Deepening regional coverage and strengthening the earnings base of the domestic industrial gas business

「In the industrial gas field, domestic demand for industrial gases, particularly from materials industries such as steel and chemicals, is trending downward. The company is using its strong ability and competitiveness in responding to regional supply needs to ensure stable supplies of various gases and capture new demand.」

「In the Industrial Gases field, while demand for industrial gases in Japan, including in materials industries such as steel and chemicals, is trending downward, we will establish a stable supply system for various gases, thoroughly implement price management including a review of low-profitability projects, and pursue measures to strengthen profitability, including improving productivity.」

「As manufacturing capacity in Japan's digital and semiconductor industries continued to expand, the company pursued gas demand by developing new customers and investing in equipment, including the expansion of large-scale plants. It also worked to expand its electronics-related business, including the supply of specialty chemicals and the sale of gas purification equipment.」

「The industrial gas business performed well despite generally weak domestic demand for industrial gases, as the company worked to improve logistics efficiency and reduce costs in response to higher energy and other costs, while price revisions for industrial gases continued to progress and new customers were acquired.」

「As the consolidation and closure of domestic steelworks is expected to tighten argon supplies in the future, the company will strengthen its stable supply system, including by expanding production facilities.」

「AIR WATER INC. Kashima Plant (Kashima, Ibaraki Prefecture) Digital & Industry Argon purification equipment 1,350 August 2023」

「Nihon Dennetsu Co., Ltd. Azumino Plant (Azumino, Nagano Prefecture) Industrial gas-related Construction of a new factory building and installation of production and ancillary equipment 3,500 September 2022」

「Air Water Plant Engineering ㈱ Fukushima New Plant (Koriyama, Fukushima Prefecture) Industrial gases Healthcare Metal can manufacturing equipment 1,436 October 2021」

「Gas supply for electronics applications remained firm as we gradually expanded supply to meet increased capacity and production at domestic semiconductor manufacturers. Gas supplied by tanker trucks and cylinders saw a sharp decline in demand because of production adjustments in Japan's manufacturing sector early in the spring, but signs of recovery emerged from the second quarter onward as the automotive industry recovered, and sales volumes followed a gradual recovery trend.」

「In June this year, the 19th high-efficiency small-scale liquefied oxygen and nitrogen production unit, the "VSU," began commercial operation in Yamagata Prefecture.」

「Against this backdrop, in the domestic business we will continue to expand the network of highly efficient, compact liquefied oxygen and nitrogen production plants known as VSUs, while pursuing stable gas supply and acquiring new demand through the distributed placement of production bases.」

「In the gas business, sales volumes of onsite gas supplied to the steel industry increased, partly because new blast furnaces began operating at major customers. Onsite gas supply to the electronics industry remained generally steady, as major customers' production plants continued to operate at solid levels. Liquid gas supplied by tanker and cylinder remained firm overall, with demand continuing at a solid level despite variations across some regions and industries. Liquefied carbon dioxide and dry ice also performed well, supported by progress in price revisions.」

「Filing company　Amagasaki Gas Center (Amagasaki, Hyogo)　Industrial gases　High-pressure gas production facilities　609　March 2021 山形液酸㈱ (Note)　Head plant (Sagae, Yamagata)　Industrial gases　Medical　High-pressure gas production facilities　2,597　June 2020」

「The tanker and cylinder supply business generally performed well, supported by resilient domestic manufacturing demand from the automotive, chemical and construction-related sectors and the effects of progress in its site strategy centered on deploying the highly efficient, compact VSU liquid oxygen and nitrogen production plant. Carbon dioxide, for which supply and demand remained tight, also performed steadily as sales volumes increased following the production capacity expansion implemented in the previous fiscal year. Hokkaido Air Water Co., Ltd. | Analysis Center | New analysis center | 1,089 | April 2019 Chubu Air Water Co., Ltd. | Head office | Nagoya Filling Plant | Head office office | Filling plant | 1,520 | June 2020 Tohoku Air Water Co., Ltd. | Akita Gas Center | Filling plant | 563 | September 2019」

「Tanker and cylinder supplies, primarily handled by 8 regional operating companies nationwide, performed steadily. In addition to continued firm gas demand across a broad range of domestic manufacturing industries, including automotive, chemicals, and construction, performance benefited from progress in the site strategy centered on the rollout of the high-efficiency small VSU liquid oxygen and nitrogen production plant.」

「During the first quarter of the current consolidated fiscal year, the following newly finalized plans for major capital expenditures were identified: Reporting company, Kakogawa Plant (Kakogawa, Hyogo), industrial gas-related, rare gas production equipment, ¥604 million, scheduled for completion in March 2019; Koshinetsu Air Water Co., Ltd., Yamanashi Plant (Minami-Alps, Yamanashi), industrial gas-related and medical-related, filling plant, ¥1.17 billion, scheduled for completion in March 2019.」

「During the consolidated fiscal year, the 15th domestic VSU began operations following the replacement of the plant at the Utsunomiya Plant, and construction of the 16th VSU was also launched in Iwate Prefecture.」

「Industrial gases benefited from the “VSU” strategy, which aims to deepen the domestic gas business by expanding gas production sites centered on high-efficiency, small-scale VSU plants for producing liquefied oxygen and nitrogen, while the eight regional operating companies nationwide strengthened ties with leading local partners. Together with continued resilient gas demand across a broad range of domestic manufacturing industries, including steel, chemicals, automobiles, and construction, this enabled the regional gas businesses, centered on tanker and cylinder supply, to perform generally well.」

「Regional gas businesses, centered on tanker and cylinder supply, generally remained solid as domestic manufacturing activity continued to be firm. Sales of gas application products, including dry ice snow precision cleaning systems, also increased.」

「Against this backdrop, the Industrial Gases-related Business actively pursued the development of new gas demand, including proposals for gas applications centered on 8 regional operating companies nationwide, against a backdrop of resilient gas demand from Japanese manufacturers. As a result, industrial gas sales volume remained solid.」

「Against this backdrop, we promoted proposals for gas applications and the development of new gas demand. We also installed 2 VSU plants for producing liquid oxygen and nitrogen in Kyushu, expanding our production base, while thoroughly advancing the development of a structure capable of responding accurately to regional industrial demand through collaboration with partner companies.」

「The 9 regional operating companies across Japan at the forefront of the group's sales activities steadily expanded opportunities for new gas supply by responding nimbly to customers' relatively solid capital investment in renewals and consolidation. Following VSU No. 13 in Nagasaki, which began operating last July, VSU-A No. 14 in Omuta, Fukuoka Prefecture, completed trial operations in December.」

「The nine regional operating companies nationwide also actively pursued proposals to support customers' production activities, securing new customers and creating new demand for gas. The VSU No. 13 unit, which began operations in July this year, is another company initiative aimed at meeting regional demand with a stable supply.」

「Gas supply performed generally well as proactive sales initiatives, including demand creation by regional operating companies nationwide and the acquisition of new customers for small on-site plant supply, proved successful.」

「In the industrial gases-related business, the company will further deepen its regional businesses by investing in expanded production and filling facilities and strengthening collaboration with leading partners in each region, thereby further reinforcing its domestic earnings base.」