Tokai Carbon : Summary of Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending December 31, 2023 (388KB)

Summary of Consolidated Financial Results

for the Second Quarter of the Fiscal Year Ending December 31, 2023

[Japanese GAAP]

			August 8, 2023
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:	Naoki Hirai, Director and General Manager, Accounting & Finance Department
Telephone:	81-3-3746-5100
Scheduled date to file quarterly report:		August 10, 2023
Scheduled date to commence dividend payments:		September 1, 2023
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, 2023 (January 1 to June 30, 2023)

(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,		178,428		13.6		21,738	30.0		24,109	24.0	15,904	71.9
	2023
	Six months ended June 30,		157,070		33.8		16,717	52.7		19,448	82.7	9,253	62.1
	2022
	Note: Comprehensive income: Six months ended June 30, 2023:	57,024 million yen (23.4%)
		Six months ended June 30, 2022:	46,200 million yen (93.1%)
			Quarterly Net Income		Quarterly Net Income
			per Share		per Share Fully Diluted
					Yen			Yen
	Six months ended June 30,				74.60			-
	2023
	Six months ended June 30,				43.41			-
	2022

1. Consolidated Financial Position

		Total Assets		Net Assets	Equity Ratio
		Millions of yen		Millions of yen	%
As of June 30, 2023		630,385		353,531	50.7
As of December 31, 2022		576,465		300,868	46.6
For reference: Shareholders' capital:	As of June 30, 2023:	319,648 million yen
		As of December 31, 2022:	268,827 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, 2022	-	15.00	-	15.00	30.00
Fiscal year ending December 31, 2023	-	18.00
Fiscal year ending December 31, 2023				-	18.00	36.00
(Forecast)
Note: Amendment to most recently disclosed dividend forecast: None

3. Consolidated Earnings Forecast for the Fiscal Year Ending December 31, 2023 (January 1 to December 31, 2023)

(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	410,000		20.5	45,000	10.9	45,000	5.8	26,000		16.0	121.95
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): None
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
4. 1. Changes in accounting policy accompanying the revision of accounting standards: None
   2. Changes in accounting policy other than those listed in (a): None
   3. Changes in accounting estimates: None
   4. Restatements: None
5. Number of shares issued (common stock)
6. 1. Number of shares issued at the end of the period (including treasury stock)

	As of June 30, 2023	224,943,104 shares	As of December 31, 2022	224,943,104 shares
(b) Number of treasury stock at the end of the period
	As of June 30, 2023	11,726,674 shares	As of December 31, 2022	11,748,117 shares
(c) Average number of shares during the period
	Six months ended June 30, 2023	213,204,105 shares	Six months ended June 30, 2022	213,186,824 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 Wednesday, August 9, 2023. 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, 2023	2
2. Quarterly Consolidated Financial Statements and Notes	4
(1)	Quarterly Consolidated Balance Sheets	4
(2)	Quarterly Consolidated Statements of Income and Comprehensive Income	6
	Quarterly Consolidated Statements of Income for the First Six-month Period	6
	Quarterly Consolidated Statements of Comprehensive Income for the First Six-month Period	7
(3)	Notes to Quarterly Consolidated Financial Statements	8
	(Notes on the Going-concern Assumption)	8
	(Notes on Significant Changes in Shareholders' Equity Amount)	8
	(Segment Information)	9

1

1. Operating Results

1. Operating Results for the Second Quarter of the Fiscal Year Ending December 31, 2023
   During the first six months of 2023 (from January 1 to June 30), the global economy avoided a serious economic downturn regardless of the downward trend. This was due to positive factors such as the easing of supply constraints and the reopening of the Chinese economy, despite a decline in purchasing power due to inflation and high interest rates. The outlook although remains uncertain from the risk of heightened geopolitical tensions, including the intensifying conflict between the United States and China, the protracted crisis in Ukraine, and changes in monetary and fiscal policies in major countries.
   Under these circumstances, in February this year, we announced the Group's rolling medium-term management plan "T-2025," which covers the three years from 2023 to 2025. Under the three basic policies of "Returning core businesses to a path of growth," "Optimizing the business portfolio (selection and concentration)," and "Establishing a sustainable management base," we aim to achieve net sales of 484 billion yen, operating income of 69 billion yen, ROS of 14%, and EBITDA of 113 billion yen as quantitative targets in 2025. Focusing on our core graphite electrode and carbon black businesses, we are working to ensure reasonable profits by adjusting the sales prices to cope with the increases in raw materials and other costs. We are steadily improving productivity and expanding production capacity in anticipation of future demand growth. With the aim of achieving carbon neutral, we are working to reduce CO2 emissions and exploring and investigating relevant technologies on a consolidated basis, mainly through the Carbon Neutral Committee, which was established in February 2022. .
   As a result, net sales for the first six months of 2023 increased 13.6% year on year to 178,428 million yen. Operating income increased 30.0% year on year to 21,738 million yen. Ordinary income increased 24.0% year on year to 24,109 million yen. Quarterly net income attributable to owners of the parent company increased 71.9% year on year to 15,904 million yen.
   Results by business segment were as follows:

Graphite Electrodes

The global slowdown in the steel industry caused a decline in electric arc furnace operating rates in various regions. Sales volume of graphite electrodes decreased year on year. However, an increase in shipments of large- diameter electrodes mainly in North America resulted in higher average selling prices.

As a result, net sales for the Graphite Electrodes business increased 4.3% year on year to 30,407 million yen, and operating income increased 8.2% year on year to 3,164 million yen.

Carbon Black

Demand related to new vehicle recovered despite production adjustments by some tire manufacturers. Sales volume was at same level as the same period of the previous year. Sales and profit increased year on year due to the partial compensation of the depreciation charges on investments in environmental equipment resulting from price revisions mainly in the United States.

As a result, net sales for the Carbon Black business increased 15.9% year on year to 73,831 million yen, while operating income increased 125.1% year on year to 10,773 million yen.

Fine Carbon

Sales of components for semiconductor manufacturing equipment particularly for Solid SiC products were significantly affected by customers' inventory adjustments due to lower demand for smartphones and personal computers, as well as the prolonged impact of the U.S. policy toward China. On the other hand, shipments of products for power semiconductors and general industrial use remained firm.

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