Main objectivesProgress in 2019Europe’s economic slowdown and trade friction between the U.S. and China led to oversupply in the electrodes market in the latter half of 2019Tokai Carbon acquired COBEX HoldCo, thereby expanding its business into carbon- and graphite-related markets and diversifying the industries it targets to aluminum smelting, silicon metal smelting, and other industriesProgress continuedProgress continuedProgress continuedGenerate stable cash flow in the Graphite Electrodes businessIntegrate management of the Carbon Black business worldwideInvest ¥50 billion in growth businessesRevamp the revenue structure of the Fine Carbon businessEstablish a group-wide management system and continue strengthening it12435Additional information√ High margins were achieved by maintaining a wide spread between raw material and product prices√ Investment was made to upgrade and maintain production facilities× Negotiations with raw material suppliers on adopting a purchasing-formula system were suspended.√ Technology-sharing activities were initiated among three locations√ Effective methods deployed by the Group’s North American production plants to manage the use of feedstock oil were shared among group companies√ Investment was made in chemical vapor deposition equipment for producing silicon carbide, enabling production capacity to be increased by about 20% by 2020 √ Production capacity at Cancarb Limited in Canada was increased by 20%, enabling annual output to be boosted by 9,000 tons by 2020√ Investment was made in industrial furnace expansion, increasing total output by about 30%× Investment in carbon black factory expansion in Thailand was put on hold× Investment in anode material factory expansion was temporarily halted due to declining demand√ Improvements were made to the global human resource management system√ Improvements were made to the organizational management of domestic and overseas subsidiaries, including a new North American headquarters√ Progress was made in global financial and tax management√ ESG-related tasks were specified and initiatives to improve information disclosure were launched in November Message from the PresidentProgress in accomplishing the objectives of the T-2021 management plan in 2019Preparing to take advantage of opportunities for growthTo respond more effectively and quickly to rapid shifts in the global market for the Tokai Carbon Group’s products, we review and revise our rolling management plan every year. Accordingly, we replaced our previous medium-term management plan, T-2021, with the new plan, T-2022, effective from February 17, 2020. While keeping the basic policies of the previous plan, we revised our performance targets up until 2022 in the new plan to reflect recent changes in our operating environment, thereby providing a practical path for management to follow and a more realistic outlook for shareholders. In the new plan, we also newly adopted earnings before interest, taxes, depreciation, and amortization (EBITDA) as a performance indicator for measuring the Company’s ability to generate cash, which will be used for future growth investments. Looking ahead, the Company will aspire to achieve record-high results. Predicting global economic trends in 2020 is extremely difficult due to the COVID-19 pandemic, as well as ongoing trade friction between the United States and China, the effects of the United Kingdom’s withdrawal from the European Union, and tensions in the Middle East. Therefore, I regard 2020 as a test of the Group’s endurance. If the global economy bottoms out sooner than expected, we will aggressively take advantage of whatever opportunities arise at that time. Then, even if an economic recovery is not on the horizon, we will continue to calmly and patiently wait for such opportunities. Presently, however, we are taking steps to prepare for the downturn while we still have time.16TOKAI CARBON ANNUAL REPORT 2019
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