Tokai Carbon (5301) investor relations material

Executive summary

• Net sales rose 1.7% year-over-year to JPY 81.7 billion for Q1 2026, driven by recovering memory semiconductor demand, license revenue in Smelting & Lining, and global AI investment, but offset by lower Carbon Black volumes, divestment, and economic uncertainties.

• Operating profit declined 8.9% year-over-year to JPY 6.3 billion due to higher depreciation from a new Carbon Black plant, weak SiC power semiconductor demand, and inflationary pressures.

• EBITDA increased 5.6% year-over-year to JPY 15.3 billion, with an EBITDA margin of 18.8%.

• Net income attributable to owners dropped 47.1% year-over-year to JPY 1.56 billion, reflecting higher costs and finalized accounting treatments.

• Free cash flow improved to JPY 2.7 billion, reflecting the peak-out of major CAPEX.

Financial highlights

• Net sales: JPY 81.7 billion (+1.7% YoY); Operating income: JPY 6.3 billion (-8.9% YoY); Net income: JPY 1.56 billion (-47.1% YoY); EBITDA: JPY 15.3 billion (+5.6% YoY).

• Gross profit increased to JPY 20.3 billion from JPY 19.9 billion year-over-year.

• EPS for Q1 2026 was JPY 7.29, down from JPY 13.78 in Q1 2025.

• Comprehensive income improved to JPY 1.57 billion from a loss of JPY 13.74 billion year-over-year.

• Cash and cash equivalents at period end: JPY 60.7 billion.

Outlook and guidance

• FY2026 net sales forecast raised to JPY 370 billion (+14.6% YoY), with operating income projected at JPY 28 billion (+8.3% YoY).

• Net income attributable to owners expected to decrease 40.2% to JPY 12 billion for 2026.

• Growth expected from Carbon Black recovery in H2, special Middle East demand in Smelting & Lining, and strong Fine Carbon performance.

• Dividend per share to increase from JPY 30 to JPY 40; progressive dividend policy and flexible share repurchases planned.