Tokai Carbon (5301): FY2025 Results Summary — Profit Rebound as Graphite Electrodes and Smelting Turn Positive

This article is based on publicly available IR materials and is not a recommendation to buy or sell any specific securities.

Tokai Carbon Co., Ltd. (5301) closed FY2025 (January to December 2025) with net sales of JPY322.9 b (-7.8%), operating income of JPY25.8 b (+33.3%) and ROS 8.0% (+2.5points). Net income attributable to owners of the parent company swung back to a profit of 20,078 million yen from a loss of 56,485 million yen a year earlier, as the prior-year costs of structural reform and impairment losses ran their course and a gain on sale of investment securities of JPY 4.1 b was recorded. EBITDA was JPY58.4 b (-4.4%) with an EBITDA margin of 18.1% (+0.6points). Net sales, operating income, ordinary income and net income all significantly exceeded the full-year earnings forecast announced on November 6, 2025.

Consolidated Results (Full-Year Actual)

Net sales decreased year on year mainly due to the divestment of the German site of the Graphite Electrodes business and declined sales prices and sales volumes in the Carbon Black business, while the Fine Carbon business grew on the consolidation of U.S.-based subsidiaries and a recovery in demand for memory semiconductors. Operating income increased year on year, driven by the significant turnaround to profitability in both the Graphite Electrodes and the Smelting and Lining businesses. Figures are in millions of yen. The figures for FY2024 have been retrospectively adjusted following the finalization of the provisional accounting for the business combinations with KBR, Inc. and MWI, Inc.

Item	Jan-Dec 2024	Jan-Dec 2025	YoY Change	% Change
Net sales	350,114	322,960	(27,153)	(7.8)%
Operating income	19,386	25,850	+6,463	+33.3%
Ordinary income	22,579	26,312	+3,733	+16.5%
Net income attributable to owners of the parent company	(56,485)	20,078	+76,564	–
EBITDA	61,120	58,443	(2,677)	(4.4)%
EBITDA margin	17.5	18.1	+0.6pt	–
Return on sales	5.5%	8.0%	+2.5pt	–

Segment Results

Carbon Black net sales fell to 147,093 million yen on declined sales volumes resulting from production adjustments among tire manufacturers and declined sales prices, and operating income fell (39.5)% to 13,135 million yen, primarily due to declining margins and non-recurring losses resulting from the consolidation of Bridgestone Corporation’s carbon black manufacturing and sales subsidiary in Thailand (consolidated from the fourth quarter of FY2025). Fine Carbon net sales rose +3.9% to 55,969 million yen on increased sales volume of Solid SiC focus rings and the consolidation of U.S.-based subsidiaries, but operating income declined (38.1)% to 7,704 million yen on the decelerated growth of the SiC power semiconductor market and intensified competition in the Chinese market. Smelting and Lining operating income improved by +15,204 million yen to 1,503 million yen on cost reductions and decreased depreciation and amortization resulting from impairment losses on goodwill recorded in the prior fiscal year; excluding that effect, the profit level stood at JPY+2.8 b YoY. Graphite Electrodes returned to an operating profit of 2,389 million yen on reduced production costs and the effects of structural reforms, including production consolidation in Japan and the divestment of the German subsidiary. Industrial Furnaces and Related Products saw net sales fall (34.1)% to 10,728 million yen as CAPEX demand in the electronic device industries remained sluggish.

Segment	Net sales Jan-Dec 2024	Net sales Jan-Dec 2025	Operating income Jan-Dec 2024	Operating income Jan-Dec 2025
Carbon Black	156,793	147,093	21,706	13,135
Fine Carbon	53,890	55,969	12,437	7,704
Smelting and Lining	64,512	61,751	(13,701)	1,503
Graphite Electrodes	48,818	37,573	(3,529)	2,389
Industrial Furnaces and Related Products	16,291	10,728	3,304	2,268
Others (total)	9,807	9,843	403	617
Corporate & Other	–	–	(1,235)	(1,769)
Total	350,114	322,960	19,386	25,850

Financial Position and Cash Flow

Total assets stood at 664,033 million yen as of December 31, 2025, against 643,517 million yen a year earlier. Interest-bearing debt was JPY198.1 billion (JPY+6.8 billion from End of FY2024) and net interest-bearing debt was JPY107.9 billion (JPY+8.9 billion from End of FY2024). The capital to asset ratio was 47.9% (End of FY2024: 44.9%) and the net D/E ratio was 0.34 times (End of FY2024: 0.34 times). Cash flows from operating activities were 55,872 million yen and cash flows from investing activities were (51,052) million yen, giving free cash flow of JPY+4.8 billion (Jan-Dec 2024 JPY-6.3 billion). Purchase of fixed assets was (42,907) million yen. The credit ratings have been maintained, with JCR: A+ (outlook stable) and R&I: A (outlook stable).

FY2026 Earnings Forecast

For FY2026 the company projects net sales of 346,700 million yen (+7.4%) and operating income of 26,000 million yen (+0.6%), with net sales projected to increase in every business except Graphite Electrodes. Consolidated operating income is projected to remain almost flat, reflecting heightened global uncertainty: declines are expected in the Carbon Black business due to an increase in depreciation associated with the commencement of full-scale operations at the new site in Thailand, and in the Fine Carbon business in anticipation of the decelerated growth of the power semiconductor market, while increases are expected in the Smelting and Lining and the Industrial Furnaces and Related Products businesses. Net income attributable to owners of the parent company is forecast at 10,600 million yen and ROE at 3.2. Assumed full-year average exchange rates are USD1=¥153 and EUR1=¥181.

Item	FY2025 Results (Full year)	FY2026 Forecast (Full year)	YoY Change	% Change
Net sales	322,960	346,700	+23,739	+7.4
Operating income	25,850	26,000	+149	+0.6
Ordinary income	26,312	24,000	(2,312)	(8.8)%
Net income attributable to owners of the parent company	20,078	10,600	(9,478)	(47.2)%
EBITDA	58,443	63,700	+5,256	+9.0
EBITDA margin	18.1	18.4	–	–
ROS	8.0	7.5	–	–
ROE	6.6	3.2	–	–

Segment	Net sales FY2025 Results	Net sales FY2026 Forecast	Operating income FY2025 Results	Operating income FY2026 Forecast
Carbon Black	147,093	159,500	13,135	12,300
Fine Carbon	55,969	62,200	7,704	7,300
Smelting and Lining	61,751	66,200	1,503	2,900
Graphite Electrodes	37,573	36,700	2,389	2,400
Industrial Furnaces and Related Products	10,728	13,500	2,268	2,800
Other Operations	9,843	8,600	617	300
Corporate & Other	–	–	(1,769)	(2,000)
Total	322,960	346,700	25,850	26,000

Shareholder Returns

For FY2025 the company set a year-end dividend of JPY15 (no changes), for an annual dividend of JPY30 with a payout ratio of 31.9%. The FY2026 dividend forecast is likewise a year-end dividend of JPY15 and an annual dividend of JPY30.

Topics and Key Indicators

Strategic investments and capital investments necessary for future growth, exemplified by the consolidation of Bridgestone Corporation’s carbon black manufacturing and sales subsidiary in Thailand, were carefully selected and continued, and while interest-bearing debts increased slightly, an optimal capital structure was maintained through appropriate leverage. Capital investment was 36,854 million yen in FY2025 against 56,715 million yen in FY2024, with 43,100 million yen planned for FY2026. R&D expenses were 4,319 million yen in FY2025, with 5,200 million yen planned for FY2026. Adjusted ROIC was 5.8% in FY2025 versus 6.8% in FY2024, and the number of employees was 4,436. The average exchange rate was 149.71 JPY/USD in FY2025.

This article is an analysis based on publicly available information and is not a recommendation to buy or sell any specific securities. Investment decisions are your own responsibility.