Newsletter for Shareholders
Autumn 2023
January 1, 2023-June 30, 2023
How is Tokai Carbon
connected to
the environment?
CONTENTS
1 Message from the CEO
5 | Feature What isTokai Carbon doing to help build |
a sustainable society? | |
9 | Focus Fine carbon-Supporting future lifestyles |
- News flash! INFORMATION
- Segment Overview
P r e s i d e n t 's m e s s a g e
Message from the CEO
We are steadily building our business base so that we can seize the growth opportunities that will drive us forward
Hajime Nagasaka
President & CEO
Business results for H1 2023
In the first six months of 2023 (January 1 to June 30, 2023), the global economy witnessed a downturn in spending power due to inflation and rises in interest rates, and although there was a decelerating trend, positive factors such as improvements in the supply situation and the resumption of economic activity in China meant a severe recession was avoided. On the other hand, the geopolitical situation became even tenser due to trade friction between the U.S. and China and the prolonging of the situation in Ukraine, and this, as well as risk factors such as changes in the financial and fiscal policies of major countries, mean the outlook remains uncertain.
Within this environment, in February 2023, we announced T-2025, our rolling medium-term management plan for the three years from 2023 to 2025. Under the plan's three basic policies of "return core businesses to a growth trajectory," "optimize the business portfolio (selection and concentration)" and "establish a sustainable management base," we will work toward quantitative targets for 2025. These are net sales of 484 billion yen, operating income of 69
2023 H1 Highlights
billion yen, ROS of 14%, and EBITDA of 113 billion yen. To achieve these, we will work to ensure reasonable profits by reflecting the increase in cost prices in sales prices, and to steadily raise productivity and strengthen production capacity with a view to capturing future demand, particularly in our core graphite electrode and carbon black businesses. We are also working toward achieving carbon neutrality and in February 2022, we established the Carbon Neutral Committee to lead our efforts to reduce consolidated CO2 emissions and we have also launched multiple subcommittees and research teams that are working on exploring and investigating relevant technologies.
In our H1 2022 business results, net sales rose 13.6% year on year to 178.4 billion yen, operating income increased 30.0% to 21.7 billion yen, and net income attributable to owners of the parent company increased 71.9% to 15.9 billion yen.
Our forecast for the full-year consolidated results is for net sales to increase 20.5% year on year to 410.0 billion yen, operating income to increase 10.9% to 45.0 billion yen, and net income attributable to owners of the parent company to increase 16.0% to 26.0 billion yen.
Business Results
February Released theT-2025 rolling medium-term management plan
April Concluded a partnership agreement with SEKISUI CHEMICAL Co., Ltd. toward the practical application of CCUS technology for capturing, effectively utilizing, and storing CO2
May Rating by Rating and Investment Information, Inc. upgraded to A
June Issued Integrated Report 2022
June ESG Score by ESG evaluation organization
FTSE Russell improved to 4.2
Net sales
(Billions of yen)
157.0 | 178.4 |
2022 | 2023 |
H1 | H1 |
Operating income
(Billions of yen)
16.7 | 21.7 |
2022 | 2023 |
H1 | H1 |
01 | 02 |
P r e s i d e n t 's m e s s a g e
Potential of our core businesses
Our graphite electrodes are mainly used in electric furnaces where scrap iron is melted down to produce steel for construction and other uses. One medium- to long-term business opportunity is the shift from blast furnaces to electric furnaces aimed at reducing CO2 emissions. The amount of CO2 emitted by electric furnaces is said to be about 25% of emissions generated by blast furnaces, which use coke derived from iron ore and coal. Since the adoption of electric furnaces is a global trend, we expect demand for the Company's products to grow.
About 70% of the carbon black we produce is used for tires. The automotive industry is undergoing a major transformation as it shifts from gasoline and diesel vehicles to electric vehicles (EV), so we will focus on meeting demand for tires, which is expected to continue to grow, with high-quality products.
Fine carbon is a product made from tiny carbon
particles broken down to the micron level. More than 70% of fine carbon is used for semiconductor-related applications. Although memory semiconductors used in PCs and mobile phones are currently in an adjustment phase, demand for power semiconductors used in EVs and other applications is growing significantly. Our fine carbon business is a highly profitable business with great potential.
Smelting and lining is a business closely related to aluminum smelting. Aluminum contributes to making vehicles lighter, so I have great expectations for our smelting and lining business due to anticipated growth in demand from the aviation industry, as well as demand driven by the shift to EVs in the automotive industry.
Nurturing our businesses and generating stable cash flows
We plan to generate stable cash flows through these existing businesses while allocating some of the cash
we earn to cutting-edge business fields. Although research and development involves a high level of risk, we will move forward with a sense of speed while also looking for opportunities to co-create with like-minded external partners.
Increasing management sustainability
Carbon neutrality is one of the most important issues we must address in terms of contributing to the sustainability of society. Out of our businesses, the carbon black business accounts for the largest amount of CO2 emissions, so reducing CO2 emitted by this business is an urgent challenge. In addition to conventional steady efforts to save energy and improve yield ratios, we will pursue innovative technologies with a sense of urgency. Potential technologies include product recycling, the use of plant-based primary materials, and CO2 recovery.
Investment in growth
Over the three years of the T-2025 plan period, we are working toward generating a cash flow from operating activities of 210 billion yen. We will reinvest 123 billion yen of this into projects focused on growth, the environment, and business continuity. This includes renewing equipment and facilities in preparation for the future, upgrading fine carbon and industrial furnace equipment and facilities, and carrying out environmental investments.
Increasing the annual dividend to 36 yen
We plan to raise the annual dividend up to 36 yen per share in 2023, an increase from 30 yen per share in 2022. We look forward to the continued support of our shareholders.
Hajime Nagasaka
President & CEO
August 2023
T-2025 Quantitative Targets
We aim to achieve these by returning core businesses to a path of growth, optimizing the business portfolio,
and establishing a sustainable management base.
Net sales | Operating income | ROS | EBITDA |
(EBITDA margin: 23%) | |||
(Billions of yen) | (Billions of yen) | ||
14% | (Billions of yen) | ||
484.0 | 69.0 | ||
113.0 |
Potential of our core businesses
Graphite Electrodes | Carbon Black | |
Further growth in demand | Meet anticipated growth in | |
for the Company's products | demand for tires with | |
due to a global shift toward | high-quality products | |
electric furnaces |
Dividend per share
(yen) | 36 |
(planned) | |
30 | 30 |
340.4 | 410.0 | |
2022 | 2023 | 2025 |
(forecast) |
40.6 | 45.0 | |
2022 | 2023 | 2025 |
(forecast) |
12% | 11% | 75.6 | 81.0 | ||
2022 | 2023 | 2025 | 2022 | 2023 | 2025 |
(forecast) | (forecast) |
Fine Carbon | Smelting and Lining | |
Considerable growth in | Anticipated growth in | |
demand expected for | demand from the aviation | |
power semiconductors | industry, as well as demand | |
used in EVs | driven by the shift to EVs in | |
the automotive industry |
2021 | 2022 | 2023 |
ROS (Return on Sales): Ratio of operating income on sales (operating income/net sales)
Assumed exchange rates in T-2025: USD1 = ¥130, EUR 1 = ¥140
03 | 04 |
How isTokai Carbon
connected to
the environment?
Feature
Stop global warming!
Initiatives at our global business sites
What is Tokai Carbon
doing to help build
Greenhouse gases, particularly carbon dioxide (CO2), are a major cause of the global warming that is driving climate change. All around the world, movement to reduce CO2 emissions and realize carbon neutrality is accelerating.
Tokai Carbon is also actively advancing initiatives, such as switching to fuels with a lower environmental
impact and using renewable energy, at Group business sites in Japan and overseas. Going forward, we aim to use innovative technology to capture, store, and effectively utilize CO2, and we will strive to measure and reduce global CO2 emissions generated by usage of the Group's products.
a sustainable society?
"Contribute to a sustainable society through
advanced materials and solutions."
This is Tokai Carbon's long-term vision for 2030.
Realizing net-zero CO2 emissions by 2050
We have set targets to steadily reduce CO2 emissions on a | 2030 target | 2050 target |
Group-wide basis. We aim to reduce CO2 emissions by | 25% reduction | Net-zero |
25% (compared to 2018 levels) by 2030 and to become | emissions | |
carbon neutral by 2050. |
Here we introduce the role of the Company and | Tokai Carbon Group CO2 | Emissions | |||
the potential of carbon products to benefit peoples' lives | |||||
and the future of industry. | 2022 result | 2030 target | 2050 target | ||
CO2 emissions | 21% | 25% | Carbon | ||
reduction | reduction | neutrality | |||
(Group-wide, | |||||
Scope 1+2) | |||||
3,056,000 | 2,408,000 | 2,292,000 | |||
t CO2 | t CO2 | t CO2 | Net-zero CO2 | ||
emissions | |||||
2018 | 2022 | 2030 | 2050 | ||
(base year) | Emission credit | ||||
trading | |||||
Steady reduction through ongoing initiatives |
05 | 06 |
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2 Tires | Working |
to reuse | |
tires |
-Carbon black
5
Reduce CO2 | |
1 Steel | emissions |
by about | |
75% |
-Graphite electrodes
Electric furnaces can reduce CO2 emissions by about 75% of the volume generated by blast furnaces. In recent years, there has been a global shift from blast
One of the uses of carbon black is to make tires. We are developing leading edge technologies that
reduce environmental impact, such as materials that extend the service life of tires and methods for reusing used tires.
Strive to develop environmentally friendly technologies!
4 | A 3% |
reduction in | |
power | |
Aluminum-Cathode blocks | consumption |
Installing ordinary cathodes into an electrolytic furnace is a cumbersome process for customers, but our unique product RUC®
Recycle
Electronic components
-EREMA heating elements
EREMA heating elements are essential to the manufacture of electronic components for smartphones and vehicles. We have been collecting and recycling
furnaces to electric furnaces to reduce environmental impact, so demand for graphite electrodes is expected to rise.
It's great that they can be used to recycle steel!
New | ||||
3 Semiconductors | materials | |||
empower | ||||
energy | ||||
eciency | ||||
-Fine carbon | ||||
One of the applications of fine | ||||
carbon is as a component of the | ||||
silicon needed to make high | ||||
precision semiconductors. It is used | ||||
in advanced SiC semiconductors | ||||
that contribute to making electric | ||||
vehicles lighter. | ||||
That's helping our convenient lifestyles!
ordinary cathodes reduces the workload involved in this task. RuC® cathodes also offer superior electrical characteristics, which enables a 3% reduction in power consumption during
the aluminum smelting process. Spreading the use of RuC® cathodes will directly contribute to reducing environmental impact.
Safe to use and with less energy. Looks like the product has the potential to spread!
used elements since 2023.
Collecting, processing, and reusing the cold ends of used EREMA heating elements
Thumbs
up!
Cold | Hot zone | Cold |
end | end |
Technology for recycling
hot zones is currently under development
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Disclaimer
Tokai Carbon Co. Ltd. published this content on 08 September 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 September 2023 02:41:08 UTC.