income: ¥110.5 billion
Consolidated number of employees: 56,031
100%

56.3%

Mitsubishi
ChemicalCorporation

Mitsubishi Tanabe
PharmaCorporation*

Capital: ¥50 billion
Consolidated sales: ¥2,159.7
billionConsolidated operating
income: ¥23.1 billion

Capital: ¥50 billion
Consolidated sales: ¥412.7
billionConsolidated operating
income: ¥59.1 billion

Oct. 2005 –Oct. 2007 –100%

The KAITEKI Institute, Inc.

Apr. 2009 –Mitsubishi Chemical Holdings America, Inc.

Nov. 2010 –Mitsubishi Chemical Holdings (Beijing) Co., Ltd.

Jan. 2011 –Mitsubishi Chemical Holdings Europe GmbH

Sep. 2012 –Mitsubishi Chemical Holdings Corporate Staff, Inc.

Apr. 2013 –MCHC R&D Synergy Center, Inc.

Apr. 2014 –100%

Mitsubishi Plastics,
Inc.

Mitsubishi Rayon
Co., Ltd.

Capital: ¥21.5 billion
Consolidated sales: ¥442.7
billionConsolidated operating
income: ¥20.1 billion

Capital: ¥53.2 billion
Consolidated sales: ¥606.2
billionConsolidated operating
income: ¥8.8 billion

Apr. 2008 –Oct. 2005 –Apr. 2010 –

(51%)

100%
Life Science Institute,Inc.

Taiyo Nippon Sanso
Corporation*

Capital: ¥3 billion
Consolidated sales: [¥118.7
billion]Consolidated operating
income: [¥3.5 billion]

Capital: ¥37.3 billion
Consolidated sales: ¥522.7billion
Consolidated operating income:¥31.4 billion
Consolidated number of
employees: 12,955

Apr. 2014 –(Jan. 2015 –)The Company will be the sixth operating company of the MCHC Group.
Maintaining its independence, the Company will remain a publicly traded
company.

10Changes in Representative Directors (as of June 27, 2014)
Name

New Title

Current Title

Shotaro Yoshimura

Chairman & Representative Director

Director

Shinji Tanabe

Vice Chairman & Representative
Director
Supervising: Technological Affairs,
Development & Engineering, and Onsite & Plant divisions

President & Representative Director

Kunishi Hazama

Vice Chairman & Representative
Director
Supervising: Industrial Gases andMedical divisions

Vice President & Representative
Director
General Manager of Gases andElectronics

Yujiro Ichihara

President & Representative Director,
CEO

Vice President & Director
Supervising: Corporate Administration
and Corporate Planning & Global
Operations divisions

Tadashige Maruyama

Vice President & Representative
Director
General Manager of Industrial Gases

Vice President & Director
General Manager of Business
Administration

Hiroshi Taguchi

Executive Adviser

Chairman and Representative Director

New Medium-Term Business Plan
“Ortus Stage 1”
Ortus: “beginning, birth” in Latin

11

Contents
1. Long-Term Vision
2. Business Targets of the New Medium-term Business Plan
3. Structural Reform
4. Innovation
5. Globalization
6. M&A Strategy
7. Investment Plan

1. Long-Term Vision
Achieve “sales of 1 trillion yen, an operating margin of 10%, a ROCE of
10% or above, and an overseas sales ratio of 50% or above” by FY2023.
⇒Position the new medium-term plan as the first stage in the achievement of the long-term
management vision, and develop a foundation and system for building a new revenue base.

GlobalmarketSales ¥1 trillion

OperatingMargin 10%

ROCE 10%or above

Ourshareholders
and investors

Overseas Sales
Ratio 50% or above[Future plans for shareholder returns]
The Company positions returns to shareholders as one of its highest priorities and seeks to perform a dividend payout
policy in a manner that fairly reflects its business performance while maintaining stable dividend payouts. Going forward,
we will strive to further improve our business performance based on the strategic policy set forth in the New MediumTerm Business Plan, and aim to raise consolidated dividend payout ratio during the period of the plan (FY2015 – FY2017).

12

2. Business Targets of
the New Medium-Term Management Plan
Aim to achieve “sales of 600 billion yen, an operating margin of 7.5%,
a ROCE of 8% or above, and an overseas sales ratio of 40% or above” in FY2017.
New Medium-Term Management Plan
“Ortus Stage 1”(Sales: 100 million yen)

Net Sales
Operating Income
Operating Margin
Overseas Sales Ratio
Capital Expenditure, Investment
and Lending
Balance of Net debt
Net D/E Ratio
ROCE(Operating margin)

FY20134,683

FY20145,227

FY20155,500

FY20165,700

FY20176,000

FY2023
10,000

248
5.3%
28%

314
6.0%
31%

350
6.4%
34%

380
6.7%
36%

450
7.5%
40%

1,000
10.0%
50% or above
-

359

713

473

366

1,161

2,286
1.12%

2,197
0.8%

2,090
0.72%

2,003
0.66%

2,410
0.74%

-

5.5%

6.2%

6.4%

7.0%

8.0%

10.0%
Optimization,
expansion

Structural reform, growth strategy

3. Structural Reform
Aim to reduce 6-7 billion yen/year in fixed costs (compared to the FY ended
March 2014) by implementing the measures below.
Current condition

Purpose・ Domestic businesses continue
low growth・ Maintain stable revenue base・ To seize growth opportunities

・ Overseas businesses areachieving growth

In Japan

Measures
・ Domestic businesses:
streamline, optimize
・ Overseas businesses:
selectively input management
resources

Measures already implemented

Measures to be implemented during the period of “Ortus Stage 1”・Special preferential treatment for early
retirement

・ Reorganization: Integrate Business
Administration and Electronics divisions
into Industrial Gases
・ Streamline indirect operations by promoting
shared services
・ Strengthen supply chains・ Improve gas engineering operations

Revise personnel
and wagesystems・ Restructure affiliated companies
・ Reorganization

Overseas= Establish Corporate Planning &Global Operations division

・ Personnel reallocation (assign personnel tooverseas businesses)13

4. Innovation
Create the new businesses that will be the core of the next generation, byseizing opportunities of global energy shift such as natural gases andshale gas.
Accelerate the commercialization of new products into global market byaggressively taking innovations from open resources.
Definition of “innovation”: To create completely new value based on newtechnologies and ideas
・ Create new synergy by strengthening cooperation with Mitsubishi Chemical Holdings Group―

Overseas on-site business, CO2 spa, value add materials

・ Open innovation―

Investment into venture companies, development and sale of high-value added products throughM&A

・ Development of new energy businesses―

Natural gas liquefaction, hydrogen on-site business, shale gas-related businesses

・ Commercialization of new strategic products into growth markets―

Hydrogen station, superconductive cooling system, PSA nitrogen generator, oxygen stable isotope
labeled water (water -18O), helium containers, new materials, etc.

5. Globalization
Fully implement globalization during the period of “Ortus Stage 1” and, for the longrun, increase the overseas sales ratio to 50% or above (FY2023).
Strategically input management resources in North America and emerging
economies to ensure that growth opportunities are seized.

EuropeEast Asia

North
AmericaJapan

MiddleEast

India

Southeast
Asia
Oceania

Position Japan, North America, andAsia as key markets while
aggressively expanding businessareas through measures such as
M&As and business development

South
America

Existing locations of Taiyo Nippon Sanso Group・ Localize overseas management systems: Establish a global innovation group, business systems in China, India, andSoutheast Asia
・ Promote globalization of domestic group companies: Southeast Asia, etc.
・ Develop global human resources: Personnel shift to overseas businesses, introduction of an overseas trainee system
・ Introduction of International Financial Reporting Standards (IFRS)・ Strengthen technical risk management on a global scale

14

6. M&A Strategy
Cultivate and penetrate global markets, including new countries, andaccelerate business expansion.
North
America

WesternEuropeEast
Asia

EasternEuropeJapan
MiddleEast

AfricaIndia andsurroundingareas

Southeast
Asia

South
America

Oceania
Existing locations of Taiyo Nippon Sanso Group
Size of industrial gas market (2010) *Source: Gas Georama
Size of industrial gas market (2022 estimate) *Company’s estimation

・ Expand sales channels, products, and regional portfolio
・ Increase profitability by expanding businesses and increasing business density
・ Acquire human resources, technologies, and expertise and use these resources effectively

7. Investment Plan
Make a strategic investment of 200 billion yen in three years in and outside
Japan, including M&As of operating companies, investment in venturebusinesses, large capital expenditure, investment in rationalization, etc.
Investment Plan (strategic division)

Example of investment

Ordinary investment¥75 billion

M&A¥40 billion

Large capital expenditure,investment in rationalization¥82 billion

Investment in venturebusinesses¥3 billion

Total

Shunan, Yamaguchi Prefecture
Further construction at a manufacturing plant for oxygen stable
isotope labeled water (water -18O)¥200 billion
Lakeland, Florida, U.S.
Constructed a new air separation plant in the U.S. which isexperiencing an industrial recovery through the shale gas
revolution

Investment Plan (regional division)Japan¥58 billion

United States¥77 billion

Asia and Others¥65 billion

Total¥200 billion

15

Consolidated Full-Year Forecasts for FY2015

Consolidated Full-Year Forecasts for FY2015(Billions of yen)

FY2014FY2015(Results)(Forecasts)

Sales

522.7

550.0

Operating
Income31.4

35.0

Ordinary
Income30.5

Net Income

6.0%

5.8%

20.1
3.9%

6.4%

33.2
6.0%

20.0
3.6%

Change% change

27.2

5.2%

3.5

11.1%

2.6

8.7%

-0.1

-1.0%

16

Full-Year Forecasts for FY2015 by Business Segment(Billions of yen)

FY2014FY2015

Operating
IncomeSales

Ratio to
sales

Sales

Operating
IncomeRatio tosales

Industrial Gas

338.6

21.9

6.5%

362.0

25.8

7.1%

Electronics

98.3

5.2

5.4%

99.0

5.0

5.1%

Energy

44.5

1.6

3.8%

45.0

1.9

4.2%

Other

41.2

3.7

9.2%

44.0

3.5

8.0%

-1.1

Adjustments
Consolidated

522.7

31.4

-1.2
6.0%

550.0

35.0

6.4%

Full-Year Forecasts for FY2015 by Geographic Segment(Billions of yen)

FY2015FY2014
Sales

Operating
IncomeRatio to
sales

Sales
(% change)

Operating
Income(% change)

Ratio to
sales

Japan

358.6

24.7

6.9%

363.0
2.0%

26.0
5.1%

7.2%

North
America

115.8

5.6

4.9%

135.0
16.5%

7.1
24.9%

5.0%

Other

48.1

2.6

5.6%

52.0
7.9%

3.4
27.1%

6.5%

-1.6

Adjustments
Consolidated

522.7

31.4

-1.5
6.0%

550.0
5.2%

35.0
11.1%

6.4%

17

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.

18