Tokai Carbon : Q3 FY2022 Earnings Presentation

Q3 FY2022

Earnings Presentation

2022/11/8

Table of Contents

Ⅰ	Q3 FY2022 Financial Summary	P 3-13
Ⅱ	T-2024 Progress Report	P14-17

Reference material

P18-21

Ⅰ

Q3 FY2022

Financial Summary

FY2022 Business Topics (January-September 2022)

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The International Monetary Fund (IMF) announced the outlook for the global economic growth rate on October 11. The growth rate for 2022 remains unchanged at 3.2% from the previous outlook (July) and the outlook for 2023 has been revised downward 0.2% to 2.7% against the backdrop of the energy crisis associated with the situation in Ukraine, monetary tightening by central banks of various countries, and the economic slowdown in China. The IMF pointed out that appropriate measures of monetary and fiscal policies are required to contain inflation.

Amid soaring costs for raw materials and energy around the globe, the company's performance for Q3 continued to be strong with a substantial YoY increase in both net sales and operating income, with 33.1% (33.8% Q2 YoY) for net sales, 58.6% (52.7% Q2 YoY) for operating income, 83.1% (82.7% Q2 YoY) for ordinary income, and 68.6% (62.1% Q2 YoY) for quarterly net income.

Progress against the FY2022 guidance are 80.8% for net sales, 80.0% for operating income, 94.5% for ordinary income, and 80.6% for net income that is beyond the standard progress rate of 75.0% for Q3.

The soaring raw material prices, fuel expenses, transportation costs, etc., caused by rising crude oil prices and the sharp depreciation of the yen are being passed on to product prices in all businesses.

In the graphite electrode business, crude steel production continues to decline, mainly in the major producing countries of Japan and in Europe, due to macroeconomic deterioration caused by the Ukraine crisis. The future upward trend of EAF demand backed by the de-carbonization remains unchanged.

In the carbon black business, operations were at full capacity at bases in Japan, Thailand, and Canada with strong global auto and tire production. The U.S.operation was impacted by the capital investment (e.g. gas scrubbers) to meet U.S. environmental and the associated equipment issues.

In the fine carbon business, continued strong demand remained amid increasing uncertainty in the semiconductor market. High value-added components for semiconductor manufacturing facility produced at subsidiary in Korea is expanding. Rapid growth of advanced driver assistance systems (ADAS) and electric vehicles (EV) are supporting the expanding demand for SiC semiconductors that are the core component for the power semiconductor.

In the smelting and lining business, despite being partially affected by Ukraine crisis, global aluminum production and relining demand in aluminum smelters are strong. Supply and demand of Carbon electrodes have been tight due to a strong demand of polysilicon and aluminum alloys.

In the industrial furnaces and related products business, by increasing growth in the EV, 5G, and IoT related markets led a continued strong demand, despite China operation being partially affected by lockdowns.

Tokai Carbon Q3 FY2022 Earnings Presentation 4

Summary of Consolidated Results

• Reversal in the market for graphite electrodes and increasing growth of markets for fine carbon led to YoY increases in net sales and operating income
• Net sales ¥246.3b, Operating income ¥28.0b, ROS 11.4% (ROS 9.5% YoY)

					Millions of yen
		Jan-Sep 2021	Jan-Sep 2022	YoY Change	%Change
Net sales		185,095	246,332	+61,237	+33.1%
Operating income		17,669	28,015	+10,345	+58.6%
Ordinary income		17,547	32,132	+14,585	+83.1%
Net income attributable to owners	9,559	16,121	+6,562	+68.6%
of the parent company
	Group companies As of September 30, 2022	Average exchange rates:
	 2021	USD1= ¥108.50
	 Consolidated subsidiaries:	31
	 Equity method affiliates:	1		EUR1= ¥129.83
				 2022	USD1= ¥128.05

EUR1= ¥135.95

Tokai Carbon Q3 FY2022 Earnings Presentation 5