Taiyo Nippon Sanso (TNSC), Japanese multinational industrial gas manufacturer, has reported consolidated finacial results for the first half of 2019.

TNSC Q2 2019 revenue stands at 329.4 compared to Q2 2018 revenue of 305.7, a YoY increase of 23.7 or 7.8%. The core operating income for Q2 2019 is 28.1 compared to 29.3 for Q2 2018, a decrease of 4%.

Business performance by segment

Japan revenue for the FYE2019 Q2 was 171.9 compared to 158.7 in FYE2018, representing an increase of 13.2 or 8.3%. Contributing towards this revenue increase was the JFE SANSO CENTER Kurashiki Factory which experienced favourable sales of laser cutting equipment (for metal processing) and electronics gases. 

Costs are set to increase further for the segment due to rising crude oil prices and increased costs for carbon dioxide (CO2) due to a lack of a raw material gas in the first half of the fiscal year. Lower segment income is also anticipated based on decreased revenue from electronic gases and the effects of the acquisition of IMI Co., a medical equipment sales company. 

The US business incurred revenues of 91.4 for 2019 compared to 84.3 in the prior year, representing an increase of 7.1 or 8.4%. This can be attributed to increased shipments of air separation gases, plus increased shipments of CO2, due partly to an increase in production capacity. 

Asia and Oceania revenues increased to 52.3 in 2019 compared to 49.5 in the prior year, representing an increase of 2.8 or 5.7%. This is due to stronger-than-expected recovery in business performance at Leeden NOX. China industrial gases to post increased segment income based on improved market conditions and electronics gases in East Asia are to perform favorably as planned.

The Thermos Business revenues increased from 13.0 to 13.5 in 2019, representing a 4.1% improvement. 

Overview of forecasts for the full-year

TNSC has forecasted full-year 2019 revenues of 670.0, a YoY increase of 23.8 or 3.7%. Core operating income is forecasted to increase from 60.0 to 64.0 in 2019, an YoY improvement of 6.6%. 

Business expansion initiatives

TNSC hopes to develop the medical business into one of the company’s core businesses. It will effectively utilise external resources through M&As and alliances, with the aim of expanding business in existing fields and capturing business in new fields. Through the acquisition of IMI, the company will seek to capture synergies between IMI and Taiyo Nippon Sanso Group, thereby gaining a solid foothold in the medical equipment business.

In August 2018, the company acquired Weld Specialty in order to establish a nationwide production and sales programme in the US by expanding business fields and increasing the density of operations through M&As and capital investments in ASUs.

TNSC announced that it had executed a share purchase agreement to acquire the shares of the corporations running certain European businesses of Praxair. Now that all of the conditions for the acquisition of the European businesses have become clear, TNSC has entered the final stages of closing the deal.

The acquisition will give TNSC a solid position as an industrial gas manufacturer in Europe, a region it has not yet entered.

The acquisition covers the shares of companies engaged in the industrial gas business (including the CO2 business) undertaken by the US company Praxair in 12 European countries and companies engaged in helium-related businesses.