Interim report
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Note : This document has been translated from the Japanese original for reference purposes only . In the event of any discrepancy between this translated document and the Japanese original , the original shall prevail . Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending December 31 , 2026 [ Japanese GAAP ] Company name : Tokai Carbon Co. , Ltd. Securities code : Representative : Inquiries : Telephone : 5301 August 5 , 2026 Listing : Tokyo Stock Exchange Prime Market URL : https://www.tokaicarbon.co.jp/en/ Hajime Nagasaka , President & Chief Executive Officer Naoki Hirai , Executive Officer and General Manager , Accounting & Finance Department 81-3-3746-5100 Scheduled date to file semi - annual report : Scheduled date to commence dividend payments : Preparation of supplementary material on financial results : Holding of financial results briefing : August 7 , 2026 September 1 , 2026 Yes Yes ( Conference call for analysts and institutional investors ) ( Yen amounts are rounded down to millions , unless otherwise noted ) 1. Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending December 31 , 2026 ( January 1 to June 30 , 2026 ) ( 1 ) Consolidated Operating Results Net Sales ( Percentages indicate year - on - year changes ) Operating Income Ordinary Income Semi - annual Net Income Attributable to Owners of the Parent Company Millions of yen % Millions of yen % Millions of yen % Millions of yen % Six months ended June 30 , 2026 173,728 9.9 15,102 10.5 14,845 9.3 7,235 ( 14.0 ) Six months ended June 30 , 2025 Note : Comprehensive income : 158,076 ( 7.5 ) 13,670 62.3 13,587 29.1 8,415 129.9 Six months ended June 30 , 2026 : Six months ended June 30 , 2025 : 22,424 million yen ( - % ) ( 10,453 ) million yen ( - % ) Semi - annual Net Semi - annual Net Income per Share Income per Share Fully Diluted Yen Yen Six months ended June 30 , 2026 34.40 34.29 Six months ended June 30 , 2025 39.42 1. The Company finalized the provisional accounting treatment for business combinations in the fourth quarter of the consolidated accounting period ended December 31 , 2025 , and figures for the six months ended June 30 , 2025 reflect the finalization of the provisional accounting 2. Quarterly net income per share fully diluted for the six months ended June 30 , 2025 is not listed because there are no dilutive shares . treatment . Consolidated Financial Position Total Assets Net Assets Equity Ratio As of June 30 , 2026 As of December 31 , 2025 For reference : Shareholders ' capital : As of June 30 , 2026 : As of December 31 , 2025 : Millions of yen 683,300 664,033 Millions of yen % 356,207 352,846 47.0 47.9 321,473 million yen 318,357 million yen
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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 31, 2025 - 15.00 - 15.00 30.00 Fiscal year ending December 31, 2026 - 20.00 Fiscal year ending December 31, 2026 (Forecast) - 20.00 40.00 Note: Amendment to most recently disclosed dividend forecast: None 3. Consolidated Earnings Forecast for the Fiscal Year Ending December 31, 20 26 (January 1 to December 31, 2026) (Percentages represent year-on-year changes) Net Sales Operating Income Ordinary Income Net Income Attributable to Owners of the Parent Company Net Income per Share Millions of yen % Millions of yen % Millions of yen % Millions of yen % Yen Full year 386,000 19.5 35,000 35.4 34,300 30.4 22,000 9.6 108.73 Note: Amendment to most recently disclosed consolidated earnings forecast: Yes
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* Notes: (1) Changes in significant subsidiaries during the period (changes in specific subsidiaries accompanying changes in the scope of consolidation): None Newly included: - Excluded: - (2) Application of accounting treatment specific to the preparation of semi-annual consolidated financial statements: None (3) Changes in accounting policy and changes and restatements of accounting estimates (a) Changes in accounting policy accompanying the revision of accounting standards: None (b) Changes in accounting policy other than those listed in (a): None (c) Changes in accounting estimates: None (d) Restatements: None (4) Number of shares issued (common stock) (a) Number of shares issued at the end of the period (including treasury stock) As of June 30, 2026 224,943,104 shares As of December 31, 2025 224,943,104 shares (b) Number of treasury stock at the end of the period As of June 30, 2026 22,607,330 shares As of December 31, 2025 11,436,605 shares (c) Average number of shares during the period Six months ended June 30, 2026 210,320,521 shares Six months ended June 30, 2025 213,487,227 shares * The semi-annual 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 re sults 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 semi-annual financial results) Tokai Carbon has scheduled a briefing on financial results in the form of a telephone meeting for analysts and institutional investors on Thursday, August 6, 2026. The materials for this briefing will be posted on the corporate website on that day.
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1 Supplemental Materials 1. Qualitative Information on the Semi-annual Financial Results ..................................................................................... 2 (1) Operating Results for the Second Quarter of the Fiscal Year Ending December 31, 2026 .................................. 2 2. Semi-annual Consolidated Financial Statements and Notes ......................................................................................... 4 (1) Semi-annual Consolidated Balance Sheets ........................................................................................................... 4 (2) Semi-annual Consolidated Statements of Income and Comprehensive Income ................................................... 6 Semi-annual Consolidated Statements of Income ................................................................................................ 6 Semi-annual Consolidated Statements of Comprehensive Income....................................................................... 7 (3) Notes to Semi-annual Consolidated Financial Statements.................................................................................... 8 (Notes on the Going-concern Assumption) .......................................................................................................... 8 (Notes on Significant Changes in Shareholders’ Equity Amount) ....................................................................... 8 (Segment Information).......................................................................................................................................... 9
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2 1. Qualitative Information on the Semi-annual Financial Results (1) Operating Results for the Second Quarter of the Fiscal Year Ending December 31, 2026 During the first six months of 2026 (from January 1 to June 30, 2026), while the expansion of global demand for technology-related products associated with the progress and spread of AI strongly drove economic activity, the outlook for the global economy remained uncertain due to continued tens ion in the Middle East in which the situation once showing signs of abating has become unstable again. Under these circumstances, in the Group, based on “Vision 2030,” the long-term vision we announced in February 2025 that lays out our desired state in 2030 and the initiatives we will take to achieve it, we are aiming to achieve net sales of 500 billion yen, EBITDA margin of 20%, and ROIC of 12% as our “Vision 2030” goals. In May 2026, we announced an upward revision of our consolidated earnings forecast for the fiscal year ending December 31, 2026 and an increase in dividends. At the same time, we announced measures to strengthen management and shareholder returns that are conscious of cost of capital and stock prices, including an increase in dividend payout ratio and the introduction of a DOE indicator (progressive dividends) as well as reduction policies for cross shareholdings and the purchase of treasury stock, developing our activities to achieve further growth and sustainable enhancement of corporate value. In addition, from the perspective of medium - to long-term growth and sustainability, in our core Carbon Black business, the Company constructed a new Thai plant installed with state-of-the-art flue gas desulfurization and denitrification equipment with the aim of reducing the environmental impact and continues to promote the relocation project. At the same time, we are steadily promoting a project to recover carbon black from used tires and other materials . In the new business field, with support from the M inistry of the Environment, we are also developing and verifying production technologies for functional solid carbons with the aim of establishing a carbon recycling-oriented society. As a result, net sales for the first six months of 202 6 increased by 9.9% year on year to 173,728 million yen . Operating income increased by 10.5% year on year to 15,102 million yen. Ordinary income increased by 9.3% year on year to 14,845 million yen. Semi-annual net income attributable to owners of the parent company decreased by 14.0% year on year to 7,235 million yen. The Company finalized the provisional accounting treatment for business combinations in the fourth quarter of the consolidated accounting period ended December 31, 2025, and the figures for the six months ended June 30, 2025 reflect the finalization of the provisional accounting treatment. Results by business segment were as follows: Carbon Black A decline in sales volume due to the production adjustments of a tire manufacturer was offset by the development of new customers and spot transactions. Net sales increased due to the contribution of the Thai base, which was newly consolidated in the latter half of 2025. On the other hand, operating income decreased year on year due to an increase in depreciation following the start of operations at the new Thai plant and worsening margins resulting from high raw oil prices caused by the Middle East situation. As a result, net sales for the Carbon Black business increased by 10.5% year on year to 83,480 million yen, while operating income decreased by 11.1% year on year to 7,239 million yen. Fine Carbon Both net sales and operating income increased year on year due to a significant increase in sales volume of solid SiC focus rings for the memory semiconductor market, a main product, despite sluggish demand in the SiC power semiconductor market.
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3 As a result, net sales for the Fine Carbon business increased by 19.1% year on year to 33,016 million yen, while operating income increased by 6.9% year on year to 4,716 million yen. Smelting & Lining In cathodes for aluminum electrolytic furnaces, earnings were underpinned by the promotion of cost reductions and the license revenue generated from our next-generation low-impact cathode RuC® (Ready-to-use Cathode), despite some disruptions in transportation against the backdrop of the volatile situation in the Middle East . As a result, net sales for the Smelting and Lining business increased by 12.9% year on year to 30,649 million yen, while operating income increased by 563.9% year on year to 2,020 million yen. Graphite Electrodes Despite sluggish crude steel production worldwide, electric arc furnace steel production in the United States, our main market, was strong, and production in Japan declined only slightly. As part of the structural reforms implemented in the previous fiscal year, the Group excluded TOKAI ERFTCARBON GmbH, a wholly -owned German subsidiary, from the scope of consolidation in April 2025 . This led to a decrease in net sales , but operating income increased due in part to the effects of the structural reforms. As a result, net sales for the Graphite Electrodes business decreased by 8.5% year on year to 16,878 million yen, and operating income increased by 60.3% year on year to 792 million yen. Industrial Furnaces and Related Products In the energy -related sector, a key market for industrial furnaces and heating elements, capital investment for lithium-ion batteries (LiBs) remained stagnant , but demand for multilayer ceramic capacitors (MLCC), mainly for AI datacenters, increased. In addition, s ales of resistors for power infrastructure also performed strongly, backed by global progress in power grid upgrades. As a result, net sales for the Industrial Furnaces and Related Products business increased by 28.7% year on year to 5,409 million yen, while operating income increased by 37.0% year on year to 1,213 million yen. Other Operations Friction materials Sales for mining equipment were sluggish due to a decline in coal mining volume in Indonesia, but sales of products for motorcycles were strong. Sales of products for industrial machinery, construction machinery and agricultural machinery were also strong. As a result, net sales of friction materials increased by 3.4% year on year to 4,138 million yen. Anode materials and others Net sales of anode materials and others, including real estate leasing, decreased by 84.2% year on year to 154 million yen. As a result, net sales in Other Operations decreased by 13.8% year on year to 4,293 million yen, while operating income decreased by 77.6% year on year to 64 million yen.
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4 2. Semi-annual Consolidated Financial Statements and Notes (1) Semi-annual Consolidated Balance Sheets (Millions of yen) Previous fiscal year (As of December 31, 2025) First six months of the fiscal year under review (As of June 30, 2026) Assets Current assets Cash and deposits 90,156 86,404 Notes and accounts receivable 66,781 70,807 Merchandise and finished goods 28,669 29,436 Work in progress 34,266 37,110 Raw materials and supplies 30,361 34,852 Other 10,309 10,562 Allowance for doubtful accounts (1,715) (1,717) Total current assets 258,828 267,457 Fixed assets Tangible fixed assets Buildings and structures, net 49,519 49,821 Machinery, equipment and vehicles, net 179,933 181,458 Land 12,878 12,730 Leased assets, net 9,360 9,006 Construction in progress 34,981 32,469 Other, net 3,755 4,214 Total tangible fixed assets 290,429 289,701 Intangible assets Goodwill 26,684 24,688 Customer-related assets 21,795 20,293 Other 13,039 12,530 Total intangible assets 61,520 57,512 Investments and other assets Investment securities 40,257 56,174 Long-term loans receivable 3,878 3,621 Net defined benefit asset 6,227 6,173 Deferred tax assets 1,645 1,076 Other 1,270 1,607 Allowance for doubtful accounts (24) (24) Total investments and other assets 53,255 68,629 Total fixed assets 405,204 415,843 Total assets 664,033 683,300
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5 (Millions of yen) Previous fiscal year (As of December 31, 2025) First six months of the fiscal year under review (As of June 30, 2026) Liabilities Current liabilities Notes and accounts payable 20,381 22,338 Electronically recorded obligations 3,029 2,769 Short-term loans payable 7,814 9,166 Commercial papers 47,000 42,500 Current portion of loans payable 10,000 - Current portion of long-term loans payable 3,282 8,772 Income taxes payable 2,508 2,884 Contract liability 2,089 2,435 Provision for bonuses 4,144 2,571 Provision for business restructuring 1,503 9 Other 24,973 25,625 Total current liabilities 126,726 119,072 Long-term liabilities Bonds payable 65,000 90,000 Long-term loans payable 65,015 57,885 Lease obligations 9,230 8,874 Deferred tax liabilities 35,935 43,214 Retirement benefit liability 4,805 4,766 Provision for retirement benefits for directors 107 87 Provision for executive officers’ retirement benefits 36 29 Provision for environment and safety measures 406 433 Other 3,923 2,728 Total long-term liabilities 184,460 208,020 Total liabilities 311,187 327,093 Net assets Shareholders’ equity Capital stock 20,436 20,436 Capital surplus 9,388 9,402 Retained earnings 160,334 164,367 Treasury stock (7,047) (22,025) Total shareholders’ equity 183,111 172,180 Accumulated other comprehensive income Valuation difference on other securities 21,933 33,091 Deferred gains or losses on hedges 115 23 Foreign currency translation adjustments 109,130 112,231 Cumulative remeasurements of defined benefit plans 4,066 3,946 Total accumulated other comprehensive income 135,246 149,293 Non-controlling interests 34,488 34,733 Total net assets 352,846 356,207 Total liabilities and net assets 664,033 683,300
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6 (2) Semi-annual Consolidated Statements of Income and Comprehensive Income Semi-annual Consolidated Statements of Income (Millions of yen) First six months of the previous fiscal year (January 1 to June 30, 2025) First six months of the fiscal year under review (January 1 to June 30, 2026) Net sales 158,076 173,728 Cost of sales 118,891 130,527 Gross profit 39,185 43,200 Selling, general and administrative expenses 25,515 28,098 Operating income 13,670 15,102 Non-operating income Interest income 971 874 Dividend income 668 718 Foreign exchange gains - 795 Other 721 366 Total non-operating income 2,360 2,754 Non-operating expenses Interest expenses 1,149 1,462 Foreign exchange losses 616 - Other 677 1,547 Total non-operating expenses 2,443 3,010 Ordinary income 13,587 14,845 Extraordinary income Gain on sale of investment securities 38 1,452 Gain on sales of fixed assets 2 9 Reversal of provision for business restructuring 1,017 - Total extraordinary income 1,057 1,461 Extraordinary losses Extra retirement payments - 556 Loss on retirement of fixed assets 84 63 Loss on sales of fixed assets 0 1 Total extraordinary losses 84 621 Semi-annual net income before income taxes 14,560 15,686 Income taxes - current 3,555 3,750 Income taxes - deferred 1,002 2,475 Total income taxes 4,558 6,225 Semi-annual net income 10,002 9,460 Semi-annual net income attributable to non-controlling interests 1,587 2,224 Semi-annual net income attributable to owners of the parent company 8,415 7,235
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7 Semi-annual Consolidated Statements of Comprehensive Income (Millions of yen) First six months of the previous fiscal year (January 1 to June 30, 2025) First six months of the fiscal year under review (January 1 to June 30, 2026) Semi-annual net income 10,002 9,460 Other comprehensive income Valuation difference on other securities 753 11,127 Deferred gains or losses on hedges 15 (92) Foreign currency translation adjustments (20,469) 2,048 Remeasurements of defined benefit plans (755) (119) Total other comprehensive income (20,455) 12,964 Semi-annual comprehensive income (10,453) 22,424 (Breakdown) Semi-annual comprehensive income attributable to owners of the parent company (11,419) 21,282 Semi-annual comprehensive income attributable to non- controlling interests 966 1,142
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8 (3) Notes to Semi-annual Consolidated Financial Statements (Notes on the Going-concern Assumption) Not Applicable (Notes on Significant Changes in Shareholders’ Equity Amount) The Company has acquired 11,210,700 shares of treasury stock based on the resolution of the Board of Directors held on May 13, 2026. As a result, during the first six months of the fiscal year under review, treasury stock increased by 14,977 million yen, and treasury stock at the end of the first six months of the fiscal year under review increased to 22,025 million yen.
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9 (Segment Information) Ⅰ First six months of the previous fiscal year (January 1 to June 30, 2025) 1. Information on net sales and amount of income by reportable segment (Millions of yen) Reportable segment Other Operations (Note 1) Total Adjustments (Note 2) Amount recorded in the semi- annual consolidated statements of income (Note 3) Carbon Black Fine Carbon Smelting and Lining Graphite Electrodes Industrial Furnaces and Related Products Subtotal Net sales External sales 75,571 27,713 27,155 18,451 4,204 153,097 4,979 158,076 - 158,076 Intersegment sales/transfers 12 122 149 77 28 390 - 390 (390) - Total 75,584 27,835 27,305 18,529 4,232 153,487 4,979 158,467 (390) 158,076 Segment income (loss) 8,148 4,410 304 494 885 14,243 286 14,529 (859) 13,670 Notes: 1. The Other Operations segment is a business segment that is not included among the reportable segments. It consists of the friction materials business, anode materials business, real estate leasing business, and other businesses. 2. The 859 million-yen negative adjustment in segment income includes company-wide expenses of 876 million yen that were not allocated to each reportable segment. Company-wide expenses consist of research and development expenses and other expenses not attributable to the reportable segments. 3. Segment income is reconciled to the operating income reported in the Semi-annual Consolidated Statements of Income. 4. The Company finalized the provisional accounting treatment for business combinations in the fourth quarter of the consolidated accounting period ended December 31, 2025, and the figures for the six months ended June 30, 2025 reflect the finalization of the provisional accounting treatment. 2. Information on assets by reportable segment During the first six months of the fiscal year under review, as a result of the transfer of all equity interests of TOKAI ERFTCARBON GmbH and its exclusion from the scope of consolidation, the amount of assets of reportable segments at the end of the first six months of the fiscal year under review decreased by 13,175 million yen in the Graphite Electrodes segment compared with the end of the previous fiscal year. Ⅱ First six months of the fiscal year under review (January 1 to June 30, 2026) Information on net sales and amount of income by reportable segment (Millions of yen) Reportable segment Other Operations (Note 1) Total Adjustments (Note 2) Amount recorded in the semi- annual consolidated statements of income (Note 3) Carbon Black Fine Carbon Smelting and Lining Graphite Electrodes Industrial Furnaces and Related Products Subtotal Net sales External sales 83,480 33,016 30,649 16,878 5,409 169,434 4,293 173,728 － 173,728 Intersegment sales/transfers 8 53 192 23 74 353 － 353 (353) － Total 83,488 33,070 30,842 16,901 5,484 169,787 4,293 174,081 (353) 173,728 Segment income 7,239 4,716 2,020 792 1,213 15,982 64 16,046 (944) 15,102 Notes: 1. The Other Operations segment is a business segment that is not included among the reportable segments. It consists of the friction materials business, anode materials business, real estate leasing business, and other businesses. 2. The 944-million-yen negative adjustment in segment income includes company-wide expenses of 951 million yen that were not allocated to each reportable segment. Company-wide expenses consist of research and development expenses and other expenses not attributable to the reportable segments. 3. Segment income is reconciled to the operating income reported in the Semi-annual Consolidated Statements of Income.