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Business Performance for the FY 2006 First Half
(on a consolidated basis)
1. Consolidated Results for the First Half of Fiscal 2006
(April 1 to September 30, 2006)

(1) Operating results

(¥ million)
Net sales
Operating profit
Recurring profit
Net income
Reporting 1st-half period Previous 1st-half period
(¥ million) (%)
215,388 16.1 185,444 --
(¥ million) (%)
18,054 48.6 12,150 --
(¥ million) (%)
18,805 53.3
12,265 --
(¥ million) (%)
9,546 48.6
6,424 --
Previous term

397,308
26,788
27,115
14,444

Net income per share (¥)

Basic
Diluted
Reporting 1st-half period Previous 1st-half period
(¥)
23.72 15.93
(¥)
-- --
Previous term
35.45
--
Notes:

1)
Gains on equity-method investments
Reporting 1st-half: ¥780 million; Previous 1st-half: ¥196 million; Previous term: ¥779 million
2)
Average number of shares issued during the term (consolidated)
Reporting 1st-half: 402,545,123 shares; Previous 1st-half: 403,105,140 shares; Previous term:
402,876,108 shares
3)
Changes in accounting standards: None
4)
Percentage figures indicate year-on-year changes. For the previous first-half period, year-on-year comparison is not available as the Company was created through merger of Nippon Sanso Corporation with Taiyo Toyo Sanso Co., Ltd.
as
of October 1, 2004.





























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(2)Segment Information

Previous 1st-half period (April 1 to September 30, 2005)


(¥ million; rounded off amounts less than one million yen)
Gas Business
Machinery
&
Equipment
Business

Housewares Business and Others
Total
Eliminations and corporate
Consolidated
Sales (1) Sales to customers (2) Sales from inter-segment transactions and transfers

124,936
79
52,610
3,103
7,897
42
185,444
3,226
--
(3,226)
185,444
--
Total
125,016
55,714
7,940
188,670
(3,226)
185,444
Operating expenses
114,644
54,108
6,682
175,436
(2,142)
173,293
Operating profit
10,371
1,605
1,257
13,234
(1,083)
12,150
Reporting 1st-half period (April 1 to September 30, 2006)
(¥ million; rounded off amounts less than one million yen)
Gas
Business

Machinery
&
Equipment
Business

Housewares
Business
and Others

Total
Eliminations
and corporate

Consolidated

Sales (1) Sales to customers (2) Sales from inter-segment transactions and transfers

148,424
47
58,239
6,619
8,724
69
215,388
6,736
--
(6,736)
215,388
--
Total

148,472
64,858
8,794
222,125
(6,736)
215,388
Operating expenses

134,057
59,962
7,461
201,481
(4,147)
197,333
Operating profit

14,414
4,896
1,332
20,643
(2,588)
18,054









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2. Basic Business Policy

1) Management Strategy over the Medium-to-Long Term, and Target Business Indicators

The management of the Taiyo Nippon Sanso Corporation (TNSC) Group is pursuing a strategy of
developing its industrial gases business toward the long-term goal of achieving global operations on a
par with the world’s leading industrial gas manufacturers. Our principal specific target is annual sales
of ¥500 billion. This plan is known as “Global 5000,” as 500 billion in the Japanese numbering
system is 5,000 oku yen. The first phase of this plan has been drafted as the medium-term business
plan, covering the three years from fiscal 2006 through 2008, under the name “Global 5000: Stage 1.”
By attaining the objectives of this Global 5000 plan, we will become the Asian industrial gas
provider to break into the industry’s global top ranks. A significant milestone along the road to our
ultimate goal will be our projected business results (on a consolidated basis) for fiscal 2008 (the term
ending March 2009), when we anticipate sales of ¥450 billion, net income of ¥20 billion, and ROE of
10%.

2) Issues Faced by the TNSC Group
One of the most significant long-term plan of the management of the TNSC Group is to acquire a 10%
share of the world market for industrial gases, putting our operations on a par with those of the current
leading overseas industrial gas manufacturers.

We have decided on a target, for the time being, of annual sales of ¥500 billion on a
consolidated basis, and as a primary-phase assault on that objective, we designed and put into effect
from May of 2006 the “Global 5000: Stage 1” medium-term business plan, with which we intend to
maximally leverage the synergies that have resulted from the merger of Taiyo Toyo Sanso with Nippon

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Sanso. Specific numerical targets set for attainment by the end of fiscal 2008 include yearly sales of
¥450 billion and net income of ¥20 billion, and we are currently implementing measures to ensure that
these goals are reached.

To realize the significant growth required to achieve these targets, we will maintain our
current strategies of marketing through the dual channels of our domestic-market sales agent
association and direct sales to major customers, with whom we are constantly working to forge closer
relationships. At the same time, we will seek out promising M&A target companies in the industrial
gases industry.

Overseas, our principal focus is on the North American and East Asian markets. In North
America, we will be constantly on the lookout for powerful new partners in the form of gas sales
companies with potential high profitability. We will also actively invest management resources in
improving our technical capabilities to enable us to produce high-quality material gases for the
manufacture of advanced electronic devices.

For major users in the steel, electronics, and petrochemical industries, which are enjoying
firm upward trends in business performance, we are working to ensure that our production capacity is
always sufficient to meet potential user needs, enabling us to take our business results to the next
level. One of most important measures in this respect is our never-ending investment in further
improving our services in the onsite plant business and in our gas supply facilities.

Meanwhile, we are also setting the standard for competition in a new field with our
development of MOCVD (metal organic chemical vapor deposition) equipment for manufacturing
gallium nitride compound semiconductor devices. We are already fielding a brisk inflow of inquiries
regarding the use of this equipment in the manufacture of white LEDs and blue-ray LD for next-
generation DVDs. In this field, we have already developed a cutting-edge MOCVD equipment model
that is capable of wafer mass production, and this is expected to fully meet the current demands of the
market.

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With regard to the reliability and safety of our industrial gases and their supply systems, upon
which the prosperity of any industrial gas maker stands or falls, we have taken every possible step to
ensure that our safety management system is foolproof. In environmental matters, too, we are working
toward the acquisition of ISO14001 certification for the entire Company. This is only one part of our
concerted efforts to rigorously enforce the principles of compliance, as embodied in its Compliance
Guidelines, throughout the whole TNSC Group.