AIR WATER INC. 02
Business
37 Management Messages
39 Digital & Industry
41 Energy Solutions
43 Health & Safety
45 Agriculture & Foods
47 Other
Wellness
Global Environment
01 Vision & Strategy 02 Business
Management Messages
03 ESG
Social Issues and Market Environment
In the global environment field, the Digital & Industry (D&I) Group and Energy Solutions (ES) Group have their sights set on contributing to the realization of a digital and green future and a decarbonized and circular economy society.
The D&I Group is contributing to a digital and green future mainly by providing a wide variety of gases and chemical products for semiconductor manufacturing that will underpin the evolution of digital technology. Although the conventional boom-and-bust silicon cycle of every few years is still subject to inventory adjust-ments, the market is currently shifting to a so-called "ultra-super cycle" in which semiconductor demand will continue to steadily expand on the whole. In addition, the development of materials that can deliver high performance and energy savings is also a key market topic if we are to reduce power consumption as digitalization becomes further entrenched in society.
In the area of decarbonization and circular economy-the core focus of the ES Group-the switch from fossil fuel energy sources to those that produce fewer CO2 emissions, like
LNG and hydrogen, is gaining traction. At the same time, in heeding the lessons learned from the natural disasters that have occurred frequently ever since the Great East Japan Earthquake, momentum is building for the optimal utilization of various energy sources taking into account regional characteristics, as well as greater efficiency, risk diversification, and less environmental impact in the energy supply. Accordingly, society's attention is turning to circular economy models that leverage local energy for local consumption.
Strengths and Key Measures
The D&I Group intends to build a new business model and strengthen its development capabilities by combining the Industrial Gas Business, which is omnipresent in a myriad of industries, with the materials development-oriented Chemical Business. Particularly when it comes to semiconductor manufac-turing, we will seamlessly manage products for both front- and back-end processes so that we can approach customers and develop products with a commanding view of all processes and look to expand our business scope to peripheral domains. Morespecifically, we intend to scale up our supply of gases, primarily nitrogen and argon, to support front-end processes, while for the semiconductor value chain, we will work on bolstering our technological and development capabilities in the areas of devices and components for semiconductor manufacturing equipment and functional materials and mounting substrates that support back-end processes. We will also seek to further reorganize our businesses and actively undertake M&As.
Alongside the transition to cleaner energy, we believe the ES Group has a business opportunity to shift to a circular economy energy system for local production and local consumption by utilizing its strength of already possessing regional business platforms. Accordingly, we will position our conventional Lifestyle and Energy Business, which is mainly focused on the supply of LP gas, as an environmental business. Also, carbon dioxide gas and hydrogen in the Industrial Gas Business will be framed as our circular economy business. Based on this restructuring, we will aim to build a circular economy model that harnesses local energy for local consumption. In addition, we will actively push ahead with the development of technology that is supportive of low-carbon and carbon-free technologies, including CO2 separation and recovery, and open up new energy fields, like biogas for example, by drawing primarily on the separation and refinement technologies we have hitherto honed in the Industrial Gas Business.
Revenue and Operating Profit TargetsWeighting of Company-wide Earnings in FY2024
(billion yen)
512.0 54.4
Revenue42.7%
Social Issues and Market Environment
In the wellness field, the Health & Safety (H&S) Group and Agriculture & Foods (A&F) Group are taking up the challenge of helping people lead healthy lives by extending healthy longevity, guaranteeing food security, and addressing many other social issues.
Japan is presently on the cusp of a "super-aged" society the likes of which have never been seen before in any country. Ahead of this era of 100-year lives, extending the lifespan and period during which someone can live healthily and independently has become a major challenge for society. In this environment, the role of providing comprehensive community-based health care, including home-based care, rehabilitation, and welfare and nursing care services, is growing increasingly important from the perspective of not only making medical care more efficient and keeping costs down, but also alleviating the burdens on healthcare professionals. And with the global population having gone past the 8.0 billion mark, food security is becoming an increasingly serious issue, especially given the skyrocketing prices of imported agricultural produce owing mainly to the Japanese yen's weakness and deterioration in the Russia-Ukraine conflict. In particular, Japan's calorie-based food self-sufficiency rate has dropped to 38% and a labor shortage in the agricultural sector has also become a real problem as a result of the falling birthrate and aging population.
Strengths and Key Measures
In anticipation of changes to Japan's healthcare system, which continue45s9t.0o see an increasingly higher weighting of home-based
512.0 54.4
care as the co2u7n.7try's population rapidly ages, the H&S Group will
3840
357.0
399.3look to ex2p88a8nd its businesses centering on regional networks. The 19.0 38.2
Air Water Group has already established a business platform for
Revenue
(Results)
2021
Operating Profit
(Target)
2024
(FY)
Profit
Operating
54.4%
home-based care, mainly through the provision and maintenance of oxygen concentrators, and we also possess the technology to support telehealth services. Leveraging these strengths, we intend to enh20a2n1 ce our presen2c02e4 as a provider of not only acute 20212c0a21re, but a2ls0o24i2n0t2e4grated community care centering on home healthcare. In addition, demand for preventive healthcare for the purpose of disease prevention is also on the rise. We thereforeintend to expand our consumer healthcare offerings centering on oral care and functional food products. As part of this initiative, we plan to open a health & lifestyle open innovation facility, tenta-tively named Air Water in KENTO, in the first half of FY2023 in the city of Settsu in Osaka.
The A&F Group will endeavor to grow its business by solving problems pertaining to agriculture and food by fully capitalizing on its strengths in logistics and processing functions, as well as the brand power of farmed goods from Japan's major producing region of Hokkaido, which boasts approximately one quarter of the country's arable land. On the topic of food security, we will further evolve our processing and storage technologies and ensure the timely supply of crops in light of the supply-demand balance. We will also develop other technologies, such as tem-perature control and soil analysis for smart farming, to not only improve cultivation efficiency, but to reduce the need for farm labor and keep manpower to a minimum. In doing so, we hope to contribute to the advancement of agriculture in regional areas. Furthermore, we will seek to develop processing technologies and the like that can make a difference in reducing food loss and also take steps to utilize energy generated from food residue.
Revenue and Operating Profit TargetsWeighting of Company-wide Earnings in FY2024
(billion yen)
459.0
278
420
(FY)
2021
2024
(Results)
(Target)
Revenue
Operating Profit
Digital & Industry
In targeting the electronics industry-the key area for society's rapid digitalization-we intend to construct a new business model that reflects our strengths in industrial gases and chemicals. And by linking it to the semiconductor manufacturing supply chain, we will seek to capture market opportunities for a smart society that is evolving at an accelerated pace. Also, given our aspirations for further growth, we will press ahead with the expansion of our business platform in India and other locations overseas.
Responding to global structural changes surrounding the semiconductor sector supporting a smart society
terrAWell30 1st stage (2022-2024) Revenue/Operating Profit
FY2024 Revenue and Operating Profit Weightings (as a percentage of company-wide earnings)
384.0
(billion yen)
Revenue32.0%
The digitalization of all kinds of data and information stemming from the use of information technology is transforming today's socio-economic system. In particular, the production and technological innovations in semiconductors and electronic components that serve as the basis for a smart society are the key elements directly linked to the security of society, and unprecedented industry policies are currently being rolled out in the world. It is in this environment that we must reinforce our competitiveness by objectively responding to the structural changes that are under way, including the struggle for technological supremacy between the US and China, how supply chains react to the outcome of that confrontation, and the trends of invest-ment in Japan's semiconductor industry.
(384.0 billion yen)
Key Policy
(FY)
Operating Profit 42.0%
(42.0 billion yen)
By building a new business model combining the industrial gas business, which widely penetrates into all industries, with the materials development-oriented chemical business and strengthening our development capabilities, we will look to gain a foothold in the semiconductor manufacturing supply chain and open up new markets from two angles: expanded production capacity and increased functionality.
1 Strengthening our capacity to provide materials to the electronics industry
Opportunities () / Risks ()
• Develop semiconductor and electronics materials by combining the know-how and technologies of the Functional Materials B.U. and Electronics B.U. (previously part of the Chemical and Industrial Gas Businesses, respectively)
• Further the system integration of the equipment/device business to provide high value-added services with enhanced capability to offer mixed proposals
2 Expanding our global business
• Secure new on-site project orders for steelworks in India and build production and logistics infrastructure by way of area-wide site expansion
Strengths
• Promote sales of highly functional materials to overseas electronics customers
3 Improving profitability in Japan
• Wide-ranging lineup of products and services to support the semiconductor manufacturing value chain, including industrial gases, related equipment, and chemical materials
• Boost sales of mainly highly functional materials and supply equipment primarily by expanding the scale of gas supply to domestic semiconductor manufacturers
• Stable supply system comprising a decentralized network of manufacturing, storage, and logistics hubs optimally located throughout Japan
• Raise prices of mainly industrial gases and chemical materials to accommodate higher electricity and energy prices
• Meet gas demand by expanding and optimally locating sites, including the securing of argon gas sources
• Business stability backed by a high market share in industrial gases, phthalic anhydride, sodium acetate, magnesia for electromagnetic steel sheets, and other products
Business Units
Production plant enlargements in anticipation of a semiconductor market "super cycle"
Electronics B.U.
Industrial Gases B.U.
Provides large-scale nitrogen gas supply systems to semicon-ductor manufacturers, and a wide range of other products to the electronics sector, including specialty gases, chemical materials, gas purifiers, and equipment and components for semiconductor manufacturing equipment.
Utilizes a robust supply network linking gas production plants and filling stations nationwide with regional business companies in each region to stably supply oxygen, nitrogen, argon, and various other gases to many different industries.
Functional Materials B.U.
Global & Engineering B.U.
Supports the semiconductor manufacturing value chain with an extensive product lineup, including electronic materials, circuit products, and precision polishing pads; it also meets the broader needs of society by offering featured products in the fields of basic chemicals, functional materials, and food chemistry.
Operates gas supply businesses in India and Vietnam. In India especially, it manages multiple on-site supply projects to meet fervent demand from the country's steelworks and has estab-lished a dominant position as an industrial gas manufacturer.
Gas purifiers for the semiconductor manufacturing process
Nihon Dennetsu Co., Ltd., a manufacturer that commands the leading share of the domestic market for industrial heat control equipment, has constructed a new building specially designed for manufacturing heat controllers for semiconductor manufacturers at its headquarters site in Azumino City, Nagano Prefecture. Japan Pionics Co., Ltd. (trade name changed to Air Water Mechatronics Inc. as of January 3, 2023), a manufacturer of gas purifiers and detoxifying equipment indispensable to the semiconductor manufacturing process, has constructed a new building at its headquarters site in Hiratsuka City, Kanagawa Prefecture, thereby augmenting production capacity by 60%. Both companies are stepping up the gas supply business and also expanding into peripheral fields by constructing large-scale on-site plants in anticipation of rapid growth in the semiconductor market.
42.0 | |
27.8 | |
2021 | 2024 |
(Results) | (Target) |
Operating Profit Margin FY2021 9.6%FY2024 10.9%
Policies and Strategies
• Growing electronics-related demand driven by digitalization in society ()
• Increasing need for development of highly functional materials that help conserve energy consumption ()
• Rising demand for industrial gases in India for steelmaking and other applications ()
• Impacts of fluctuating power costs on industrial gas production costs ()
• Stronger demand for environmentally friendly products owing to the advancement of a circular economy ()
Social Issues to AddressTowards a smart society
Ongoing electrification and digitalization of transportation, services, and all other industries, not just manufacturing
Greater demand and increased functionalitySpread of digital infrastructure and data industries
Towards a decarbonized society
Greater energy efficiency driven by digitalization
For a digital and green society
Energy Solutions
Given the rising trend towards a decarbonized society, we will endeavor to transform our business structure from one centered on the sale of LP gas and kerosene to a carbon-neutral energy business. We will also aim to bring about a resource-recycling society by undertaking power generation projects fueled by woody biomass and developing new technologies that fuse together different environmental fields and deploying them in society. For example, supplying carbon-neutral energy derived from bio-mass whilst capturing and utilizing the CO2 emissions.
Towards the realization of carbon neutrality by 2050
terrAWell30 1st stage (2022-2024) Revenue/Operating Profit
FY2024 Revenue and Operating Profit Weightings (as a percentage of company-wide earnings)
(billion yen)
The impending crisis of global warming is mounting year after year and society at large is accelerating the push towards decar-bonization, reflected in the Japanese government's commitment to achieving carbon neutrality by the year 2050. We are therefore obligated to further our efforts on decarbonization by developing innovations in manufacturing processes and other technologies such as CCUS*/carbon recycling based on the concrete action plans for each industry set out in the government's Green Growth Strategy for realizing a virtuous cycle between the economy and the environment. We will also need to work on lowering the costs of these technologies with a view to their implementation in society.
128.0
12.4
Revenue10.7%
*Carbon dioxide capture, utilization, and storage
Key Policy
(128.0 billion yen)
2021
2024
(FY)
(Results)
(Target)
Operating Profit 12.4%
(12.4 billion yen)
In light of the decarbonization movement sweeping the world, we have sought to reposition our longstanding hydrogen and carbon dioxide gas businesses within the framework of energy and resource recycling. We will push ahead with the development of carbon-neutral technologies that contribute to less, or zero, carbon emissions and work on deploying them in society at the earliest possible time. Such technologies include the supply of biogas, methane gas, and hydrogen, as well as the capture and utilization of CO2 emissions.
• CO2 collection equipment
1 Transforming to a carbon-neutral energy business
Opportunities () / Risks ()
• Resource recycling and utilization
• Develop businesses to combat climate change, such as CO2 collection and utilization, biogas, and liquefied biomethane
• More carbon-neutral energy proposals and opportunities as the decarbon-ization movement gathers momentum ()
• Establish a local-production local-consumption resource recycling-oriented energy supply model underpinned by our LPG supply network and industrial gas customer relationships
• Decreased use of LPG and kerosene due to population decline and global warming ()
• Energy hydrogen
• Liquefied biomethane
• Smart aquaculture
• Lack of successors to run LP gas dealership ()
2 Rolling out a supply system to regulate the supply-demand balance
• Shortage of carbon dioxide gas feedstock owing to domestic refinery closures or mergers ()
• Volatility in market prices for fuel for power generation and marine trans-portation costs ()
• Carbon dioxide gas: secure feedstock gas sources
• Hydrogen gas: establish a hydrogen supply chain by deploying VHRs, our high-efficiency hydrogen gas generators
Strengths
Producing hydrogen from cow manure
3 Strengthening profitability in existing businesses
(mainly LPG and LNG)
• Greater efficiency with the use of digital services
• Promote the switch to cleaner fuel sources in support of the decarbonization movement and expand sales of LNG equipment
• Use IoT to make the delivery and filling of LP gas cylinders more efficient
CN: carbon-neutral
• Green LPG and promotion of energy savings at home
• Roll out life solution businesses utilizing existing sites
• Mitigate the risk of market price volatility mainly by reviewing the procurement of fuel for biomass power generation
Business Units
Energy B.U.
Resources Recycling B.U.
Proposes various energy solutions that contribute to reductions in environmental impact with a view to carbon neutrality; it also operates locally-based life solution businesses, mainly in Hokkaido and East Japan, handling sales of LPG and kerosene and providing housing renovation services.
Manufactures and sells carbon dioxide gas and hydrogen gas and leverages the business platforms and know-how thereof to proactively develop low-carbon and carbon-free technologies, including CO2 collection, hydrogen energy, and LNG, with the aim of establishing new business models.
Operating Profit Margin FY2021 9.4%FY2024 9.7%
Policies and Strategies
• Carbon-neutral technologies, such as CO2 collection, hydrogen, and LNG accumulated in the industrial gas business and energy business
• Stable supply infrastructure (filling, distribution, and sales) covering 99% of Hokkaido
• Regional business platforms for new business development
Social Issues to Address
Conventional Businesses
Strengths (infrastructure and technology)
Initiatives for carbon-neutral society
Decarbonization
New energy and resource recyclingHousehold energy supply
Development of technologies for the realization of a decarbonized and resource-recycling society
As one initiative for contributing to the realization of a decarbonized society, we developed a small-sized CO2 collection and utilization system called the ReCO2 STATION. It can recover low concentrations of CO2 in exhaust gases emitted from small and medium-sized plants, such as boilers and industrial furnaces, and its best feature is being able to utilize the CO2 to produce dry ice. In the energy unit, Air Water was the first company in Japan to manufacture liquefied biomethane using biogas sourced from cattle manure in the Tokachi region of Hokkaido. We also conducted a feasibility project to see whether it could be used as an alternative fuel to LNG. We delivered our first shipment in October 2022 to Yotsuba Milk Products Co., Ltd., who used the liquefied biomethane as a boiler fuel.
Liquefied biomethane production plant
Health & Safety
This business started out by providing medical oxygen, but it now provides on-site support to medical institutions with such products and services as the construction of hospital facilities, contracted outsourcing of hospital services, and the maintenance of facilities and equipment. It also contributes to health and safety in people's lives with dental and sanitary products, hypodermic needles, home medical care, aerosol products, and even a safety services business.
Contributing to community-based comprehensive care for Japan's super-aged society
terrAWell30 1st stage (2022-2024) Revenue/Operating Profit
FY2024 Revenue and Operating Profit Weightings (as a percentage of company-wide earnings)
(billion yen)
282.0
17.7
Revenue23.5%
In Japan's super-aged society, people of 65 years old or older make up 29.1% of the total population and this percentage will only continue to increase going forward. Given the serious issue of rising healthcare costs, the Ministry of Health, Labour and Welfare is advocating for a community-based comprehensive care system as the best way to deliver home medical care. This concept aims to unite communities with a view to the participation of the elderly in society. We are therefore required to contribute to the establish-ment of a community-based system to provide comprehensive support and services so that senior citizens can live out their twilight years with dignity in familiar surroundings as much as possible.
Key Policy
(282.0 billion yen)
2021
2024
(FY)
(Results)
(Target)
Operating Profit 17.7%
(17.7 billion yen)
Not only will we focus on providing and maintaining the hospital healthcare systems needed in the community, but we will also utilize the business networks that we have developed in the home medical care and dentistry businesses to expand the "homecare" field as well as "wellness" field centering on oral health. To address issues in this so-called "age of 100-year life," we will seek to broaden our business domains, from preventive medicine right through to rehabilitation services, and help bring about an ideal society by working closely with specialty organizations and developing such technologies as telehealth and video equipment.
1 Expanding oral care and home medical care fields
Opportunities () / Risks ()
• Increase share of new oxygen concentrators
• Create new services in the remote (home) rehabilitation business
• Expand sales of dental materials
2 Deepening existing businesses
• Take on new projects for medical services (SPD/sterilization) in step with growing outsourcing demand
• Meet growing demand from data centers and logistics depots for gas-based fire extinguishers in the safety services business
Strengths
• Streamline operations by consolidating and restructuring sites and Group companies
3 Strengthening consumer health
• Comprehensive strengths in various business domains, ranging from acute medical care to wellness and oral care
• Expand contract manufacturing of cosmetics
• Stable medical gas supply system based on an infrastructure network comprising mainly VSUs and filling stations
• Increase overseas sales of beauty and dental needles
• Strengthen profitability through productivity improvements
• Revenue base consisting of businesses in which we boast a high market share, including medical gas and hospital facility construction
• Patient contact points established through home oxygen therapy
• Proprietary technologies in the field of advanced medicine, including dental pulp regeneration therapy
Business Units
Medical Services B.U.
Medical Products B.U.
Provides outsourcing services that support more efficient hospital management and operations, including supply, processing and distribution (SPD) services and the sterilization and disinfection of medical equipment.
Supports the lives of patients by stably supplying medical gas, provides a home medical care service with the use of cutting-edge medical equipment and home oxygen therapy, and also operates a dental materials business.
Consumer Health B.U.
Safety Services B.U.
Provides infection prevention products, oral care products, and other sanitary products, as well as high-quality Japanese-manufactured dental and beauty needles; it also provides an OEM supply of aerosols and liquid-filled products for a wide range of industry applications, such as cosmetics, insecticides, paint, and automobile supplies.
Operates an end-to-end hospital equipment business that handles the design, construction, and maintenance of medical gas piping, operating rooms, and intensive care units, as well as a safety services business that installs mainly gas-based fire extinguishing systems at data centers and other facilities where water cannot be used.
Operating Profit Margin FY2021 6.1%FY2024 6.3%
Policies and Strategies
• Curbing of healthcare costs in Japan ()
• Heightened need for more advanced medical equipment at medical institutions and more efficient hospital operations ()
• Advancements in digital transformation in healthcare ()
• Growing demand for community-based comprehensive care and home medical care ()
• Greater need for nursing care and preventive medicine ()
Social Issues to Address
Incorporation of telehealth and home medical care startup firm Remohab into the Group
In March 2022, we welcomed cardiac-focused telehealth and home medical care startup company Remohab Inc. into the Air Water Group. The company was founded in 2017 by CEO Tatsunori Taniguchi, a cardiovascular specialist. It is currently developing an online-managed heart rehabilitation system with which heart disease patients can perform rehabilitation exercises at home under remote monitoring. Physician-led clinical trials are currently underway with a view to practical implementation in fiscal 2024. Hospitals can monitor their patients in real time with an app that col-lects biological data from a wearable electrocardiograph and IoT-compatible exercise bike. The incorporation of Remohab into the Air Water Group means we can gain entry to the remote communications technology-driven rehabilitation field and further expand our home medical care business.
Conceptual image of system
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AIR WATER Inc. published this content on 29 March 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 March 2023 10:15:14 UTC.
