Fiscal Year Ending December 2025 Earnings Presentation Materials

Fiscal Year Ending December 2025 Earnings Overview

Net sales for the fiscal year ended December 2025 reflected revenue growth in the Fine Carbon segment due to consolidation of a U.S. subsidiary and recovery in memory semiconductor demand, but overall consolidated net sales decreased year-over-year due to the sale of the German graphite electrode facility and declines in selling prices and volumes in the Carbon Black segment. Operating income significantly increased due to structural reforms in the Graphite Electrode segment and a reversal of impairment losses recognized in the Smelting & Lining segment in the previous year. Although a one-off loss was recorded in the Carbon Black segment in Q4, improved production efficiency and cost reductions contributed to overall consolidated profit growth. EBITDA declined but margin improved to a high level in the upper teens percentage range. Net income attributable to owners of parent turned positive, aided by gains on sales of policy equity holdings.

Consolidated Business Summary and Segment Performance

Net sales were 322.96 billion yen (YoY -7.8%), operating income was 25.85 billion yen (+33.3%), and net income attributable to owners of parent significantly increased to 20.078 billion yen. By segment, the Carbon Black segment experienced declines in net sales and operating income; Fine Carbon saw revenue growth but operating income decreased; Smelting & Lining and Graphite Electrode segments posted profit increases. The Graphite Electrode segment turned profitable due to structural reforms and lower raw material costs. Although cash generated from operating activities declined, reduced investment spending led to positive free cash flow.

Earnings Guidance for Fiscal Year Ending December 2026

For fiscal 2026, excluding the Graphite Electrode segment, net sales are expected to increase with an anticipated consolidated growth rate of 7.4%. Operating income foresees pressure from higher depreciation costs following full-scale operations at the new Thailand facility and slowing growth in the Carbon Black and power semiconductor-related businesses. However, profit growth is expected in the Smelting & Lining and Industrial Furnace-related businesses. Net income attributable to owners of parent is forecasted at 10.6 billion yen, a decrease from the previous fiscal year. The year-end dividend is planned at 15 yen, with an annual dividend of 30 yen.