Integrated Report
2 0 2 3
2030 Management Vision
"Creating products with unprecedented potential"
Becoming a leading company through Earth-friendly products and technologies
Company Policies
Become a global company
For the world, for society
Become a strong company
Medium-Term
Management Plan
P.16
02
On the publication of the Integrated Report 2023
Embracing the challenge of even greater accomplishments in accordance with our 2030 Management Vision
The Toyo Tanso Group began publishing an integrated report in 2022 so that customers, shareholders, investors, and other stakeholders can better understand its contributions to resolving social issues and increasing its corporate value through its businesses. This marks the second publication of our integrated report.
The Toyo Tanso Group has established a robust foundation built atop its aspirations for"Manufacturing completely unique products."
This foundation was built based on our extensive pursuit of added value, and this stance will remain unchanged for many years to come.
Our management vision for 2030 of"Creating products with unprecedented potential"and"Becoming a leading company through Earth-friendly products and technologies"speaks to this commitment. This integrated report highlights a number of the Toyo Tanso Group's initiatives, detailing what we can do to give back to society while also pursuing our own growth.
Editorial policy
The Integrated Report 2023 provides a concise summary of the most important aspects of the Group's value-creating operations. More detailed information can be found on Toyo Tanso's sustainability website and on its IR website. In compiling the report, we have drawn on the recommendations of the International Integrated Reporting Council's International Integrated Reporting Framework and on"Guidance for Collaborative Value Creation,"a publication of the Ministry of Economy, Trade and Industry.
Scope of coverage
The report covers Toyo Tanso Co., Ltd. and its domestic and overseas consolidated subsidiaries.
* Some non-consolidated information pertaining to Toyo Tanso Co., Ltd. alone is provided in notes.
Dates of coverage
FY2022 (January 1 to December 31, 2022)
* The report also includes some information about activities undertaken during or after January 1, 2023.
Precautionary note concerning forward-looking statements
Forward-looking information contained in this report, for example forecasts of future performance, represent judgments made on the basis of information that was available at the time of their disclosure. Such information by its nature includes numerous sources of uncertainty, and actual performance may vary due to factors including changes in business conditions.
Information disclosure structures
- Documents disclosed in accordance with legal requirements Documents disclosed in a timely manner
Brevity | ||||||||
Integrated | Report | |||||||
Sustainability/ ESG information | Information for shareholders | |||||||
Non-financial | and investors | Financial | ||||||
content | • Corporate Governance | • Securities Report* | content | |||||
Report* | • Financial Results* | |||||||
• Sustainability website | ||||||||
• IR website | ||||||||
www.toyotanso.com/ | ||||||||
www.toyotanso.com/IR/ | ||||||||
sustainability/ | ||||||||
Comprehensiveness
Contents
Message from the CEO
04 Message from the CEO
Background of value creation
- History of value creation
- Business domains
- At a Glance
Toyo Tanso's value creation story
14 Value creation process
16 Medium-Term Management Plan (2023 to 2027)
18 Business strategies based on the Group's business portfolio
20 Materialities and contributions to the resolution of social issues
- Sustainability structures
- Roundtable Discussion involving Group Heads of Sustainability Committee
Pursuing product development and manufacturing technologies to resolve social issues and customer needs
- Pursuing added value and promoting globalization through improved competitiveness
- Developing products and improving manufacturing processes to help realize a recycling-based society
- Complying with increasingly sophisticated quality requirements
- Developing new products and improving services in partnership with stakeholders
- Policies and initiatives for intellectual properties
- Column: Double winner of Monodzukuri Nippon Grand Awards
Contribution to reducing climate change risk and environmental protection
- Reducing greenhouse gas emissions, including through energy savings and creation
- Contributing to the reduction of greenhouse gas emissions through products
-
Complying with various countries' environmental laws and regulations and reducing environmental impacts
Using Earth-friendly raw materials and avoiding procurement risk - Environmental policies and management system
- Compliance with TCFD recommendations
Creating safe, secure workplace environments where all employees can flourish
- Improving safe, healthy workplace environments and increasing productivity
- Ensuring the human rights of all stakeholders
- Offering human resources development, training, and education programs
- Respecting workforce diversity
Undertaking corporate activities that inspire trust
- Compliance
- Strengthening crisis management capabilities
- Undertaking community service activities
- Corporate governance
51 Roundtable discussion among outside directors
Financial and non-financial information
54 Financial and non-financial highlights
56 11-year financial and non-financial summary
58 Consolidated financial statements
Corporate information
63 Company profile/Stock information
Message from the CEO
Message from the CEO
Message from the CEO
Fostering a corporate culture with dynamic frontline operations aimed at high value added manufacturing and sustainable growth
Naotaka Kondo
Representative Director
Chairman & President, CEO
Looking Back on FY2022 When We Posted
Higher Profit on Increased Revenue
The business environment remains uncertain as a result of geopolitical risks, economic downturns, and surging resource prices. Against this backdrop, in FY2022, we recorded net sales of 43,774 million yen (up 16.0% year-on-year), operating profit of 6,667 million yen (up 17.7%), ordinary profit of 7,369 million yen (up 17.6%), and profit attributable to owners of parent of 5,181 million yen (up 16.0%). In particular, net sales and net income profit reached record highs. The driver of the increase in revenue was the semiconductor sector, especially products for SiC semiconductors, which are indispensable for electric vehicles (EVs) and communication networks such as 5G. We saw the potential of and focused on this segment before any other company did, and this has led to customer satisfaction, which, I believe, produced these results. Within this segment, components for epitaxial growth* are building more than 50% of high market share.
As we build a stronger global supply chain, our extensive improvements to our production capacity in Japan and overseas also led to this dramatic progress in revenue and profit. We reviewed various aspects of production such as automation, changing to multi-tasking machines, and consolidating processes. In addition, our utmost focus has been on human resource development. One of the bottlenecks in manufacturing is machine breakdown, and if one operation stops, work cannot move on to the next process. Therefore, we provided detailed technical guidance on how to maintain machines so that they do not break down, what to pay attention to, and how to keep records and manage them. Another focus has been increasing multi-skilled operators. This refers to a single employee having the ability to operate multiple different machines, and once this is possible, we can manufacture with a smaller number of
selected people. We are already working on this in Japan, but we are also promoting multi-skill development overseas by developing human resources who has multi tasks. We believe that developing human resources and enhancing productivity in this manner, as well as producing products of stable quality globally, is essential for maintaining and improving the Toyo Tanso brand.
*Refers to the process for growing single crystal thin film on wafers.
Three Company Policies under the 2030 Management Vision and Their Aims
Last year, the Toyo Tanso Group formulated its Management Vision of "Creating products with unprecedented potential" and "Becoming a leading company through Earth-friendly products and technologies," and set out its vision and general directions characterizing the challenges it will embrace for sustainable growth. In addition, we defined three company policies: "Become a global company," "For the world, for society," and "Become a strong company," each of which has a different aim.
First, one of the aims of "Become a global company" is to strengthen communication with overseas subsidiaries. In providing the aforementioned technical guidance, as well as improving product quality and understanding customer needs, the key is close communication. The Head Office is responsible for any problems that arise overseas, so we must always keep grasping the latest information. Therefore, we are working
to strengthen our governance system globally by using a management book for all subsidiaries (containing the Group's common management standards) and enhancing the checking function of the Head Office. We are also looking to strengthen our cohesion globally and increase sales in overseas markets.
04 | TOYO TANSO Integrated Report 2023 05 |
Message from the CEO
Message from the CEO
"For the world, for society" involves, as it says, contributing to society. This refers to product manufacturing, but in order to further increase employee motivation, it also includes activities to inform employees about where and how the products they are involved with benefit society. In addition, we are working on measures to address the declining birthrate and aging population, which is a social issue. In order to increase productivity even with a small head count, we will first promote automation from physically demanding work and nighttime work. Furthermore, we are creating a workplace where everyone can work comfortably, making the workbench at a height that is easy for women to reach and changing the design of uniforms.
"Become a strong company" means becoming a company that can generate a solid profit. With these increased profits, we intend to increase the compensation paid to our employees. To this end, it is necessary to create high value-added products that can only be made by the Toyo Tanso Group. There is much work to be done, such as promoting selection and concentration, acquiring advanced technical skills, and lowering costs by increasing productivity.
To promote understanding of these policies and to share information, we have created an in-house monthly newsletter called C dash Kawara Edition, which distributed to all employees. Personally, I plan to visit our overseas subsidiaries and listen to the voices of those on the frontline of our operations.
Initiatives and Targets in Our Medium-Term
Management Plan (2023-2027)
Management targets are net sales of 66.5 billion yen, operating profit of 13.5 billion yen, operating profit ratio of 20.3%, and ROE of 10%. In addition to net sales, profits are important for increasing employee compensation and making the next round capital investments. Toward this end, we must establish a system
for value-added manufacturing that is only possible by the Toyo Tanso Group. We are constantly developing isotropic graphite (special graphite products), which is our main product, to make better products, and although we are taking a long-term perspective, we are also starting to promote recycling technology and take on the challenge of creating new material sources such as making carbon
-
from CO2. We aim to more quickly develop materials that can meet more stringent conditions such as durability, heat resistance, and cost for C/C composite products, graphite sheet products, mechanical carbon, and carbon brush.
Capital investment is expected to total 51.5 billion yen, with
30% of this planned to be used for the renewal and maintenance of existing facilities, and the remaining 70% for expansion and the introduction of new equipment and technologies. Since this plan is on a rolling basis every year, the amount of investment may change in the future, but we will establish a solid strategy for what kind of business we will develop in the large markets of the United States, China, and Europe, and make the necessary investments.
An important role in the initiatives of this Medium-Term Management Plan is played by task force teams established by product and application. Leaders present and discuss information compiled by the team, such as how the size of the worldwide market, what is happening now, and how much demand will occur in the medium to long term, at the Group's global meetings. We consider various resources such as what is necessary to achieve the goal, how much investment is required if equipment is required, and what recruitment and education plans to implement if human resources are needed, in formulating our Medium-Term Management Plan.
The important thing is to determine market timing. Our products should not arrive to market too early or too late. Therefore, in order to listen to the voices of our customers, not only our sales representatives but also I hold regular interviews with our customers to confirm the direction and timing of investment. In addition, we inform our suppliers of trends for the next year and the year after, and ask them to secure raw materials. In order to procure products as desired, our customers also focus on our manufacturing capacity, in addition to whether there are any problems with our raw material sourcing. Therefore, we have established a department called the Global Supply Chain Promotion Department, in which key persons from related functional departments participate across organization lines. The aim is to grasp the operating status of facilities in Japan and overseas, manage delivery time, quality, and cost throughout the Group, and maximize the use of limited capacity. For example, if there is not enough capacity in Japan, we will use the available capacity in the United States to meet customer requests and improve productivity.
From a longer-term perspective, relying solely on existing products could inhibit our business growth. Therefore, we must make tireless efforts to create new products, including continue to develop with an eye on the future while aligning our efforts with our customers. Moreover, we must lower costs in order to increase profits. I believe that this is a very important initiative not only
from the perspective of profits, but also from the perspective of population decline. In order not to fall into the situation where we cannot make products due to labor shortages, improving production efficiency through automation is the most important task.
Performance Forecast for FY2023
and Strategies
For FY2023, we plan to achieve net sales of 48.5 billion yen (up 10.8% year-on-year), operating profit of 8.5 billion yen (up 27.5%), ordinary profit of 9.3 billion yen (up 26.2%), and profit attributable to owners of parent of 7.0 billion yen (up 35.1%). Rapidly growing SiC semiconductor applications will be the driving force, and demand for metallurgical applications is expected to be resilient. Although the silicon semiconductor market is entering an adjustment phase, the impact on our earnings performance is expected to be relatively minor. In terms of profits, electricity, raw material and fuel prices are still soaring, and fixed costs, mainly labor costs, are on the rise. On the other hand, raw material and fuel prices are expected to be absorbed to a certain extent by progress in our efforts to pass these on in price increases, and we are aiming for record high net sales and profits by increasing sales volume. In particular, we plan to increase capacity of SiC-coated graphite products by 1.5 times by FY2024, and operating some
of the equipment this fiscal year will also contribute to earnings performance from the third quarter onward. As a result, our operating profit ratio is expected to increase 2.3 percentage points year on year to 17.5%, and ROE is expected to be 8.8%.
Strengthening and Evolving Sustainability
Management
With the establishment of the Sustainability Committee in FY2021, it became clear that there are many things that need to be addressed for the sustainable development of society, the maintenance of the global environment, and the further growth of the Toyo Tanso Group. To ensure that these are realized, we are allocating issues to the ESG Value Creating and Promoting Group, the Sustainable Consumption and Production Group, and the People and Organizational Vitalization Group, which make up the committee, and to carry out initiatives.
Our materiality as it relates to sustainability is divided into four categories. In the area of "Contribution to reducing climate change risk and environmental protection," we have set targets of reducing greenhouse gas emissions per unit of production by 30% by 2030 and achieving a 35% ratio of environmentally friendly products to net sales, and we are working to achieve these targets. In addition, we have implemented measures to develop products and improve
manufacturing processes for a recycling-oriented society in the area of "Pursuing product development and manufacturing technologies to resolve social issues and customer needs" and to enable women and the elderly to play an active role in "Creating safe, secure workplace environments where all employees can flourish." With regard to "Undertaking corporate activities that inspire trust," we are striving to establish a stronger governance system throughout the Group.
In addition to these team-based initiatives, we believe that the thinking and execution of each and every employee is very important in initiatives and transformations to achieve our targets. This is because it is the frontline employees who know best, what is really needed and what can be done in their day-to-day work. We also expect that these challenges will lead to the fulfillment of our work.
Becoming a Stronger Group with Greater
Employee Satisfaction
As various events occur in Japan and overseas and society continues to become more complex, companies must always have a sustainable perspective and look ahead to survive. In doing so, we believe that we should present a vision and direction that is convincing to our stakeholders, especially our employees, and I actively send out messages, hold roundtable discussions, and conduct interviews. We are also promoting initiatives to increase employee satisfaction, such as improving openness by increasing opportunities for exchanges between departments and updating the workplace environment by listening to the voices of our people on the frontline of our operations. How can we make work more comfortable for employees? I believe the answer can be found in making sure employees that are occupied but also having fun.At any rate, a company is only able to operate because of its people. I believe that the Toyo Tanso Group will become even stronger by increasing the number of people who want to work here and who believe the company will be better if they take these actions. We will continue to make efforts so that our strength could be a key to resolve social issues.
President Kondo pictured at center of the front row with members of domestic and overseas affiliates at the Toyo Tanso Group Global Conference
06 | TOYO TANSO Integrated Report 2023 07 |
Background of value creation
Background of value creation
History of value creation
At the time of its founding, the Toyo Tanso Group was a processor. We started material development with the founder's strong commitment to"offer first-class materials,"and have taken on the challenge of pursuing original and innovative carbon particularly in high-performance fields, creating a number of long-selling products. Even today, we continue to pursue"products with unprecedented potential"while keeping up our diligent work.
Trend in net 'salessproductlineup | ■ Net sales (consolidated) | 1955 | 1960 | 1965 | 1970 | 1975 | 1980 | 1985 |
1941 | 1945 | 1950 | ||||||
■ Net sales (non-consolidated) |
* | |||||||||
1990 | 1995 | 2000 | 2005 | 2010 | 2013 | 2013 | 2015 | 2020 | 2022 |
.5 | .12 |
- The end of the fiscal year changed from May 31 to December 31 starting with the fiscal year ended December 2013. Consequently, the fiscal year ended December 2013 is an irregular fiscal year insofar as it consisted of only seven months of operations (for some subsidiaries, nine months).
(Millions of yen)
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
History of technologies created and Toyo Tanso
1941 | 1950 | 1960 | 1970 | 1980 | 1990 | 2000 | 2010 | 2020 |
Founded | Binder |
Electrical carbon | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
We developed resin binder, a carbon | (carbon brush) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
brush material that combines carbon | DC graphitization | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and synthetic resin. This carbon brush | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
was highly evaluated not only in | furnace | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Japan but also in Korea, Taiwan, and | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
the United States, and was adopted | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Resin impregnation | Mechanical carb | on | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
one after another as an automobile | LS materials/ | KC materials | Metal impregnation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
In 1974, we established the industry's first mass production technology for isotropic graphite. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
part against the backdrop of the | LA materials | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
spread of automobiles. | It has been successively adopted as a component of single crystal silicon manufacturing | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
High | Ultra high | equipment, and has become the cornerstone of our business expansion. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
We improved the carbon brush material and developed a | purification | purification | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
full-scale carbon KC material for machines, and the material | Isotropic | Mass | Isotropic graphi | te | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
developed through further improvements was used for genuine | graphite production | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
parts such as piston rings and rod packing for compressors | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
manufactured by major heavy industry manufacturers. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
We decided to enter the SiC-coated graphite products business in order to build bridgehead | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Surface treatment materi | al | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
a mass production system after four years of trial and error. Our pursuit of added value | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
protection for semiconductor applications. We successfully commercialized and established | PERMA-KOTETM | PYROGRAPHTM | GLASTIXTM | EVEREDKOTETM | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
accelerated from here, and now we provide a variety of surface treatment materials with | (SiC-coated graphite products) | (pyrolytic carbon coated | KOTE | (TaC-coated products) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
graphite products) | (glass carbon) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
high added value according to the characteristics required by our customers. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
In order peripheral domains to graphite materials, we entered the C/C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
composite products business. We have reached practical application | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
products | New produc | ts | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
by bringing together elemental technologies accumulated in-house, | C/C composite | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
such as manufacturing methods and coating technologies. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
08
Graphite sheets are made mainly from natural graphite instead of artificial graphite that we had offered previously. This attracted attention as an alternative to asbestos, and the Toyo Tanso Group sold imported products. Focusing on this high added value, we decided to take on the challenge of natural graphite. After numerous failures, we created a product that is a latecomer but of a quality that surpasses our competitors.
PERMAFOILTM
(graphite sheet products)
Based on the idea that"it will definitely be useful to the world,"we created CNovelTM from the spirit of taking on challenges passed down since our founding. CNovelTM is a powder material that is different from conventional products, and since the pore size inside it can be freely controlled from 2 nm to 50 nm, it is used for adsorption of various substances, energy storage, and chemical catalysis.
CNovelTM
TOYO TANSO Integrated Report 2023 09
Background of value creation
Business domains | ||
Electronics | ||
Since its founding, the Toyo Tanso Group has expanded its | ||
operations into a wide range of businesses, including social | ||
infrastructure, mobility, life sciences, electronics, and energy. | ||
As we have journeyed together with customers, our | ||
technologies have encountered numerous needs, giving rise | ||
to new products and spurring the expansion of our operations | ||
into new business domains. | ||
Having been created in this manner, our product portfolio | ||
is helping solve social issues from a variety of perspectives, | ||
including saving energy, creating energy, and electrifying | Energy | |
automobiles. Going forward, we will continue to focus | ||
on creating products with unprecedented potential and | ||
technologies and embracing the challenges of new domains | ||
while valuing our partnerships with customers. |
Mobility
Social infrastructure
Life science
Background of value creation
Semiconductors | Components for crystal growth | |
Components for wafer processing | ||
Electronic components | Jigs for electronic component | |
Electronics | manufacturing | |
Grounding brushes for power | ||
generators | ||
Power generation | Components for manufacturing solar | |
power generation systems | ||
Core structure for next-generational | ||
Energy | nuclear power reactors | |
Fuel cells | Catalyst carriers | |
Railcars | Pantograph sliders | |
Engine parts manufacturing | ||
Aerospace | (Electrodes for EDM, jigs for heat | |
treatment) | ||
Mobility | ||
Automobiles | Parts for various types of pumps | |
Gaskets | ||
Components for manufacturing | ||
Telecommunications | optical ber | |
Components for manufacturing | ||
cables | ||
Social infrastructure | General industry | Packings |
Seal rings and bearings | ||
Healthcare | CT machine target materials | |
Analysis column llers | ||
Components for manufacturing LED | ||
Life science | Home appliances | Carbon brushes for vacuum cleaners |
Components for compressor | ||
10 | TOYO TANSO Integrated Report 2023 11 |
Background of value creation
At a Glance
The Toyo Tanso Group operates by manufacturing carbon materials primarily at plants in Japan and processing them at facilities in destination markets.
By consolidating the production of materials, we can pursue economies of scale and cost competitiveness while maintaining stable quality. In order to listen to the voices of customers and reflect their needs in our products, we process our products in locations close to our customers.
Worldwide
Net sales
43,774million yen
Employees | Locations | Manufacturing capital (property, plant and equipment) |
1,690 | 19 | 31,138million yen |
Background of value creation
Customers
Around 3,700
Top market share for graphite materials used to manufacture single-crystal silicon Top market share in graphite materials used to manufacture silicon/SiC epitaxial
- Head Office (material manufacturing, processing, and sales) ● Processing/sales facility
● Production site ● Sales facility
Germany
France
Italy
Europe
Employees Locations
134 3
Composition of |
net sales |
8.9% |
Asia
Employees Locations
469 10
Composition of |
net sales |
% |
40.7 |
Manufacturing capital (property, plant and equipment)
4,301million yen
South Korea
China
Head Office
Taiwan
Thailand
Singapore
Indonesia
North America
Employees Locations
116 2
Composition of |
net sales |
% |
8.1 |
U.S.
Manufacturing capital | |
(property, plant and equipment) | |
Japan | 932million yen |
Mexico |
Employees Locations
971 4
Composition of |
net sales |
% |
41.7 |
Other
Manufacturing capital (property, plant and equipment) 1,420 million yen
Composition of net sales
0.6%
Manufacturing capital (property, plant and equipment)
24,483million yen(FY2022 results)
12 | TOYO TANSO Integrated Report 2023 13 |
Toyo Tanso's value creation story
Value creation process
A variety of social issues, including increasingly serious environmental issues and a shrinking, aging population, are giving rise to a transformation in society and industry. The shift to a recycling-based society and digitalization are examples of innovations inspired by these issues, indicating that we stand on the verge of an era of significant change. The Toyo Tanso Group sees changes like these in the external environment as opportunities, and we are working to contribute to the realization of a sustainable society while increasing our corporate value through the deployment of an extensive portfolio of management resources and a robust program of business strategies.
Toyo Tanso's value creation story
Toyo Tanso Group
2030 Management
Vision
Global megatrends
Inputs (FY2022 results)
Manufacturing capital
Production sites
Japan: 7/ Overseas: 13
Intellectual capital
Strategies
Planning and execution of strategies by product and
"Creating products with unprecedented potential"
Becoming a leading company through Earth-friendly products and technologies
Extensive pursuit
of added value
R&D spending: ¥1.1billion
Number of patents acquired: 437
Human capital
Consolidated employees: 1,690
Of which, employees at 719 overseas sites:
Financial capital
Total assets: ¥77.2billion
Cash ows from | ¥5.6billion |
operating activities: |
Number of sales and sales engineers
123
Ratio of direct sales
More than 90%
application by task force teams
Robust partnership
across the value chain, including customers and business partners
Solutions
- Provision of products and technologies that carefully address customer needs
- Identifying the next issues and compiling seeds and needs
Governance
Promotion of stronger management groupwide using category leaders
(Processing technology, quality assurance, development, sales, procurement, legal, accounting, personnel, and information systems, etc.)
Development
-
Product development that
provides clues for resolving customers'issues - Research and development with an eye toward future market trends
by function
Outputs (FY2027 plan)
Net sales
¥66.5billion
Operating prot
¥13.5billion
Operating prot ratio
20.3%
ROE
10%
CAGR
8.7%
Outcomes
Reducing greenhouse gas emissions
Helping realize a recycling-based society
Realizing industrial development
and a rich, satisfying society
Realizing diversity & inclusion
14 | TOYO TANSO Integrated Report 2023 15 |
Toyo Tanso's value creation story
Medium-Term Management Plan (2023 to 2027)
The semiconductor market is entering a short-term adjustment phase, but strong growth is expected over the medium to long term. Based on the latest market forecasts and demand trends, the Toyo Tanso Group has formulated a Medium-Term Management Plan covering the period from 2023 to 2027 with semiconductor applications as a growth driver.
Under the 2030 Management Vision, the entire Group will work as one to achieve business growth.
Summary
POINT 1 Raised the previous target (announced in 2022) due to the upward swing in the growth forecast for the SiC semiconductor market
Semiconductor applications account for 50% of net sales (FY2022 result: 40%)
There are no major changes in other market/demand forecasts, and only minor adjustments were made to the plans for each product and application
< SiC semiconductor applications >
- For SiC wafers: special graphite product electronics applications
- For SiC epitaxials: compound material SiC-coated graphite products
POINT 2 Capital investment of 51.5 billion yen over five years centered on semiconductor applications
Strengthening the global production system in anticipation of strong demand exceeding existing capacity
Toyo Tanso's value creation story
Net sales targets by product and application
Strong demand for SiC semiconductor applications has led to significant growth in special graphite products, electronics applications, and compound material SiC-coated graphite products.
(100 millions of yen)
FY2022 Net Sales | FY2027 Net Sales Targets | CAGR (2022 to 2027) | |
Special graphite products | 202 | 322 | 9.8% |
Carbon products for general industries | 39 | 54 | 6.6% |
(for mechanical applications) | |||
Carbon products for general industries | 48 | 72 | 8.6% |
(for electrical applications) | |||
Three major products of compound materials | 99 | 192 | 14.2% |
Other | 47 | 24 | Down 12.2% |
(other products of compound materials and related goods) | |||
Capital investments
We will increase capacity and strengthen production structures to reliably capture demand for semiconductor applications in each process of isotropic graphite material, machining, adding high value, and processing capacity of our subsidiaries.
Management targets
FY2022 | FY2023 (Forecast) | FY2027 (Target) | (Ref.) FY2026*1 (Previous Target) | |
Net sales | ¥43.7 billion | ¥48.5 billion | ¥66.5 billion | ¥54.5 billion |
Operating | ¥6.6 billion | ¥8.5 billion | ¥13.5 billion | ¥11.0 billion |
Total capital investment amount | Strategic | Steady | ||
(FY2023 to FY2027) | investment | investment | ||
▼ | ▼ | : | ▼ | |
¥ | bn | |||
51.5 | 7 | 3 |
Examples of strategic investments
Direction of capital investments based on the strategies of the Medium-Term Management Plan
- Increasing global production capacity in high- value-added businesses
- Strengthening competitiveness in core businesses and stable businesses
- Deploying labor and energy savings, process innovations, etc.
prot | ||||
Operating | 15.2 % | 17.5 % | 20.3 % | 20.2 % |
prot ratio | ||||
ROE | 6.9 % | 8.8 % | 10 % | 9 % |
Foreign exchange rates: 124 yen to one US dollar, 136 yen to one euro, and 18 yen to one renminbi
EBITDA*2 in FY2027 of approx. 21.0 billion yen (EBITDA margin of approx. 30%)
*1 Medium-Term Management Plan announced in February 2022 (covering 2022 to 2026) *2 Operating prot plus depreciation
From 2024 onward, we plan to steadily complete investment projects, and we will strive to maximize supply by optimizing and streamlining our global production structures to meet demand that exceeds our capacity in the short term.
● Increasing production capacity for high | ● Strengthening global | ● Increasing production capacity |
purification processing and SiC-coated | production structures | of isotropic graphite materials |
graphite products | Strengthening value-added | We are considering increasing |
Total amount of ¥7.0 billion | processes at each subsidiary | production capacity to ensure a |
1.5x increase in capacity each | with a focus on semiconductor | supply volume that meets demand. |
SiC-coated graphite products: completion in 2024 | applications | |
High purification processing: completion in 2025 |
Market environment surrounding semiconductors
■ Silicon wafer market
CAGR of 5%from 2022 to 2027
Expected to increase consistently, almost unchanged from the previous plan
- Semiconductor manufacturers are planning large-scale capital investments, and the wafer market is expected to grow at a CAGR of 5% as a result.
- In particular, Epi wafers are expected to grow even higher amid increased demand for logic semiconductors.
■ SiC device market
CAGR of 40%from 2022 to 2027
The market size has expanded at an accelerated pace, reaching a CAGR of 20% in the previous plan, and in the latest plan this is expected to grow to a CAGR of 40%, representing a significant increase.
- In anticipation of the growing adoption of semiconductors in EVs and high-voltage devices, wafer and device manufacturers are planning to make aggressive and large-scale capital investments, and the SiC semiconductor device market is expected to grow at a CAGR of 40%.
Policy on shareholder returns | 182.4% | 90 | ||||||||||
Our policy is to deliver stable increases | 70 | |||||||||||
128.9% | 60 | |||||||||||
in dividends while maintaining a balance | ||||||||||||
between returning profits to shareholders | 50 | 50 | 50 | |||||||||
and making growth-oriented capital | ||||||||||||
investments against a backdrop of | 30 | |||||||||||
sustained growth in profits. | 25 | 25 | ||||||||||
22 | 35.6% | 39.4% | ||||||||||
28.2% | 28.3% | |||||||||||
■ Dividend | 27.0% | |||||||||||
Dividend payout ratio | 11.5 | 21.3% | ||||||||||
34.4% | ||||||||||||
20.6% | ||||||||||||
FY2013 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 | FY2021 | FY2022 | FY2023 | ||
Dec. | Dec. | Dec. | Dec. | Dec. | Dec. | Dec. | Dec. | Dec. | Dec. | Dec. |
*Since net income for the scal year ended December 2013 was negative, the dividend payout ratio is not listed.
16 | TOYO TANSO Integrated Report 2023 17 |
Toyo Tanso's value creation story | Toyo Tanso's value creation story |
Business strategies based on the Group's business portfolio
General direction of business strategies
The Toyo Tanso Group classifies its products into three business types based on market growth potential and business volatility and implements appropriate and well-balanced business strategies.
Under the current Medium-Term Management Plan (2023 to 2027), semiconductor applications will be the driver, and special graphite products and compound material SiC-coated graphite products show increase in growth businesses.
High | Current revenue | Growth businesses | |
Future revenue | |||
SiC-coated | |||
graphite | |||
products | |||
C/C | |||
Market | composite | ||
products | |||
Special | |||
graphite | |||
growth | products | Graphite | |
sheet | |||
products | |||
Mechanical | |||
potential | |||
applications | |||
Electrical | |||
applications |
Business strategies
■ Special graphite products | Main products | Trend in performance | |||||||||||
Business development focused on the high- | ■ Electronics applications / ■ General industry applications / ■ Other | ||||||||||||
value-added domain | (Millions of yen) | 20,230 | |||||||||||
● Growing market share in the high- | 17,143 | ||||||||||||
value-added domain, for example in | |||||||||||||
8,104 | |||||||||||||
semiconductors, which are characterized by | 13,907 | ||||||||||||
● EDM electrodes | 6,751 | ||||||||||||
demanding quality requirements | 5,266 | ||||||||||||
● Working to strengthen cost flexibility | |||||||||||||
and reduce the domestic manufacturing | 9,598 | ||||||||||||
burden in the general-purpose domain, for | 8,377 | ||||||||||||
example by outsourcing manufacturing | 7,024 | ||||||||||||
● Single-crystal silicon manufacturing | ● Continuous casting dies | 1,616 | |||||||||||
2,013 | 2,527 | ||||||||||||
2020 | 2021 | 2022 | |||||||||||
equipment parts | |||||||||||||
Stable businesses | Differentiated businesses | |
Medium | ||
Medium | Volatility | High |
Growth businesses
Profit drivers
▼ Special graphite products (electronics applications and other, etc.) Three major composite products (SiC-coated graphite products, C/C composite products, and graphite sheet products)
Differentiated businesses
Conduct business development focused on the high-value-added domain ▼ Special graphite products (general industry applications)
Stable businesses
Contributing to the stability of the Group's businesses with few fluctuations in demand and profitability
▼ Carbon products for general industries (for mechanical and electrical applications)
Related goods
6.8%
- Carbon products for general industries
Contributing to the stability of the Group's businesses with few fluctuations in demand and profitability
- Mechanical application: Increasing cost competitiveness and strengthening sales in automotive applications and overseas markets
-
Electrical application: Working to increase share in growth markets (Asia, household appliances, and power tools) by leveraging
strengths (lead times and service) in order to increase the extent of the segment's contribution
Main products
- Carbon brush
● Bearings | ● Pantograph sliders |
Trend in performance
■ Mechanical applications / ■ Electrical applications | ||
(Millions of yen) | 9,465 | |
8,809 | ||
8,464 | ||
3,763 | 3,738 | 3,985 |
4,701 | 5,727 | 4,823 |
2020 | 2021 | 2022 |
Compound | ||
materials and | ||
other products | Ratio of | Special graphite |
26.9% | Net Sales | products |
46.2% | ||
(FY2022) | ||
11.0%
Carbon products for | 9.1% |
general industries | |
(for electrical applications)
Carbon products for
general industries
(for mechanical applications)
- Compound materials and other products
A high-growth business that drives profit
- SiC-coatedgraphite products: Reliably capturing demand by boosting production capacity
- C/C composite products: Increasing sales through technical services like design
- Graphite sheets: Improving customer satisfaction through customization
Main products
● Crucibles
(C/C composite products)
- Graphite sheet products
-
MOCVD susceptors
(SiC-coated graphite products) ● Three-layered trays (C/C composite products)
Trend in performance
■ Three major products / ■ Other | 11,765 | |||||||
(Millions of yen) | ||||||||
9,306 | ||||||||
7,835 | ||||||||
9,944 | ||||||||
6,743 | 7,808 | |||||||
1,092 | 1,820 | |||||||
1,497 | ||||||||
2020 | 2021 | 2022 |
18 | TOYO TANSO Integrated Report 2023 19 |
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Disclaimer
Toyo Tanso Co. Ltd. published this content on 26 December 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 December 2023 01:35:36 UTC.