Corporate Social Responsibility (CSR) / Environmental and Social Report 2014

The current fiscal year is the first of a new medium-term business plan, which we have positioned as the first step in our drive to attain the targets of our long-term vision

Despite signs of a modest recovery in the United States, the global economy remained generally lackluster in fiscal year 2014, ended March 31, 2014. In Japan, corporate results improved, particularly in export-oriented industries, owing to a weakening of the yen and rising stock prices, but a full-scale economic recovery failed to materialize.

Our operating environment was characterized by an increase in overall demand for industrial gases, bolstered by the U.S. economic recovery and signs of a rebound in the electronics sector in Taiwan. In Japan, the pace of recovery in demand remained gentle, as trends varied from one sector to another.

Our withdrawal from a monosilane gas production joint venture in Japan resulted in a significant extraordinary loss in fiscal year 2013. To clarify management responsibility for this occurrence, and to provide the focus necessary to respond to dramatic changes in key markets, including electronics, we subsequently installed new management. Thanks to prompt and diligent efforts by the new team to resolve urgent issues and swiftly improve profitability, we succeeded in boosting operating income approximately 27% in the period under review.

Having thus accomplished the principal objective of short-term changes, we then turned our attention to addressing longer-term challenges. To this end, in June 2014 a new management team took the reins. At the same time, we introduced a long-term vision, under which we will endeavor to achieve net sales of ¥1 trillion, an operating margin of 10%, a return on capital employed (ROCE) of at least 10%, and an overseas sales ratio of 50% or higher, by the end of fiscal year 2023.

The current fiscal year is the first of a new medium-term business plan, which we have positioned as the first step in our drive to attain the targets of our long-term vision. Guided by the new plan, we will work to solidify our operating foundation, thereby preparing us for the next step forward. We will also promote structural reforms, particularly in Japan, as well as take steps to accelerate the expansion of our operations overseas.

President CEO

Yujiro Ichihara

President CEO

Fulfilling our responsibilities as “The Gas Professionals” to further reinforce safety and product quality management

In the near future, our relationship with our principal shareholder, Mitsubishi Chemical Holdings Corporation, will change from that of equity-method affiliate to consolidated subsidiary. We look forward to strengthening our alliance with Mitsubishi Chemical Holdings, which we are confident will yield broad synergies. Of particular note, we expect both companies to benefit from the ability to collaborate more closely in a variety of areas, including the supply of industrial gases to overseas sites belonging to the Mitsubishi Chemical Holdings Group and R&D in cutting-edge fields.

Going forward, we will maintain an unwavering commitment to operating in a manner that ensures operational safety and the quality and safety of our products, as well as enables us to contribute to a healthy environment and manage technological risks associated with the use of intellectual property. We will also continue working to earn the trust of society, as well as to ensure the sound evolution of our businesses and bolster corporate value.

We vow to help reduce the negative environmental impact of human activity and minimize energy consumption through the advancement of gas technologies, as well as through the development of products and technologies that support improved productivity. In addition to implementing the strategies of our current medium-term business plan, we will strive continuously to fulfill the responsibilities implied in our corporate slogan, “The Gas Professionals,” by reinforcing both compliance and product safety and quality management, which we recognize as essential to sustainable growth. By doing so, we pledge to remain a company deserving of the support of our many stakeholders.

It is our hope that stakeholders find this report on the Taiyo Nippon Sanso Group’s environmental and social initiatives both informative and of interest.

October 2014

Yujiro Ichihara
President CEO

President’s Basic Policy on Technological Risk Management

To fulfill the responsibilities implied in our corporate slogan, “The Gas Professionals,” we recognize that we have an obligation to ensure stringent compliance with pertinent laws and regulations and to prioritize the management of key technological risks, i.e., risks related to security, product quality, product safety, the environment and intellectual property. Accordingly, we have formulated the President’s Basic Policy on Technological Risk Management.

We will continue taking steps to minimize such risks and to enhance customer satisfaction across all areas of our operations. These include ensuring the President’s Basic Policy on Technological Risk Management is fully understood and applied by every Taiyo Nippon Sanso Group employee, as well as formulating and implementing a Groupwide technological risk management system and effective business continuity planning (BCP) to guarantee critical operations are maintained in the event of a disruption caused by an earthquake or other major disaster. At the same time, we will work to contribute to greater public safety and environmental preservation, thereby earning the trust of society at large, ensuring the sound growth of our businesses and building greater corporate value.

Safety: Implement decisive, practical measures to ensure the safety of our operations, in line with our belief that selling gas is commensurate with selling safety and peace of mind.
Product quality: Accurately grasp the increasingly sophisticated and diverse customer needs and social imperatives and respond by ensuring optimum product quality.
Product safety: Minimize safety risks at all stages of the product life cycle to ensure the safety and security of the products we supply.
Environment: Take steps to reduce the negative impact of our operations on the global environment and to prevent pollution.
Intellectual property: Obtain and make use of intellectual property rights as necessary to preclude competition with other companies.

(As of June 27, 2014)

Corporate Philosophy "Market-driven collaborative innovation:improving the future through gases"
Corporate Guidelines Progressive United in creativity Forward looking

We pledge to listen to the views of stakeholders and to contribute—through both our gas technologies and collaboration with partners in all industries—to the creation of a spiritually and materially wealthy society.

Corporate Slogan The Gas Professionals

Striving tirelessly to fulfill our potential as industrial gas professionals and as the global leader in this field in terms of both market position and expertise

Corporate Logo
TAIYO NIPPON SANSO The Gas Professionals

Taiyo Nippon Sanso’s corporate logo represents the seamless integration of state-of-the-art technology and nature, as well as the Company’s business domain, founded on its advanced technologies for controlling oxygen, nitrogen, argon and other gases. The logo also evokes the Company’s resolve to achieve growth through superior quality and transparency and to ensure a future that is clean, safe and healthy.