Air Water : Financial Summary Results of FY2017 full-year

Date: May 11, 2018

CONSOLIDATED FINANCIAL RESULTS（NEWS FLASH）

AIR WATER INC.

Head Office: 12-8, Minami semba 2-chome,

Chuo-ku, Osaka, Japan

Results for the year Ended March 31, 2017

1. Analysis of operating results and financial standing (1) Analysis of operating results

1) Operating results for the current period

The Japanese economy in the current consolidated fiscal year was on a gradual recovery trend, with further improvements in the employment and income environment and steady performance in consumer spending and corporate capital investment. With regard to overseas economies, although concern due to the U.S. trade policy responses and increasing geopolitical risks in some countries and regions still exists, the U.S. and European economies performed strongly, and economies in China and other emerging countries in Asia also showed continued moderate recovery.

In such a business environment, each business segment of our corporate group steadily promoted various implementation measures set out in our three-year mid-term business plan "NEXT2020 - Ver. 3," which is currently in its second year of implementation, by placing the wheels of "structural reform of existing businesses" and "growth strategies through M&A" on the axle of our growth strategies. Also, we reorganized our business portfolio including the establishment of a new logistics company, and reinforced our regional business strategies, with focus placed on assigning regional representative directors to maximize the group's comprehensive strength through the fusion of our group's diverse range of business bases and functions of our eight regional business companies across the country. Further, as a measure to foster new businesses, we steadily implemented initiatives to strengthen our electricity generation business and overseas strategies.

With regard to results for this consolidated fiscal year, our industrial gas business saw strong performance in its regional gas businesses which center on gas supply service using tanker lorries and cylinders, backed by continued steady gas demand from a broad range of domestic manufacturing sectors, but the results remained at the same level as in the previous year due to the rise in electricity prices and also because of the impacts of fluctuations in operations on our on-site gas supply service to blast furnaces caused by facility problems at our customers' plants.

On the other hand, in addition to satisfactory performance in our medical business which is positioned as a future growth area and have been expanded through aggressive M&A's and also in our agriculture and food product business, the strong performance in each of the businesses that constitute our other business segment drove overall expansion of results, which demonstrated the strength of our group's management strategies of "All Weather Management System" and "Order Rodentia Style of Business." Our chemical business, which had been suffering from sluggish performance, particularly in the tar distillation business until the previous fiscal year, saw further improvement in results due to a recovery in market conditions of our products and progress made in the structural reform of the functional chemicals sector.

As a result, for the current consolidated fiscal year, the group's sales were ¥753,559 million (112.4% that of the previous year), operating income was ¥42,398 million (102.6%), ordinary income was ¥44,691million (108.3%) and net income attributable to owners of parent was ¥25,173 million (112.7%)

2) Consolidated results by segment for this period

Due to changes in the structure of our group's organization, our "Logistics Business," which was previously included in our "Other Business," is now separately presented as a reporting segment, effective the first quarter consolidated cumulative accounting period.

Also, the business results management segments were changed, so that Air Water Materials Inc. and other eight companies, which were previously classified under "Industrial Gas Business," have been re-classified into "Other Business."

Financial profit and loss including funding costs, which were previously presented in each segment, have collectively been recorded as "Adjustments."

The segment information for the previous year's consolidated cumulative period has been revised in accordance with the above new reporting segment classification and calculation method

（Millions of yen）

Ordinary income

Adjustments to ordinary income are due to costs, profit/loss from financial operations, etc. which were incurred at the company headquarters and research and development division and which were not allocated to any reporting segment.