AIR WATER INC.

Business Details

This segment mainly manufactures and sells industrial gases such as oxygen, nitrogen, and argon, and also develops electronic materials, functional materials, gas purification equipment, and thermal control systems for semiconductor manufacturing equipment. In addition to domestic industrial gas supply for materials sectors such as steel and chemicals, it also supplies specialty gases to the digital and semiconductor industries, and operates overseas industrial gas businesses (including North America and India) and a high-output UPS business. In the first half of FY2026 (ending March 2026), sales revenue was ¥159,987 million, accounting for approximately 31% of the group total, making it the largest segment, but it fell into an operating loss due to impairment losses.

Recent Overview

Impairment losses and the withdrawal from the North America cryogenic equipment business pushed the segment to an operating loss of over ¥16.7 billion in the first half

In the first half of FY2026 (ending March 2026), sales revenue was ¥159,987 million (96.9% of the same period of the previous year), falling below the prior-year level, and the segment recorded an operating loss of ¥16,708 million (compared to an operating profit of ¥13,833 million in the same period of the previous year). The main cause was impairment losses on property, plant and equipment, goodwill, and intangible assets recorded in connection with the withdrawal from the North America cryogenic equipment business and the India business, among others. On the other hand, in the Digital Unit, sales of gas supply, gas purification equipment, and thermal control systems increased on the back of robust demand related to semiconductors for generative AI, and the functional materials field also performed well due to price management effects.

Key Products

Growth Drivers

• Expanding demand for gas supply, gas purification equipment, and thermal control systems for generative AI and advanced semiconductors
• Large-scale plant investments and development of new customers in response to the expansion of semiconductor manufacturing facilities
• Thorough price management of industrial gases and productivity improvements in plant operations
• Recovery in sales of functional materials (sealants, basic chemicals) and price management effects
• Expansion of on-site supply for the steel industry in the Indian market (medium- to long-term, once the impact of blast furnace maintenance has passed)
• Continued acquisition of new orders in the high-output UPS business

Risks

• Downward trend in domestic industrial gas demand in materials sectors such as steel and chemicals (including partial blast furnace shutdowns)
• Withdrawal from the North America cryogenic equipment business and a sharp decline in hydrogen-related demand triggered by US policy
• Temporary effects on operations in the India business, such as long-term maintenance of blast furnaces
• Risk of sluggish demand in the functional materials field (organic acid products such as phthalic anhydride)
• Risk of rising procurement costs for helium and other materials
• Risk of additional impairment of property, plant and equipment, goodwill, and intangible assets in overseas businesses (North America, India) (impairment losses already recorded in H1 FY2026, ending March 2026, but investigation ongoing)
• Risk of additional restatement of financial figures due to the ongoing investigation by the Special Investigation Committee into improper accounting practices