Results for the Fiscal Year Ended December 31, 2017 · Copyright © Toyo Tanso Co., Ltd. All Rights Reserved 7 561 468 743 1,407 1,003 1,182 728 1,242 670 1,212 1,312 1,134 1,134

２０１８年２月

Results for the Fiscal Year Ended December 31, 2017

Copyright © Toyo Tanso Co., Ltd. All Rights Reserved

February 2018

Toyo Tanso Co., Ltd.

Copyright © Toyo Tanso Co., Ltd. All Rights Reserved 2

1. Key Points for the Fiscal Year Ended December 31, 2017

2. Results for the Fiscal Year Ended December 31, 2017 and

Forecasts for the Fiscal Year Ending December 31, 2018

3. Factors Affecting Changes in Operating Income

4. Net Sales by Product and Segment

5. Net Sales by Region

6. Capital Investment, Depreciation, and R&D Expenses

7. Dividend

8. Consolidated Balance Sheet and Statement of Consolidated Cash Flows for

the Fiscal Year Ended December 31, 2017

P3

P4

P5

P7

P12

P13

P14

P15

Table of Contents



The market environment was positive overall. Applications for semiconductor and

solar cells were key drivers, and net sales exceeded levels in the previous year as well

as forecasts.

1. Key Points for the Fiscal Year Ended December 31, 2017

On the profit side, higher marginal profit due to sales growth, as well as reductions in

fixed costs, were major contributors. Operating income, ordinary income, and profit

attributable to owners of parent all increased significantly.

Business structure reforms have been achieved by reaching our goal of operating

income of 3.0 billion yen on a consolidated basis one year earlier than planned. We will

establish a new medium-term management plan to build for further growth.

The inspection of graphite materials for the Chinese high-temperature reactor–

pebble-bed modules (HTR-PM) is slated for completion in the first half of fiscal 2018.

Sales of about 3.0 billion yen are priced into forecasts.

Point 1

Point 2

Point 3

Point 4


2. Results for the Fiscal Year Ended December 31, 2017 and Forecasts for the Fiscal Year Ending December 31, 2018


Exchange rate

Operating

income

Net sales

Ordinary income

Profit attributable

to owners of

parent

Profit attributable to

owners of parent

per share (basic)

FYE Dec. 2016

(Unit: Yen, millions)

H1

result20,700

H2

result18,800

H1

result2,200

H2

result2,200

(Ratio of operating

income to net sales) 2.0% 10.5% 11.1%

H1

result2,300

H2

result2,200

(Ratio of ordinary

income to net sales) 2.3% 10.6% 11.4%

H1

result1,700

H2

result1,600

H1

result81.54 yen

H2

result76.75 yen

%

Profit attributable

to owners of parent

per share (basic)13.71 yen 145.52 yen 158.29 yen

963.0 % 3,300 279 / 9.2

Profit attributable

to owners of

parent

284 3,020 2,736 /

Exchange

rate

108.9 yen/$

120.4 yen/€

16.4 yen/CNY

112.2 yen/$

126.7 yen/€

16.6 yen/CNY

110 yen/$

125 yen/€

17.0 yen/CNY

/ 18.6 %

Ordinary

income759 3,719 2,960 / 390.0 % 4,500 780 / 21.0 %

%

Operating

income652 3,708 3,055 / 468.2 % 4,400 691

8.6 % 39,500 4,259 / 12.1

FYE Dec. 2017FYE Dec. 2018

(forecast)

Year-on-year change Breakdown Year-on-year change

Net sales 32,464 35,240 2,775 /


3. Factors Affecting Changes in Operating Income (Results for the year ended December 31, 2016 vs. results for the year ended December 31, 2017)

✔An increase in sales and improved profitability contributed to higher marginal profit

✔ Success in thoroughly reducing fixed costs through business structure reforms



3. Factors Affecting Changes in Operating Income (Results for the year ended December 31, 2017 vs. results for the year ending December 31, 2018)

✔ Higher marginal profit due to sales growth (including the Chinese high-temperature

reactor-pebble-bed modules [HTR-PM]) contributed✔ Higher fixed costs due to an increase in personnel costs resulting from an earnings recovery



561 468 743 1,407 1,003 1,182 728

1,242 6701,212

1,312 1,134 1,1341,187

6,456

4,405

7,8948,874

7,9858,179 8,861

3,969

3,379

5,215

5,380

5,153 5,311 5,2962,988

1,733

3,300

3,033

2,9663,339 3,423

1,255

774

1,513

1,747

1,4811,535

4,476

8,790

8,765

7,719

8,505

5,329

7,383

4. Net Sales by Product and Segment (full year)

* The final day of the fiscal period was changed from May 31 to December 31 as of the fiscal year ended December 31, 2013.

For this reason, the fiscal year ended December 31, 2013 was an irregular seven-month fiscal period (nine months for some subsidiaries).


8,388

4,551

3,781

5,395

5,038

5,018

6,052

7,138

28,409

20,542

34,066

35,558

32,464

35,240

39,500

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

FYE Dec.2018

(forecast)

(Unit: Yen, 100 millions)

Carbon Products for General

Industries

[Carbon Products for

Electrical Applications]

Special Graphite Products

[General Industries

Applications]


[Others]


[Electronics Applications]


Industries


Mechanical Applications]

Compound Materials and

Other Products

[Other Products]

Related goods


Other Products

[Three Major Products]

FYE Dec.2017

FYE Dec.2016

FYE Dec.2015

FYE Dec.2014

FYE Dec.2013*

FYE May2013

7,383

5,329

8,7907,719

8,505

8,765

6,456

4,405

8,874

7,8947,985 8,179

8,861

1,187

5,296

3,423

4,476

1,535

2,966 3,339

5,311

1,134

1,481

1,747

3,033

5,153

5,380

5,215

3,300

1,733

2,988

1,255

15,700 16,093

10,1869,106 9,120 9,314

10,0487,698

9,885

5,075

15,551

14,219

13,191

20,002

3,969

3,379

1,242670

1,2121,312

774

1,134


4. Net Sales by Product and Segment (six-month period)


509 897 525 478 530 651 349 379

611700

596 538 540 594525 661

4,120

4,753

4,123 3,862 3,8404,338

4,3074,553

2,687

2,692

2,5112,642 2,614

2,6962,589

2,707

1,631

1,401

1,5571,408 1,614

1,7241,579

1,844

896

851

824657 714

820

3,846

630

4,460

4,304

3,9363,782

4,080

4,424

4,070

4,317

2,755 2,282

2,866

2,152

2,628

3,423

3,432

3,706

17,673 17,884

16,941

15,522

16,564

18,675

20,700

18,800

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

22,000



Industries


Electrical Applications]


[General Industries

Applications]


[Others]


[Electronics Applications]


Industries


Mechanical Applications]


Other Products

[Other Products]

Related goods


Other Products

[Three Major Products]

FYE Dec.2018H2

(forecast)

FYE Dec.2018H1

(forecast)

FYE Dec.2017H2

FYE Dec.2016H1

FYE Dec.2016H2

FYE Dec.2015H2

FYE Dec.2015H1

FYE Dec.2017H1

6,592

7,424

4,3804,400

7,627

7,43811,348

8,668

4,933

8,112

4,7325,454

4,719

8,654

4,833 5,215


4. Key Points for Net Sales by Product and Segment (1)

Key point

[Electronics applications]

Applications for single-crystal silicon manufacturing: Demand for semiconductors will remain solid. Manufacturers plan to increase production

by about 10,000-100,000 wafers per month as they respond to the expansion of crystal-growing furnaces and upgrades (increasing the diameter).

In the near term, we estimate that production will increase in stages, and that demand for graphite will be high, particularly for large materials.

Solar cell applications: Manufacturers will begin making capital investments in the second half of fiscal 2017 and we expect the supply of large

graphite materials to become increasingly tight due to the increase in the diameter of crystal-growing furnaces. We expect utilization rates to

remain high in fiscal 2018, particularly among manufacturers in China, South Korea and Taiwan.

[General industries applications]

Applications for EDM electrodes are currently solid due to signs of a recovery in demand for automotive applications in Thailand. Utilization

remains high for products for continuous casting, primarily among construction-related and semiconductor companies in Japan.

<Special Graphite Products>Hot press molds

(cut model)Devices for single-crystal

silicon manufacturing

EDM electrodes





<Carbon Products for General Industries>

Key points

[Carbon products for mechanical applications]

The performance of core products in Japan such as bearings and sealing rings will remain strong overall, with the exception of

some applications. Sales of pantograph sliders are expanding steadily, and will remain firm without any impact from the economy.

In addition, the Company has ramped up public relations activities to bring in new orders for overseas projects on transportation

systems.

[Carbon products for electrical applications]

Conditions for small motor applications remain extremely harsh for both home appliance applications (vacuum cleaners and

washing machines) due to the trend for brushless motors and competition with cheap products from local manufacturers in China.

The Company is accelerating the optimization of global manufacturing and sales chains, including ongoing cost-cutting and the

consolidation of manufacturing bases.

Sliders

Carbon brushes

Bearings





<Compound Materials and Other Products>

Key points

[Three major products]SiC-coated graphite products: In addition to MOCVD (LED and power device) and Si-Epi, which have been mainstay applications up to this point, SiC-Epi applications have grown rapidly. Both device manufacturers and Epi manufacturers are performing well, with capital investment picking up further.

C/C composite products: Semiconductor applications remained strong performers. In addition, inquiries and orders related to heat treatment, a key focus thus far, are gradually increasing, and are expected to increase in fiscal 2018 as well. Moreover, the supply of graphite (isotropic) is tight, which is increasing demand for replacement with C/C composites in various applications.

Graphite sheet products: Metallurgical, automotive, and electronics applications remained stable overall. Demand for graphite sheets is increasing in new applications as well. However, the cost of raw materials is increasing significantly, forcing the Company to transfer the higher costs onto prices.

Graphite sheet products

MOCVD susceptor(SiC-coated graphite products)

Three-layered trays(C/C composite products)

Bolts and nuts(C/C composite products)




5. Sales by Region

Note: The final day of the fiscal period was changed from May 31 to December 31 as of the fiscal year ended December 31, 2013.


✔We expect conditions to remain strong in Japan and Asia’s electronics field in fiscal 2018 as well.

✔We expect sales in Asia to increase significantly in FY18 due to the posting of sales for the

Chinese high-temperature reactor–pebble-bed modules (HTR-PM).


*


6. Capital Investment, Depreciation, and R&D Expenses

Note: The final day of the fiscal period was changed from May 31 to December 31 as of the fiscal year ended December 31, 2013.


✔About 40% of capital investment made in this fiscal year was for strategic investment aimed at

expanding production capacity for carbon for mechanical applications✔We will strengthen strategic investments in fiscal 2018 to expand the existing core businesses

and develop two strategic businesses for the next fiscal year.


(H1)

(H1)(H1)

(H1)

(H1)

5,310

855

2,591

2,958 2,662

2,221

4,251

3,384

2,251

3,935 3,673

3,414 3,223

3,031

3,702

1,014

1,523 1,691

1,023

1,546

2,089 1,871 1,786 1,611

1,220

718

1,790

1,490 1,458

1,233

1,334

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

13/5月期 13/12月期 14/12月期 15/12月期 16/12月期 17/12月期 18/12月期

（予想）

設備投資（左軸）減価償却費（左軸）研究開発費（右軸）(Unit: Yen, 100 millions) Capital investment R&D expenses (line graph)Depreciation (left axis)

FYE Dec.

2018

(forecast)

FYE May

2013

FYE Dec.

2013FYE Dec.

2014

FYE Dec.

2015

FYE Dec.

2016

FYE Dec.

2017



7. Dividend

Note 1. The final day of the fiscal period was changed from May 31 to December 31 as of the fiscal year ended December 31, 2013.


2. Since profit was negative in the fiscal year ended May 31, 2013 and the fiscal year ended December 31, 2013, information on consolidated payout ratio is excluded here.

✔ Strengthen returns to shareholders while considering balance with capital efficiency

and strategic investment✔We plan to increase dividends by 5 yen in fiscal 2017 and by 10 yen in fiscal 2018.


*1

20.0

11.5

22.0

25.0 25.0

30.0

40.0

34.4

128.9

182.4

20.6

25.3

0%

50%

100%

150%

200%

0 yen

10 yen

20 yen

30 yen

40 yen

50 yen

FYE May 2013 FYE Dec. 2013 FYE Dec. 2014 FYE Dec. 2015 FYE Dec. 2016 FYE Dec. 2017 FYE Dec. 2018

(forecast)

Dividends per share (horizontal axis)

Consolidated payout ratio (line graph)


8. Consolidated Balance Sheet and Statement of Cash Flows for the Fiscal Year Ended December 31, 2017



December 31,

2016

December 31,

2017

69,797 74,223

Notes and accounts

receivable - trade12,083 14,255

Inventories 16,131 15,471

Property, plant and

equipment25,421 24,642

69,797 74,223

Interest-bearing

liabilities1,965 1,194

Capital stock 7,692 7,810

Net assets 58,182 60,986

81.4% 81.0%

Consolidated Balance

Sheet

Total assets

Total liabilities and net

assets

Equity ratio


FYE Dec.

2016

FYE Dec.

2017

6,424 6,361

(722) (63)

7,147 6,424

Net cash provided by (used

in) operating activities5,120 6,972


in) investing activities(4,127) (5,951)


in) financing activities(1,270) (1,216)

Consolidated Statement of

Cash Flows

Cash and cash equivalents

at end of period

Net increase (decrease) in

cash and cash equivalents

Cash and cash equivalents

at beginning of period


Note: This presentation contains “forward-looking statements” and forecasts of business results. These

statements are not historical facts but instead represent the Company’s beliefs regarding future

events, many of which, by their nature, are inherently uncertain and beyond the Company’s

control. It is possible that the Company’s actual results may differ, possibly materially, from the

anticipated results and financial condition indicated in these forward-looking statements.


Documents

Results for the Fiscal Year Ended December 31, 2017 · Copyright © Toyo Tanso Co., Ltd. All Rights Reserved 7 561 468 743 1,407 1,003 1,182 728 1,242 670 1,212 1,312 1,134 1,134