Slides
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UPDATE
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Long-term vision Target Indicators for 2030 Net sales ¥500.0 billion ROIC 12% EBITDA 20% Contributing to a sustainable society through advanced materials and solutions.
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Vision 2030
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Commitment to growth market The impact of the deceleration of the EV market will persist through 2026; however, we are responding to demand expansion driven by AI growth. For Industrial Furnaces, the demand for EREMA heating elements has returned to its growth trajectory. Sustainable value creation We are advancing sustainable value creation through the project to regenerate carbon black from used tires. Drastic structural reforms We are aiming to transform the Graphite Electrodes, and S&L businesses into value -creating businesses through structural reforms. <Current Progress> ▍ Vision2030 indicators 2024 2025 2026 Forecast → Vision 2030 Net sales ¥350.1 billion ¥323.0 billion ¥346.7 billion X 1.4 ¥500.0 billion EBITDA 18 % 18 % 18 % + 2% point 20 % ROIC (adjusted) 7 % 6 % 5 % + 7% point 12 % Current Situation Structural reforms in Graphite Electrodes and S&L taking effect from Q4 FY2025. The business environment for growing sectors, including Fine Carbon and Industrial Furnaces, is anticipated to improve from 2027. * S&L: Smelting & Lining
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PBR and Stock Price The recovery of PBR to 1.0x has not yet been fully realized, although there is a trend toward improvement. 0.58 0.59 0.73 2.35 1.42 1.1 1.37 1.12 0.85 0.67 0.68 0.72 0.82 355 342 378 1395 1248 1095 1290 1208 1073 1026 917 969 1,107 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 0.0 0.5 1.0 1.5 2.0 2.5 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026f Stock price (yen) PBR (x) Foreign currency translation adjustment ROE improvement To achieve Vision 2030, we aim to improve EPS (Earnings per Share). We are also aiming to achieve sustained ROE improvement through total asset turnover and financial leverage. PER improvement Our goal is to lower the cost of capital by minimizing financial risks and ensuring timely, accurate disclosures of our budgets and forecasts. Additionally, through our updates on the progress of Vision 2030, we are consistently establishing a reputation for commitment - driven communication, which connects our growth narrative to our market valuation. ▍ PBR and Stock Price * Net assets for 2026f are projected value; stock price for 2026f is as of February 9, 2026. * See p.18 for “Measures to Achieve Management That is Conscious of the Cost of Capital and Stock Price” <Recognized Challenges> Net assets (Billion yen) 400.0 350.0 300.0 250.0 200.0 150.0 100.0 50.0 0.0
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Business Portfolio Management of TOKAI CARBON Manage each business by ROIC (Return on Invested Capital) and evaluate the businesses from the perspective of both market growth and profitability. Prioritize the allocation of management resources to the “growing business.” Business evaluation using adjusted ROIC -WACC Focus on business returns exceeding the cost of capital. Utilize the business evaluation as a management metric for corporate strategy and discussions on “selection” and “concentration.” ▍ Conceptual diagram * ROIC: Return on Invested Capital, WACC: Weighted Average Cost of Capital, Economic profit: (adjusted ROIC-WACC) x invested capital Market growth Profitability ROIC - WACC Growing business Next-generation products Sustainable value creation Structural reforms High High Core business ▍ Prioritize the allocation of management resources Reinforcement, etc. through capital investment, R&D, human capital investment, and M&A
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Business Portfolio Strategy in Vision2030 Allocate management resources to maximize economic profit by targeting a 7% or greater economic spread at the entire company for Vision 2030, defined as (ROIC - WACC) multiplied by invested capital. * EBITDA, ROIC, and WACC are actual results for fiscal year 2025. WACC is managed by calculating risks for each business. ROI C uses adjusted ROIC that takes in account goodwill and goodwill amortization. * The market growth rate has been estimated by the Company. 0% 5% 10% 15% -10% -5% 0% 5% 10% 15% 20% Graphite Electrodes Economic spread: adjusted ROIC-WACC (FY2025 average 5%) S&L Carbon Black Market growth rate until 2030 (annual rate forecast) * The size of each circle represents the amount of EBITDA Implementation of “structural reforms” Growing business Prioritize the allocation of management resources to the Fine Carbon and Industrial Furnaces businesses, positioned in the “high - growth, high -profitability” area, including investments for ramping -up of facilities ▍ Economic spread by business (2025 results) Areas that create “value”Areas that lost “value” Fine Carbon Industrial Furnaces
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Growing Business/Fine Carbon Returns will begin to materialize after 2027, driven by the investment effects and integration benefits of the U.S. machining shops, even though ROIC is expected to decline in the short term due to growth investments. 559 622 1000 180 179 300 2025 2026 2027 2028 2029 2030 Growth vision for 2030 Improved production capacity (2027 ~) Sales expansion of solid SiC- related products Next- generation products Underlying business environment outlook Addressing the significant challenges of AI's remarkable evolution and the swift increase in data center power consumption has led to a growing demand for next -generation power semiconductors that offer high voltage resistance and heat resistance. Growing business Next- generation Structural reforms Core business Upfront investment (-2025) Realization of CAPEX returns (2026-) Production facilities of CIP materials (special graphite materials) (Tanoura Plant, Kumamoto) Capital investment in production facilities for TCK (Korea) focus rings to capture current rising memory demand and the next -generation memory demand Stronger sales capabilities through the acquisition of sales networks targeting the semiconductor and aerospace industries Acquisition of two U.S. machining shops Ramp-up of production capacity Expansion of production facilities of polycrystalline SiC wafers (Chigasaki Plant, Kanagawa) Responding to technological innovation with R&D products Higher-layer stacking of NAND AI-related demand growth Growth of SiC-semi Net sales (Billion yen)EBITDA 55.9 62.2 8.0 7.9 30.0 100.0
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2025 2026 2027 2028 2029 2030 Growing Business/Industrial Furnaces and Related Products Businesses Pursue distinct technologies and products unavailable from competitors during a prolonged recovery of demand in customer industries. Industrial furnaces and ceramic heating elements ➢ The volume of inquiries has decreased as customers are postponing capital investments due to a slowdown in the electric vehicle (EV) market. ➢ Demand for MLCCs to grow (5 -10% p.a.) driven by the expansion of 5G, EV, autonomous driving, robots, and AI data centers. Increasing inquiries for disc resistors ➢ Demand for transformers and high -voltage equipment is surging, driven by renewal and digitalization investment in aging substations and the global expansion of AI data centers. ▍ Business environment ▍ Measures toward Vision 2030 * Disc resistors: products used for circuit breakers in substation equipment Forward-looking growth investments ⚫ Ramp-up of production capacity of EREMA heating elements (40 ton/month capacity) in line with increasing demand for LiB in the Industrial Furnaces business. ⚫ Development of “TK-SONiC,” a fast heating furnace that responds to a larger capacity and smaller MLCCs ⚫ Expanding sales of high-value EREMA products ⚫ Establishment of a mass production system for disc resistors TK-SONiC that enables fast heating The integration of AI and IoT technologies for decarbonization and energy conservation will drive demand for high-performance heating materials . Growing business Next- generation Structural reforms Core business Net sales EBITDA (Billion yen) 10.7 13.4 2.7 3.4 30.0 8.0
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Toward the Achievement of Vision 2030 Facing reality, delivering on commitment , and implementing seed -planting initiatives with a conscious focus on next -generation growth. * S&L: Smelting & Lining CB: Carbon Black Three measures 2025 2026 ~ 2030 (i) Commitment to growth market • Growth of Fine Carbon and Industrial Furnaces businesses in the semiconductor-related area • Profitability improvement through the standalone operation of the new CB Thai plant. Production expansion of high-value-added products in the North American market. (ii) Sustainable value creation • Creation of businesses that contribute to realizing a circular economy • Applying the development of existing technologies (CB regenerated from waste tires, etc.) (iii) Drastic structural reforms • Transformation of Graphite Electrodes and S&L businesses to value-creating businesses through structural reforms (ROIC > WACC)
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Capital Allocation
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Capital Allocation Allocate operating cash flow to proactive investments and shareholder returns while ensuring financial stability to enhance corporate value. Use debt strategically to fund investments that drive inorganic growth. An optimized business portfolio will lead to higher capital efficiency, which will support the stabilization and expansion of cash flow generation across our operations. ▍ Medium-term allocation policy (2026 - 2028) Expanding Operating CF Financial and capital policy (Secure A rating) →p.16 →p.13 Dividends Adjusted ROIC: over 12% KPI WACC: below 5% Capital investments →p.14 Shareholder return Appropriate allocation of CF according to investment opportunities 20% 60% 20% Facility renewal Growth investment Environmental investment FC Industrial Furnaces Strategic investments M&A →p.15 Reduced cross- shareholdings Operating CF →p.13 Borrowing capacity Breakdown of capital investments * The above planned investments represent our medium-term strategies and may differ substantially, depending on various future factors. The Company is not obligated to update this information. Corporate value improvement
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Financial and Capital Policy (Optimal Capital Structure) Adjusted Net D/E ratio of around 0.35x is used as a target metric for the optimal capital structure, ensuring a credit rating of A or above, which indicates sufficient financial soundness to support business growth. Target metrics for financial soundness and capital efficiency * Adjusted net debt/equity is the debt/equity ratio used by the rating agencies that rate hybrid financing to confirm capital . Balancing financial soundness (A credit rating) with minimizing WACC -0.25 -0.1 0.05 0.2 0.35 0.5 0.65 0.8 0.95 1.1 1.25 Adjusted Net D/E ratio 0.35 A-A+ BBB+ 0.24 0.21 0.22 0.15 0.20 0.21 0.21 2020 2021 2022 2023 2024 2025 2026f 0.35 Borrowing capacity A Optimal capital structure Adjusted Net D/E ratio Approx. 0.35x Net interest bearing debt/EBITDA 1.0x level WACC Below 5% Cost of capital High Low (WACC) Investment capacityInvestment capacityAdjusted* Net D/E
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Capital Investment 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026f Environmental Maintenance & Facility update *1 Growth investment is organic investment (excluding M&As). Capital investment, which expanded from 2022 to 2024, has peaked out. [Environmental] Concentrated investments in CB U.S.-based sites Growth investment*1 Level of capital investments 40.0 billion yen/year Overlapping large-scale growth investments and environmental investments At the CB manufacturing facility acquired in North America, significant environmental investments were made over multiple years to promote coexistence with the global environment. These efforts focused on reducing emissions of exhaust gases, including sulfur dioxide (SO2) and nitrogen oxides (NOx), generated during the CB manufacturing process. (2021-2024 approximately ¥35.0 billion). [Growth] Capital investments in FC for the semiconductor market The production capacity of special graphite materials, launching a new plant in China, enhancing SiC production equipment at TCK (Tokai Carbon Korea), upgrading SiC production equipment in Japan, and opening a production plant for polycrystalline SiC. [Growth] Relocation of CB Thai plant The environmental impact was reduced by securing the company's land and introducing advanced facilities. A sustainable supply system has been established. (2023 - 2025: approximately ¥50.0 billion) Steady-state value Capital investments 60.0 50.0 40.0 30.0 20.0 10.0 (Billion yen)
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M&A Select and implement strategic investments that deliver profitable growth to the Group toward the achievement of Vision 2030 U.S. | Fine Carbon machining shops MWI and KBR serve U.S. customers in the semiconductor, aerospace, and general heat-resistant application markets, contributing to total sales of around $10.0 billion. Through these acquisitions, our group now offers customized customer services that range from materials supply to purification, silicon carbide (SiC) coating, and machining. TCU Strategic investments September 2025 December 2024 Merged three companies (MWI, KBR, and TCU) from January 2026 as TCGS (Tokai Carbon Graphite Solutions) with the headquarters in Rochester, NY. Thailand | Carbon Black manufacturing site Acquired BRIDGESTONE CARBON BLACK (THAILAND) CO., LTD., a specialty carbon black manufacturing and sales site of Bridgestone Corporation. Co-creating competitive advantages for both companies through strengthened global partnership with Bridgestone Corporation. Sales scale of approx. ¥10.0 billion (annual). TCP-R KBR MWI
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6 6 6 12 24 48 30 30 30 36 30 30 30 -600 -400 -200 0 200 400 600 800 -60 -40 -20 0 20 40 60 80 Dividend per share and net income Dividend Policy Aiming for stable and consistent dividends with a target payout ratio of 30%, while enhancing shareholder value through business growth. f=forecast yen/share [Forecast] (100 Million yen)(Yen/share) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026f Total dividends (100 Million yen) 13 13 13 26 51 102 64 64 64 77 64 64 64 Dividend payout ratio 50% 52% - 21% 7% 32% 627% 40% 28% 30% - 32% 60% Shareholder return
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Measures to Achieve Management That is Conscious of the Cost of Capital and Stock Price
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Measures to Achieve Management That is Conscious of the Cost of Capital and Stock Price →p.19 →p.13 →p.10 →p.13 →p.8-9 →p.7 Measures Main drivers →p.7 →p.12 →p.6 The Company’s approach • Accurately track the capital costs and profitability specific to each division based on the Capital Asset Pricing Model (CAPM) on a quarterly basis. Conduct analysis and evaluations during Board of Directors meetings. • Discuss a growth strategy focused on achieving Vision 2030 and enhancing the stock price, using a breakdown of the current Price-to-Book Ratio (PBR) as a basis for the conversation during Board of Directors meetings. Cost of equity Anticipated growth rate PBR Market cap Net assets ROE Profit Net assets PER Market cap Profit Financial leverage ROIC • ROIC control by segments • Optimization of business portfolio • Efficient capital allocation • (Business) Structural reforms of businesses that lost value • (Business) Profitable growth in growing areas • Enhancement of corporate governance • Reduction of financial risks • (IR) Timely and reliable information disclosure and dialogue • Disclosure of management plan • Sustainable value creation • (Financial) Optimal capital structure • Delivering on commitments in the Business Plan (follow-up with timely disclosure) • Establishment of the eCB technology • Creation of new businesses • Credit rating of A or above • Timely, appropriate, and highly transparent disclosure • Net DER of approx. 0.35x • Implementation of “selection” and “concentration” • Accomplishment of a structural reform of the Graphite Electrodes business • Drastic structural reform of the S&L business • Growth of the Si and SiC semiconductor markets • Completion of inventory cutbacks in the EV- related market →This document
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Event Achievement Description Financial results briefing for institutional investors and securities analysts 4 times Held briefings led by the President & CEO and the officer responsible for the accounting & finance department to explain financial results and future outlooks. These briefings followed by a Q&A session, were streamed live and recording posted (quarterly). Small-group meetings hosted by securities analysts 3 times Attended by the President & CEO. Had dialogue with institutional investors about our management policy, business strategy, business environment, etc. Individual dialogue with domestic and foreign institutional investors and securities analysts 195 times President & CEO: 12 times (including attendance at overseas road shows) IR officer: 183 times (all meeting minutes were shared in a timely manner with all members of the management team) Briefing for securities analysts and media reporters hosted by the Company 1 time The President & CEO, the officer responsible for the corporate planning department, the officer responsible for the accounting & finance department and general managers of all business divisions gathered together for an exchange meeting with several securities analysts and media reporters. In fiscal year 2025, the Carbon Black business and Graphite Electrodes business were selected as the theme. Participation in fairs for retails investors 1 time Hosted a booth at the Nikkei-TSE IR Fair 2025. Participated with the corporate planning division (IR) taking on a central role. Achievements for fiscal year 2025 IR policy (Reference) Reduction of the cost of equity by enhancing dialogue with the stock market • Effectively communicate strategic investments and growth narratives • Broaden the range of disclosed information and encourage ongoing dialogue with shareholders and investors.
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Reference Material
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Sales and operating income by segment Exchange rate assumptions for 2026: JPY153/USD, JPY181/EUR 2024 (Result) 2025 (Result) 2026 (Plan) Net sales (Billion yen) Carbon Black 156.8 147.1 159.5 Fine Carbon 53.9 56.0 62.2 Smelting and Lining 64.5 61.8 66.2 Graphite Electrodes 48.8 37.6 36.7 Industrial Furnaces 16.3 10.7 13.5 Other Operations Friction Materials 8.0 8.0 8.4 Anode materials and other 1.8 1.9 0.2 (Total other) 9.8 9.8 8.6 Total 350.1 323.0 346.7 Operating income (Billion yen) Carbon Black 21.7 13.1 12.3 Fine Carbon 12.4 7.7 7.3 Smelting and Lining (13.7) 1.5 2.9 Graphite Electrodes (3.5) 2.4 2.4 Industrial Furnaces 3.3 2.3 2.8 Other Operations 0.4 0.6 0.3 Corporate & Other (1.2) (1.8) (2.0) Total 19.4 25.9 26.0
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EBITDA and EBITDA margin by segment 2024 (Result) 2025 (Result) 2026 (Plan) EBITDA (Billion yen) Carbon Black 32.0 24.6 27.0 Fine Carbon 20.3 18.0 18.0 Smelting and Lining 2.4 5.6 7.8 Graphite Electrodes 2.6 7.4 7.6 Industrial Furnaces 3.7 2.7 3.4 Other Operations 0.8 1.0 0.6 Corporate & Other (0.6) (0.9) (0.7) Total 61.1 58.4 63.7 EBITDA Margin Carbon Black 20% 17% 17% Fine Carbon 38% 32% 29% Smelting and Lining 4% 9% 12% Graphite Electrodes 5% 20% 21% Industrial Furnaces 23% 25% 25% Other Operations 8% 11% 7% Corporate & Other - - - Total 18% 18% 18% Exchange rate assumptions for 2026: JPY153/USD, JPY181/EUR
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1) ROE: Return on Equity = Net income as a percentage of equity 2) ROIC: Return on Invested Capital = Operating income after taxes as a percentage of the sum of working capital and fixed assets * ROIC (adjusted): ROIC after adjustments taking into account goodwill and goodwill amortization 3) ROA: Return on Asset = Net income as a percentage of total assets 4) WACC: Weighted Average Cost of Capital 5) Adjusted net D/E: Debt/equity ratio used by the rating agencies that rate hybrid financing to confirm capital Key performance indicators 2024 (Result) 2025 (Result) 2026 (Plan) Net sales (Billion yen) 350.1 323.0 346.7 Operating income (Billion yen) 19.4 25.9 26.0 EBITDA (Billion yen) 61.1 58.4 63.7 ROS (Operating income) 6% 8% 7% ROS (EBITDA) 18% 18% 18% ROE 1) (18%) 7% 3% ROIC (adjusted) 2) 7% 6% 5% ROA 3) (9%) 3% 2% WACC 4) 4% 5% 5% Net D/E ratio 0.34 0.34 0.34 Adjusted net D/E ratio 5) 0.20 0.21 0.21 Exchange rates JPY152/USD JPY164/EUR JPY150/USD JPY169/EUR JPY153/USD JPY181/EUR
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List of abbreviations <Division name> CB: Carbon Black FC: Fine Carbon S&L: Smelting & Lining GE: Graphite Electrodes IF: Industrial Furnace and related materials <Financial indicators> ROS: Return on Sales = Operating margin (operating income as a percentage of total net sales) EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization = Operating income before depreciation and amortization (operating income + depreciation and amortization) ROE: Return on Equity = Net income as a percentage of equity ROA: Return on Asset = Net income as a percentage of total assets ROIC: Return on Invested Capital = Operating income after taxes as a percentage of the sum of working capital and fixed assets ROIC (adjusted): ROIC after adjustments taking into account goodwill and goodwill amortization WACC: Weighted Average Cost of Capital Adjusted Net D/E: Debt/equity ratio used by the rating agencies that rate hybrid financing to confirm capital
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Disclaimer regarding forward looking statements ◼ Forward-looking statements in this document are based on information obtainable at the time this document was published and assumptions as of the date of publication concerning elements of uncertainty that could affect future earnings. ◼ Actual results may differ substantially, depending on various future factors. Factors that affect business performance include, but are not limited to, economic conditions, trends in product demand and market prices, and fluctuation in exchange rates. ◼ The quantitative goals, reference values, investment amounts, and other numerical goals in this document only express the medium-term strategy and vision of the company; they are not performance forecasts. The company is not obligated to update such information. ◼ Please see the disclosures in the Consolidated Financial Results for the official earnings forecast, based on the rules of Tokyo Stock Exchange, Inc.
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IR contact: Corporate Planning Department TC-IR.new@tokaicarbon.co.jp