Tokai Carbon : Summary of Consolidated Financial Results for the First Quarter of the Fiscal Year Ending December 31, 2021

May 10, 2021

Summary of Consolidated Financial Results

for the First Quarter of the Fiscal Year Ending December 31, 2021

[Japanese GAAP]

Company name:	Tokai Carbon Co., Ltd.	Listed on: Tokyo Stock Exchange
Stock code:	5301	URL: https://www.tokaicarbon.co.jp/en/
Representative:	Hajime Nagasaka, President & Chief Executive Officer
Contact:	Akihiko Sato, Executive Officer and General Manager, Accounting & Finance Department
	Tel.: [phone]

Scheduled date for submission of quarterly report:	May 14, 2021
Date for commencement of dividend payments:	−
Supplementary notes to quarterly financial statements:	Yes
Briefing on quarterly financial statements:	Yes (Conference call for analysts and institutional investors)
	(Rounded down to nearest million yen)

1. Consolidated Financial Results for the First Quarter of the Fiscal Year Ending December 31, 2021 (January 1 to March 31, 2021)

(1)	Consolidated Operating Results						(Percentage figures represent 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	%
Three months ended March 31,	53,968		2.2		4,077		(39.6)	3,999	(39.2)	1,968	(57.1)
2021
Three months ended March 31,	52,790		(23.3)		6,750		(68.2)	6,573	(69.0)	4,583	(65.4)
2020
Note:	Comprehensive income: Three months ended March 31, 2021:	15,888 million yen, (−%)
	Three months ended March 31, 2020:	(8,565) million yen, (−%)
		Quarterly Net Income	Quarterly Net Income
			per Share
		per Share
				Fully Diluted
				Yen				Yen
Three months ended March 31,		9.23
2021						−
Three months ended March 31,		21.50
2020						−

1. Consolidated Financial Position

		Total Assets		Net Assets	Capital-to-asset Ratio
		Millions of yen		Millions of yen	%
As of March 31, 2021		475,308		237,503	44.7
As of December 31, 2020		459,709		224,815	43.8
For reference: Shareholders' capital:	As of March 31, 2021:	212,424 million yen
		As of December 31, 2020:	201,267 million yen

2. Dividends

				Annual Dividends
	End of 1st quarter	End of 2nd quarter		End of 3rd quarter	Year-end	Total
	Yen	Yen		Yen	Yen	Yen
Fiscal year ended December		15.00			15.00	30.00
31, 2020	−		−
Fiscal year ending December	−
31, 2021
Fiscal year ending December		15.00		−	15.00	30.00
31, 2021 (Forecast)
Note: Amendment to most recently disclosed dividend forecast: None

3. Consolidated Earnings Forecast for the Fiscal Year Ending December 31, 2021 (January 1 to December 31, 2021)

(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
First six months	103,800		10.7	4,600	(20.9)	4,100	(20.6)	200		(90.7)	0.94
Full year	227,900		13.1	18,100	130.3	16,900	169.9	8,900		772.6	41.75

Notes: Amendment to most recently disclosed earnings 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 principles peculiar 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 March 31, 2021	224,943,104 shares	As of December 31, 2020	224,943,104 shares
(b) Number of treasury stock at the end of the period
	As of March 31, 2021	11,771,826 shares	As of December 31, 2020	11,771,256 shares
(c) Average number of shares during the period
	Three months ended March 31,	213,171,583 shares	Three months ended March 31,	213,151,860 shares
	2021	2020

• Quarterly financial results are not subject to quarterly review 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 Quarterly Account Settlement Supplementary Explanation)
  Tokai Carbon has scheduled a briefing on financial results in the form of a telephone meeting for analysts and institutional investors on Tuesday, May 11, 2021. The materials for this briefing will be posted on the corporate website on that day.

• Supplemental Materials

1. Qualitative Information Related to This Quarter's Settlement ................................................................................	2
(1)	Explanation regarding operating results..........................................................................................................	2
2. Quarterly Consolidated Financial Statements and Notes ........................................................................................	4
(1)	Quarterly Consolidated Balance Sheets ..........................................................................................................	4
(2)	Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive
	Income ............................................................................................................................................................	6
	Quarterly Consolidated Statements of Income
	First Three-month Period ..........................................................................................................................	6
	Quarterly Consolidated Statements of Comprehensive Income
	First Three-month Period ..........................................................................................................................	7
(3)	Notes to Quarterly Consolidated Financial Statements...................................................................................	8
	(Notes on the Going-concern Assumption).....................................................................................................	8
	(Notes When There Are Notable Fluctuations in Shareholders' Stock Amount) ...........................................	8
	(Additional information) .................................................................................................................................	8
	(Segment Information) ....................................................................................................................................	9

1

1. Qualitative Information Related to This Quarter's Settlement

1. Explanation regarding operating results

During the first three months of 2021 (January 1 to March 31, 2021), the global economy continued to recover from the first half of the previous year, when we saw a significant decline caused by the novel coronavirus (COVID-19) pandemic, thanks to massive financial support, primarily by major economic powers such as the United States, and the start of a phased vaccine rollout at the end of 2020. Going forward, the economic recovery is expected to continue, aided by economic stimulus measures by each country and the vaccine rollout, while uncertainties surrounding the global economy are increasing, such as the spread of highly contagious variants, side effects of massive financial support, and disparities among countries and regions in the coverage (rate) of financial support and vaccination, which have become increasingly visible.

Under these circumstances, the Tokai Carbon Group has engaged in its business activities in line with the mid-term management plan "T-2022" announced in February 2020; however, we were forced to struggle as the growth in growth businesses such as Fine Carbon was dragged down by core Graphite Electrodes business, which was negatively affected by the delayed recovery of the market.

As a result, net sales for the first three months of 2021 grew 2.2% year on year to 53,968 million yen. Operating income declined 39.6% year on year to 4,077 million yen. Ordinary income declined 39.2% year on year to 3,999 million yen. Net income attributable to owners of the parent company declined 57.1% year on year to 1,968 million yen.

Results by business segment were as follows:

Graphite Electrodes

Sales volume of graphite electrodes recovered to the level a year ago, as inventory in the market has returned to a proper level. Despite a sign of bottoming out and picking up, the graphite electrode market remained low compared to the level a year ago.

As a result, net sales for the Graphite Electrodes business decreased 30.6% year on year to 7,957 million yen, while operating loss was 223 million yen (operating income of 2,131 million yen in the previous fiscal year).

Carbon Black

Sales volume saw a decrease due to the suspension of production and shipment at the production bases in the United States when they were affected by a severe cold wave in February in the southern United States. On a group-wide basis, however, sales volume increased year on year, with the overall recovery of demand from the tire and auto parts industries.

As a result, net sales for the Carbon Black business increased 2.7% year on year to 21,595 million yen and operating income rose 3.8% year on year to 1,807 million yen.

Fine Carbon

While production and shipments for semiconductor and solar power generation applications were steady, those for general industry applications remained weak due to the lack of full-scale recovery. Meanwhile, shipments of solid SiC (silicon carbide) products, which are high value-added products, have increased on the back of robust global demand.

As a result, net sales for the Fine Carbon business rose 12.8% year on year to 8,826 million yen and operating income increased 11.8% year on year to 2,146 million yen.

2