Summary of Consolidated Financial Results

for the Second Quarter of the Fiscal Year Ending December 31, 2022

[Japanese GAAP]

August 8, 2022

Company name:

Tokai Carbon Co., Ltd.

Listing:

Tokyo Stock Exchange Prime Market

Securities code:

5301

URL:

https://www.tokaicarbon.co.jp/en/

Representative:

Hajime Nagasaka, President & Chief Executive Officer

Inquiries:

Akihiko Sato, Executive Officer and General Manager, Accounting & Finance Department

Telephone:

81-3-3746-5100

Scheduled date to file quarterly report:

August 10, 2022

Scheduled date to commence dividend payments:

September 1, 2022

Preparation of supplementary material on quarterly financial results:

Yes

Holding of quarterly financial results briefing:

Yes (Conference call for analysts and institutional investors)

(Yen amounts are rounded down to millions, unless otherwise noted)

1. Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending December 31, 2022 (January 1 to June 30, 2022)

(1) Consolidated Operating Results

(Percentages indicate year-on-year changes)

Quarterly Net Income

Net Sales

Operating Income

Ordinary Income

Attributable to Owners

of the Parent Company

Millions of yen

%

Millions of yen

%

Millions of yen

%

Millions of yen

%

Six months ended June 30,

157,070

33.8

16,717

52.7

19,448

82.7

9,253

62.1

2022

Six months ended June 30,

117,380

25.2

10,945

88.1

10,646

106.2

5,708

164.4

2021

Note: Comprehensive income: Six months ended June 30, 2022:

46,200 million yen (93.1%)

Six months ended June 30, 2021:

23,929 million yen (−%)

Quarterly Net Income

Quarterly Net Income

per Share

per Share Fully Diluted

Yen

Yen

Six months ended June 30,

43.41

-

2022

Six months ended June 30,

26.78

-

2021

  1. Consolidated Financial Position

Total Assets

Net Assets

Equity Ratio

Millions of yen

Millions of yen

%

As of June 30, 2022

559,400

293,578

47.2

As of December 31, 2021

512,503

256,570

44.7

For reference: Shareholders' capital:

As of June 30, 2022:

263,963 million yen

As of December 31, 2021:

229,210 million yen

2. Dividends

Annual Dividends

End of 1st

End of 2nd

End of 3rd

Year-end

Total

quarter

quarter

quarter

Yen

Yen

Yen

Yen

Yen

Fiscal year ended December 31, 2021

-

15.00

-

15.00

30.00

Fiscal year ending December 31, 2022

-

15.00

Fiscal year ending December 31, 2022

-

15.00

30.00

(Forecast)

Note: Amendment to most recently disclosed dividend forecast: None

3. Consolidated Earnings Forecast for the Fiscal Year Ending December 31, 2022 (January 1 to December 31, 2022)

(Percentages represent year-on-year changes)

Net Income

Net Sales

Operating Income

Ordinary Income

Attributable to

Net Income per

Owners of the Parent

Share

Company

Millions of yen

%

Millions of yen

%

Millions of yen

%

Millions of yen

%

Yen

Full year

305,000

17.8

35,000

42.0

34,000

37.3

20,000

24.2

93.82

Note: Amendment to most recently disclosed consolidated earinings forecast: None

* Notes:

  1. Changes in significant subsidiaries during the period (changes in specific subsidiaries accompanying changes in the scope of consolidation): Yes
    Newly included: -
    Excluded: 1 company (Tokai Carbon (Tianjin) Co., Ltd.)
  2. Application of accounting treatment specific to the preparation of quarterly consolidated financial statements: None
  3. Changes in accounting policy and changes and restatements of accounting estimates
    1. Changes in accounting policy accompanying the revision of accounting standards: Yes
    2. Changes in accounting policy other than those listed in (a): None
    3. Changes in accounting estimates: None
    4. Restatements: None
  4. Number of shares issued (common stock)
    1. Number of shares issued at the end of the period (including treasury stock)

As of June 30, 2022

224,943,104 shares

As of December 31, 2021

224,943,104 shares

(b) Number of treasury stock at the end of the period

As of June 30, 2022

11,747,825 shares

As of December 31, 2021

11,762,569 shares

(c) Average number of shares during the period

Six months ended June 30, 2022

213,186,824 shares

Six months ended June 30, 2021

213,175,798 shares

  • The financial results are not subject to audit by certified public accountants or audit firms.
  • Appropriate use of earnings forecasts and other pertinent information (Cautionary statement on forward-looking statements)
    These materials contain various forward-looking statements and other forecasts regarding performance and other matters. Such statements are based on information available at the time of preparation as well as certain reasonable assumptions. Actual results may differ materially from those expressed or implied by forward-looking statements due to a range of factors.
    (How to obtain the supplemental material on quarterly financial results)
    Tokai Carbon has scheduled a briefing on financial results in the form of a telephone meeting for analysts and institutional investors on Tuesday, August 9, 2022. The materials for this briefing will be posted on the corporate website on that day.

Supplemental Materials

1. Operating Results ..........................................................................................................................................................

2

(1)

Operating Results for the Second Quarter of the Fiscal Year Ending December 31, 2022 ..................................

2

2. Quarterly Consolidated Financial Statements and Notes ..............................................................................................

5

(1)

Quarterly Consolidated Balance Sheets ................................................................................................................

5

(2)

Quarterly Consolidated Statements of Income and Comprehensive Income ........................................................

7

Quarterly Consolidated Statements of Income for the First Six-month Period ....................................................

7

Quarterly Consolidated Statements of Comprehensive Income for the First Six-month Period...........................

8

(3)

Notes to Quarterly Consolidated Financial Statements ........................................................................................

9

(Notes on the Going-concern Assumption) ..........................................................................................................

9

(Notes on Significant Changes in Shareholders' Equity Amount) ........................................................................

9

(Changes in Accounting Policy) ...........................................................................................................................

9

(Additional Information) ......................................................................................................................................

9

(Segment Information)........................................................................................................................................

10

(Business Combination, etc.) ..............................................................................................................................

11

1

1. Operating Results

  1. Operating Results for the Second Quarter of the Fiscal Year Ending December 31, 2022
    During the first six months of 2022 (from January 1, 2022 to June 30, 2022) the global economy simultaneously experienced a significant slowdown in the pace of economic recovery and an increase in inflation, contrary to expectations at the beginning of the year. Although lockdowns occurred in major Chinese cities, the balance between anti-infection measures and economic activities progressed in countries around the world. On the other hand, uncertainty of the global economy is increasing again due to the global inflation and the resulting monetary tightening have become major downward factors driven by the supply chain disruption triggered by Russia's invasion of Ukraine.
    Under these circumstances, in February this year, Tokai Carbon Group announced the rolling medium-term management plan "T-2024", for the three-year period from 2022 to 2024. Based on the three basic policies of "returning core businesses to a path of growth," "optimizing the business portfolio (selection and concentration)," and "strengthening the consolidated governance structure," we aim to achieve quantitative targets of 356 billion yen in net sales, 57 billion yen in operating income, 16% in ROS, and 91 billion yen in EBITDA by 2024. Focusing on our core businesses of graphite electrodes and carbon black, we are working to secure appropriate profits by passing through the rising costs to selling prices. At the same time, we are expanding our production capacity for the growing future demand. Also, along with our selection and concentration strategy, in February 2022 we completed the transfer of Tokai Carbon (Tianjin) Co., Ltd., our Chinese carbon black plant and in May 2022, we acquired an additional 350,000 shares in Tokai Carbon Korea Co., Ltd., a consolidated subsidiaries company (increasing percentage of voting rights from 44.4% to 47.4%).
    In February this year, we disclosed our new long-term vision for 2030, "Contributing to the realization of a sustainable society with advanced materials and solutions." Along with this vision, Sustainability Committee to discuss important issues related to sustainability and the Carbon Neutral Committee to serve as a control tower for addressing carbon neutral issues were established.
    As a result, net sales for the first six months of 2022 increased 33.8% year on year to 157,070 million yen. Operating income increased 52.7% year on year to 16,717 million yen. Ordinary income increased 82.7% year on year to 19,448 million yen. Quarterly net income attributable to owners of the parent company increased 62.1% year on year to 9,253 million yen.
    Results by business segment were as follows:

Graphite Electrodes

Global demand for graphite electrodes continued to be strong, and inquiries to the Company increased mainly in Europe and the United States. Although there are concerns about the impact of the crisis in Ukraine and global inflation, both factory operational rates and sales volumes are recovering, and sales prices rebounded from the previous year's bottom.

As a result, net sales for the Graphite Electrodes business increased 62.1% year on year to 29,164 million yen, while operating income increased significantly to 2,925 million yen (compared with 123 million yen in operating income for the same period of the previous year).

Carbon Black

Although automobile production declined significantly from the same period of the previous year due to a shortage of semiconductors and other factors, demand in replacement tires was robust, particularly for truck and bus applications in North America. Despite a decrease in overall sales volume year on year due to the sale of the China-based business, sales and profit increased due to measures such as passing on the increase in raw material oil prices to selling prices.

2

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Tokai Carbon Co. Ltd. published this content on 18 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 August 2022 07:23:07 UTC.