Tokai Carbon : Summary of Consolidated Financial Results for the First Quarter of the Fiscal Year Ending December 31, 2023(378KB)

Summary of Consolidated Financial Results

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

[Japanese GAAP]

			May 11, 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:		May 12, 2023
Scheduled date to commence dividend payments:		-
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 First Quarter of the Fiscal Year Ending December 31, 2023 (January 1 to March 31, 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	%
	Three months ended March 31,	86,530		24.5		11,493	44.8		11,804	40.4	7,964	96.9
	2023
	Three months ended March 31,	69,512		28.8		7,938	94.7		8,406	110.2	4,044	105.5
	2022
	Note: Comprehensive income: Three months ended March 31, 2023:	14,415million yen (-24.9%)
	Three months ended March 31, 2022:	19,183 million yen (20.7%)
		Quarterly Net Income	Quarterly Net Income
		per Share		per Share Fully Diluted
				Yen			Yen
	Three months ended March 31,			37.36			-
	2023
	Three months ended March 31,			18.97			-
	2022

1. Consolidated Financial Position

		Total Assets		Net Assets	Equity Ratio
		Millions of yen		Millions of yen	%
As of March 31, 2023		582,246		312,082	48.1
As of December 31, 2022		576,465		300,868	46.6
For reference: Shareholders' capital:	As of March 31, 2023:	279,779 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	-
Fiscal year ending December 31, 2023		18.00	-	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
First six months	198,000		26.1	20,000	19.6	20,000	2.8	11,000		18.9	51.60
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 March 31, 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 March 31, 2023	11,748,724shares	As of December 31, 2022	11,748,117 shares
(c) Average number of shares during the period
	Three months ended March 31,	213,194,797shares	Three months ended March 31,	213,180,330 shares
	2023	2022

• 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 Friday, May 12, 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 First 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 Three-month Period	6
	Quarterly Consolidated Statements of Comprehensive Income for the First Three-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 First Quarter of the Fiscal Year Ending December 31, 2023
   During the first three months of 2023 (from January 1 to March 31, 2023), while the recovery of the Chinese economy is a positive factor, the outlook for the global economy remains uncertain due to factors such as the prolonged crisis in Ukraine, financial system instability triggered by rapid interest rate hikes in the United States and Europe, and concerns about capital outflows from emerging markets.
   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 continued 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 raising sales prices to adjust the increases in raw materials and other costs to sales prices. At the same time, we are steadily improving productivity and expanding production capacity in anticipation of future demand growth. With the aim of achieving carbon neutrality, we are working to reduce CO2 emissions on a consolidated basis, mainly through the Carbon Neutral Committee, which was established in February 2022. At the same time, we are exploring and investigating relevant technologies.
   As a result, net sales for the first three months of 2023 increased 24.5% year on year to 86,530 million yen. Operating income increased 44.8% year on year to 11,493 million yen. Ordinary income increased 40.4% year on year to 11,804 million yen. Quarterly net income attributable to owners of the parent company increased 96.9% year on year to 7,964 million yen.
   Results by business segment were as follows:

Graphite Electrodes

Production and sales in Europe declined due to rising energy costs in response to the global slowdown in the steel industry. On the other hand, shipments of large-diameter electrodes increased mainly in North America. This resulted in higher average selling prices.

As a result, net sales for the Graphite Electrodes business increased 9.1% year on year to 13,486 million yen, and operating income increased 30.1% year on year to 1,637 million yen.

Carbon Black

sSales volumes were at the same level as the same period of the previous year, despite inventory adjustments by some tire manufacturers under the impact of shortages of semiconductors and other materials. 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 27.1% year on year to 37,406 million yen, while operating income increased 88.8% year on year to 5,757 million yen.

Fine Carbon

In the semiconductor market, some demand for production equipment is slowing due to lower demand for smartphones and PCs as well as the impact of the U.S. policy toward China. On the other hand, demand for SiC (Silicon Carbide) semiconductors and other power semiconductors increased, and sales of graphite and SiC products in this segment remained firm, resulting in increased sales and profit.

2