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ANNUAL REPORT2014Year Ended March 31, 2014
Gas &Energy
Supplying “Gas & Energy” to meet the needs of society
To Our Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . 1
Business Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Iwatani’s Future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
An Interview with the President . . . . . . . . . . . . . . . 5
Performance by Segment . . . . . . . . . . . . . . . . . . . . 8
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Company Information . . . . . . . . . . . . . . . . . . . . . . . . 10
Disclaimer Regarding Forward-looking Statements:This report contains forward-looking statements regarding the Company’s plans, outlook, strate-gies and results for the future that are based on management’s estimates, assumptions and projections at the time of publication. Certain risks and uncertainties could cause the Company’s actual results to differ materially from any projections presented in this report. These risks and un-certainties include, but are not limited to, the domestic and international economic circumstances surrounding the Company’s businesses, competitive activity, related laws and regulations and exchange rate fluctuations.
Ever since its founding, Iwatani Corporation has grown as a company that supplies
gases and energy—resources that are critical to society—by adhering to our universal
corporate philosophy for all employees: “Become a person needed by society, as those
needed by society can prosper.” In the coming years, we will continue our efforts to
enhance corporate value by operating in wide-ranging business fields. We will focus
mainly on our core businesses—the Energy business, which supports the lifestyles of
3.1 million households nationwide through the supply of LPG, and the Industrial Gases
& Machinery business, which supports every manufacturing industry in Japan by
supplying liquid hydrogen, helium, and other high-pressure gases. At the same time,
we will be developing our Materials and Agri-bio & Foods businesses.
For the coming hydrogen society, a goal now close at hand, we will draw fully on the
knowledge and technologies we have cultivated, over many years as a leading supplier of
industrial hydrogen, to press ahead with infrastructure development and contribute to
popularizing and expanding the use of hydrogen, the ultimate clean energy source.
We will further build on our strengths in our core businesses and work to establish
a solid business foundation that can respond to changes in the business environment.
We ask your continued support in the years to come.
To Our Shareholders
Contents
Chairman and CEO
Akiji Makino
1
Business Overview
Today and...
As a unique trading company
with technological capabilities
rarangngee ofof hhigigh-h pressure gases, including
oxoxoxoxoxygygene , nitrogen, argon, and other
air-separation gases as well as hydrogen
and helium, which offer prospects for
future growth. We maainintatainin aa cconstant
quesest t for solutions beeyoyondnd iindndusustrtriaiall
fiefieldlds, mmadadee popossssibibblleleee wwwwwwitittth hh ththt eee apapppplplplplp icici aaa--
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WeWeWeW havavave e e acaca hihhievevedededddd aa sstatablble e e susususupppppppplylylyly oooof f f f f
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susupppporort t wiwiiwidedededede-rr-ranangigiingngngng iiiindndndndndususususstrtrtrt ieieieieesssss
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enenenengagagggagagegegggege iiiinnnn thththhthe e e mamammatetteteriririalalalllssss bububbbb sisineeessss
wowowoworllrlrlrldwdwdwdwdwd ididide,e,e, fffocococusususususususssiniinininnininnggggggg mamamainininininnlylylyylyly oooonnnnn
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smsmararrtptpptptpphohohohohohoneneneeneeeeesss anandd rrerereresisissisinnn rarararaaw w w w w w mamaamamam teteteririalalaa ssss
susususuchchchch aaassss PEPEPEPETTT TT T rererr sisinsssssns..
WeWeWeWeWe pppprororovividede ssafafafaffe eee ananaannddddd rerereeeeliilil abaababbbbleleelelele ffffffoooooooooooood d d byby oopepeeraratitingngg
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ininnclccludududuudinining g g g thththththeeeeee imimimimpopopop rtrt aandnd ssalaalee offfffof vvegegegegeegetabableles,s, mmararararinininninne eee e
prprprprprprprprodododdoddodddodo ucucuccucucuctstststststststst ,, ,, , , anananaaa d d d otototheheher r frfrffrfrozozzozozozenenen fffoooooodd d prprp ododo ucuctsts. . WeWeWeee aaalslsslso o o oo
cococcocontntntntntririririribububububutetetetetee ttttttttoo oooo oo oo pepepepepeepepep opoopopopooopopopopleleeleleeleele’s’s’s’s’s’ssss llllllivivivivivivivivvesesesseseesesese iiinn n n nn aaaaaa nununnunummmbmbmmbererrr oooooof ff fff fofofofofofoododododdod-r-r-r-r-relelelelelelatatatatatatedededededed
fieeldlddss ththroroougugughh hh acacactitittivivitiesessess iinccncncnn ludididiiidiingnggnnngngn ttthehehe ccconononstststruruructcttctioioioonnnnnn anananaaa dddddd
ininststalallalationn oof f plplanant t fafafafafactctcc ororrieiei s.
Since Iwatani became Japan’s first
nationwide supplier of LPG for household
use in 1953, we have been building an
independent and stable supply
structure that extends end to end from
oil-producing countries to our
customers’ kitchens. We support Japan’s
energy infrastructure by building a
disaster-resilient supply system and
diversifying our supply sources.
InInduduststririalal GGasasa ese & Machinen ryryy
MaMaMaMaMaMaMateteteteteteteririririririalalalalaaa ssssss
AgAgAgAgririr -b-bbioio && FFFFoooooooodssds
Energy
2
Yamaguchi Liquid Hydrogen Corporation
Iwatani Industrial Gases Corporation Chiba Plant
Hydro Edge Co., Ltd. (Osaka)
Strengthening of
supply capabilities for the future
Liquid hydrogen is the critical link
between hydrogen production, and
its transport, storage and use
The Iwatani Group, Japan’s only supplier of liquid hydrogen, oper-
ates three hydrogen liquefaction plants in Japan. Sales volume of
liquid hydrogen is increasing each year, and we are considering
constructing a fourth plant to further boost our supply capabili-
ties. As we move forward, we will also consider large-scale
procurement of hydrogen produced overseas.
As demand for hydrogen increases accompanying the populariza-
tion of hydrogen energy, it will become necessary to transport
large quantities of hydrogen. This will require liquid hydrogen. We
will realize a stable supply of inexpensive hydrogen by leveraging
liquid-hydrogen handling technologies developed over many
years to build a supply chain extending from the production of
hydrogen to its transport, storage and use.
A new era of hydrogen power pioneered by
Road to a Hydrogen Society2012 Demand for hydrogen for industrial use
140 million m3
2015 Hydrogen stations
100 locations
Produce Deliver
● Bases for liquid hydrogen production
Semiconductors
Optical fibers
Liquid hydrogen container
Iwatani’s Future
Preliminary
construction of
20 hydrogen
stations by 2015
100%Liquid hydrogen
share
3
Liquid hydrogen is the key to popularization
Liquid hydrogenCompressed hydrogen gas
Measures to promote the use and
application of hydrogen
Hydrogen is attracting widespread attention as the ultimate clean energy source.
The market introduction of fuel cell vehicles that use hydrogen as fuel is scheduled
for 2015, and the size of the hydrogen market is expected to increase more than
fifteen-fold by 2025. The Iwatani Group aims to achieve annual hydrogen sales of
600 million m3 by 2025, including hydrogen for industrial use and for household use.
To that end, we are working to further boost our supply capacities and handling
technologies and to create new markets.
Key characteristics of liquid hydrogen
are high-volume transport,
high-volume storage, and high
purity. Liquefaction of hydrogen gas
reduces its volume by about 800
times, making it possible to increase
transport efficiency approximately ten times compared
to compressed hydrogen gas. Liquefaction also makes it
possible to satisfy the requirement for high quality.
Hydrogen liquefaction is an essential technology for the
realization of a hydrogen society.
The development of hydrogen infrastructure is necessary for
popularizing fuel cell vehicles, and Iwatani plans to construct 20
hydrogen stations by 2015. We also leverage our technological
expertise to sell equipment and consult on engineering for
hydrogen stations being built by other companies, and to promote
the use and application of hydrogen energy.
...future2025 Demand for hydrogen
for fuel cell vehicles
2,400 million m3
Hydrogen stations
700 locations
Use
Opening ceremony at Amagasaki Hydrogen Refueling Station
Targeting annual
hydrogen sales
of 600 million m3
by 2025
Transport efficiency
Approx.
10 times
99.9999%High purity
4
Question 1
Answer
An Interview with the President
Business conditions in Japan appear to be headed toward a full-scale recovery. In
this environment, we forecast higher profit, mainly from our two core businesses:
the Energy business and the Industrial Gases & Machinery business. In the Energy
business, we will work to enhance earning power by continuing efforts to increase
the number of LPG consumer households and strive to establish a stable supply
structure by beginning importation of LPG from the U.S., as well as other means. In
the Industrial Gases & Machinery business, we will work for expansion of the business
base by leveraging the Iwatani Group’s strengths. These include helium, for which
we have undertaken all-out strengthening of supply capabilities, and liquid hydrogen,
for which we have a high market share.
We plan to increase net sales by ¥20.9 billion and operating income by ¥1.0
billion through these initiatives.
The year ended March 31, 2014 (fiscal 2013) marked a solid start for the PLAN15 medium-term management plan. In the first year of the plan, Iwatani exceeded the targets for net sales, operating income, ordinary income, and net income announced at the beginning of the term. In fiscal 2014, we will continue efforts to enhance corporate value by enhancing of capacity for sustained growth and strengthening of the financial standing.
What is the outlook for fiscal 2014?
0
200
800
(¥ billion)
¥20.9 billion up
400
600
(FY) ’13 ’14 (Forecast)
¥1.0 billion up
0
5
25
20
10
15
(¥ billion)
(FY)
’13 ’14 (Forecast)
Net Sales Operating Income
■ Energy ■ Industrial Gases & Machinery■ Materials ■ Agri-bio & Foods■ Others
■ Energy ■ Industrial Gases & Machinery■ Materials ■ Agri-bio & Foods■ Others
President Masao Nomura
5
Question 2
Question 3
Answer
Answer
The Iwatani Group began purchasing helium from Qatar in July 2013. Procurement
from Qatar will increase in fiscal 2014, when purchasing will extend throughout the
full year. This, together with procurement from the U.S., will give Iwatani approxi-
mately 8% of world supply capabilities. We will work to ensure stable supply in Japan
while also proceeding with sales expansion in growth markets such as China and
Southeast Asia.
Our strategy for the distribution system is to work to strengthen the supply
structure and increase profitability by making continuous investments in helium
containers and developing distribution bases.
We will also undertake long-term reinforcement of our supply capabilities by
working to secure new procurement sources.
What is Iwatani’s sales strategy for helium?
Iwatani will import LPG sourced from shale gas from the U.S. beginning in fiscal
2014, and plans to import approximately 88,000 tons in the first year. Since this is a
small portion of the volume we handle, we expect the impact on our business
performance to be slight.
Since we currently rely heavily on LPG imports from the Middle East, we will
work to reinforce a stable supply structure by diversifying supply sources.
What is the plan for importing LPG from the U.S.?
LPG export terminal (Houston)
Volumehandled:
Approximately 8% of
world supply capabilities
The U.S.
Qatar
● Bases for helium distribution
6
Question 4
Question 5
Answer
AnswerThe Iwatani Group has a basic policy of reliably paying stable dividends. Our goal is
to provide appropriate shareholder returns, paying careful consideration to the
outlook for business results and the business environment. We paid a dividend of ¥7
per share for fiscal 2013. We plan to pay a dividend of ¥7 per share for fiscal 2014.
Iwatani will continue efforts to enhance corporate value as a company needed
by society. I request the continued understanding and support of our shareholders
in the coming years.
What is Iwatani’s dividend policy?
Iwatani aims to construct 20 hydrogen stations by fiscal 2015. The first of these,
Japan’s first commercial hydrogen station, opened for business within the Iwatani
R&D Center in Amagasaki City in July 2014. Since this station is supplied with liquid
hydrogen, it has the supply capacity to support high-volume consumption. In
addition, we plan to build a hydrogen station within Kansai International Airport to
supply buses and work vehicles. With the Tokyo Olympics fast approaching, we will
also proceed with construction of a hydrogen station in central Tokyo, where early
uptake of fuel cell vehicles is expected.
What is the current status of hydrogen station construction anticipating the market introduction of fuel cell vehicles?
Dispenser at commercial hydrogen station
An Interview with the President
7
Operating Income
Operating Income
Operating Income
Operating Income
Net Sales
Net Sales
Net Sales
Net Sales
Despite the impact of a decline in the per-unit con-
sumption of residential and commercial customers
and a review of less-profitable wholesale trading,
Iwatani strove to boost earning power through
continued expansion of the number of LPG con-
sumer households and operating cost reductions. In
addition, sales of LPG emergency power genera-
tors, photovoltaic power generation equipment,
and other energy-related equipment increased. As
a result, operating income rose by approximately
¥1,000 million.
Despite the continued impact of increases in electric-
ity charges, sales of industrial gases were stable,
thanks to a trend toward recovery in plant opera-
tion at domestic manufacturers and higher demand
overseas and other reasons. Sales of helium greatly
increased as supply from Qatar began. In the hydro-
gen business, the sales volume of liquid hydrogen
increased. In the machinery and facility business,
sales of hydrogen-related facilities increased as well.
As a result, operating income rose by approximately
¥800 million.
Sales of functional films for smartphones in the
electronic materials business were strong. Profit
improved in the resources and new materials busi-
ness due to factors including recovery in the mineral
resource raw materials business in Western Australia.
Sales of stainless steel increased in the metals busi-
ness. In the functional plastics business, profitability
of plastics products declined due to soaring raw
materials prices, despite strong sales of PET resin
and other resin raw materials. As a result, operating
income rose by ¥800 million.
Although profitability in the foods business de-
creased due to factors including the impact of cost
increases in producing countries and exchange
rates, sales of frozen vegetables and marine products
increased. In the agriculture and livestock business,
sales of plant factories, livestock raising facilities, and
other products were favorable. As a result, operating
income rose by approximately ¥68 million.
Energy
Industrial Gases & Machinery
Materials
Agri-bio & Foods
● LPG for household, commercial and industrial use
● LPG-supply equipment and facilities● LNG● Petroleum products● Household kitchen appliances● Home energy components● Daily necessities● Portable cooking stoves● Gas canisters● Mineral water, etc.
● Air-separation gases ● Hydrogen● Helium ● Other specialty gases● Gas-supply facilities ● Welding materials● Welding and cutting equipment● Industrial machinery and facilities● Industrial robots● Pumps and compressors● Disaster prevention equipment● High-pressure gas equipment● Semiconductor manufacturing equipment● Electronic-component manufacturing equipment● Factory automation systems● Medicine and food packing machinery● Environmental equipment, etc.
● Stainless steel● Non-ferrous metals● Functional plastic products● Electronic display materials● Mineral sand● Rare earth metals, etc.
● Frozen vegetables and fruits● Health foods● Livestock-related products● Agri-bio related goods● Food plant sanitation management, etc.
Segment Performance Review
Percentage of Net Sales
■ Energy ■ Industrial Gases & Machinery
■ Materials ■ Agri-bio & Foods ■ Others
Performance by Segment
0
100,000
200,000
300,000
400,000
0
3,000
6,000
9,000
15,000
12,000
386,718386,718
12,075
’12 ’13 ’12 ’13
(¥ million) (¥ million)
(FY) (FY)
0
40,000
80,000
120,000
160,000
0
1,000
2,000
3,000
5,000
4,000
151,474 4,753
’12 ’13 ’12 ’13
(¥ million) (¥ million)
(FY) (FY)
0
50,000
100,000
150,000
0
1,000
3,000
2,000
126,885 2,683
’12 ’13 ’12 ’13
(¥ million) (¥ million)
(FY) (FY)
0
10,000
20,000
30,000
0
200
600
400
26,378573
’12 ’13 ’12 ’13
(¥ million) (¥ million)
(FY) (FY)
54.9%21.5%
18.0%3.8%
1.8%
(Years ended March 31)
8
2010 2011 2012 2013 2014 2014
For the year ¥ million US$ thousand
Net sales ¥ 555,477 ¥ 618,844 ¥ 661,185 ¥ 657,006 ¥ 703,923 $ 6,839,516
Gross profit 133,204 138,608 144,432 139,763 146,792 1,426,272
Operating income 13,732 14,868 19,171 16,709 18,518 179,926
Ordinary income 13,448 15,590 19,528 17,406 19,258 187,116
Income before income taxes and minority interests 12,903 12,850 19,535 15,465 18,302 177,827
Net income 5,539 6,193 10,543 8,026 10,466 101,690
Comprehensive income 4,888 10,508 13,691 16,384 159,191
R&D expenses 751 611 572 683 1,368 13,291
Ratios % %
Net income to net sales 1.0 1.0 1.6 1.2 1.5 1.5
ROE (net income to net assets) 9.6 10.0 15.7 10.4 11.6 11.6
ROA (ordinary income to total assets) 3.7 4.2 5.1 4.5 4.8 4.8
Equity ratio 16.6 16.9 18.4 21.5 23.2 23.2
Per share data Yen U.S. dollars
Net income 22.22 25.21 43.24 32.88 42.53 0.41
Shareholders’ equity 248.03 257.80 292.28 337.74 393.15 3.81
Cash dividend applicable to the period 8.00 6.00 7.00 7.00 7.00 0.06
At year-end ¥ million US$ thousand
Total assets 366,110 373,940 386,127 386,302 416,219 4,044,102
Fixed assets 198,971 197,811 200,354 207,523 214,724 2,086,319
Interest-bearing debt 158,998 166,108 159,398 151,378 161,099 1,565,283
Net assets 67,999 71,249 79,551 90,903 105,058 1,020,773
* The U.S. dollar amounts have been translated at the prevailing exchange rate as of March 31, 2014, which was ¥102.92 to US$1.00.
Net Sales (¥ million) Operating Income (¥ million) Net Income (¥ million)
Total Assets (¥ million) Net Assets (¥ million)
Financial Highlights
0
100,000
’10 ’11 ’12 ’13 ’14
700,000
600,000
500,000
400,000
300,000
200,000
0
5,000
20,000
15,000
10,000
’10 ’11 ’12 ’13 ’14
0
100,000
500,000
300,000
400,000
200,000
’10 ’11 ’12 ’13 ’140
30,000
120,000
90,000
60,000
’10 ’11 ’12 ’13 ’14
0
4,000
2,000
12,000
8,000
10,000
6,000
’10 ’11 ’12 ’13 ’14
(Years ended March 31)
9
Share Information
Company Information
Share listing Tokyo, Nagoya Shares of common
stock issued and outstanding
246,385,997 (4,979,031 shares of treasury stock excluded)
Agent to manage
shareholders’ registryMitsubishi UFJ Trust and Banking Corporation
Distribution
of shares by type
Major shareholders*
Change in share price
* In addition to the above, the Company holds 4,979,031 shares of treasury stock.
Individuals and others 32.68% Financial institutions 27.85% Other institutions 25.42% Foreign institutions and others 12.64% Securities companies 1.41%
Share Price (Yen) Trading Volume (Thousand shares)
Name Formal establishment February 2, 1945
Headquarters
Osaka Head Office6-4, Hommachi 3-chome, Chuo-ku, Osaka 541-0053, Japan Tel: 81-6-7637-3310Tokyo Head Office21-8, Nishi-Shimbashi 3-chome, Minato-ku, Tokyo 105-8458, Japan Tel: 81-3-5405-5711
Company directors
and auditors
Paid-in capital 20,096 million yen Number of employees 8,741 (consolidated)
Website http://www.iwatani.co.jp/eng/
Company Information
[2011] [2012] [2013] [2014]
Jan.Feb.M
ar.A
pr.M
ayJun.Jul.A
ug.Sept.O
ct.N
ov.D
ec.Jan.Feb.M
ar.A
pr.M
ayJun.
Jan.Feb.M
ar.A
pr.M
ayJun.Jul.A
ug.Sept.O
ct.N
ov.D
ec.Jan.Feb.M
ar.A
pr.M
ayJun.
Jul.A
ug.Sept.O
ct.N
ov.D
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400
200
0
600
800
0
50,000
100,000
150,000
200,000
22,755shareholders
(As of March 31, 2014)
* An asterisk indicates the holding of concurrent positions as director and executive officer.
(As of June 27, 2014)
Chairman and CEO* Akiji MakinoVice Chairman* Toshio WatanabePresident* Masao NomuraExecutive Vice President* Kazuhiko MinamimotoExecutive Vice President* Hisato UehaSenior Executive Director* Mitsuhiro Tanimoto
Senior Executive Director* Masami MakiseSenior Executive Director* Hirozumi HirotaExecutive Director* Masanori WatanabeExecutive Director* Masaaki MiyashiroExecutive Director* Hiroyuki OnjiExecutive Director* Takashi Funaki
Executive Director* Hiroshi MajimaDirector* Naoki IwataniDirector* Akira OhtaDirector* Katsuya TakemotoCorporate Auditor Toyofumi OhamaCorporate Auditor Yoshiaki Fukuzawa
Corporate Auditor Masahiro HoriiCorporate Auditor Mitsuaki Naitou
Name Number of shares held (Thousands of shares)
Shareholding ratio(%)
The Iwatani Naoji Foundation 20,663 8.39The Master Trust Bank of Japan, Ltd. (Trust Account) 9,756 3.96The Chase Manhattan Bank, N.A. London S.L. Omnibus Account 7,396 3.00Tetsu Iwatani Co. Ltd. 6,870 2.79The Bank of Tokyo-Mitsubishi UFJ, Ltd. 6,680 2.71Japan Trustee Services Bank, Ltd. (Trust Account) 6,120 2.48Resona Bank, Ltd. 5,888 2.39Iwatani Enyukai 5,235 2.12Nippon Life Insurance Company 5,052 2.05Iwatanisangyou Senyukai 4,229 1.72
10
Osaka Head Office6-4, Hommachi 3-chome, Chuo-ku, Osaka 541-0053, Japan
Tel: 81-6-7637-3310 Fax: 81-6-7637-3535
Tokyo Head Office21-8, Nishi-Shimbashi 3-chome, Minato-ku, Tokyo 105-8458, Japan
Tel: 81-3-5405-5711 Fax: 81-3-5405-5640
Corporate Website http://www.iwatani.co.jp/eng/ Printed in Japan
FSC LOGO