040%GraphiteElectrodesCarbon BlackSmeltingandLiningFineCarbonIndustrial FurnacesOther Operations NewEBITDA marginGraphite ElectrodesSmoothly resume production when the market reboundsCarbon Black Secure an optimal spread between raw material and sales pricesSmelting and Lining Tap growing demand and launch new productsFine Carbon Supply more highly competitive products and develop next-generation productsIndustrial Furnaces and Related Products Promote newly developed furnaces to stimulate market growthOther Operations (Friction materials and Anode materials) Improve profitability and develop new productsEBITDA (Billions of yen)Revenue base• Generate stable cash ow• Produce synergistic effects*Circle sizes correspond to net sales amountsGrowthbusinesses• Boost production in line with market growth• Develop new products with added value Businesses torestructure-5510152025303530%20%10%PlanBusiness categoryand goals2020 to 2022Message from the PresidentProjected EBITDA and EBITDA margin by business segmentOptimally balancing our business portfolioAllocating cash ow to strengthen the nancial structureOur management continuously works to maintain an optimal balance among the businesses that make up the Group’s portfolio, which we organize under the three categories of revenue base businesses, growth businesses, and businesses to restructure. Within the portfolio, we have positioned the Graphite Electrodes and Carbon Black businesses as the core drivers of the Group’s revenue base. We intend to expand the Graphite Electrodes business over the medium term, with the expectation that sales volume and prices will rebound when the market recovers. We are also working to enable the Carbon Black business to generate stable profits amid shifting demand and the fluctuating price of oil, the raw material used to produce carbon black. Through these two businesses, the Group should be able to secure stable cash flow.At the same time, we have positioned the Smelting and Lining, Fine Carbon, and Industrial Furnaces and Related Products business divisions as growth businesses, for which we will proactively develop new products and expand product lineups. We also expect the markets for these businesses to grow since they are closely tied to electric vehicles, 5G networks, and information technology. In addition, we plan to completely restructure the Group’s Friction Materials and Anode Materials businesses in order to prepare them for the next wave of growth. The restructuring will include measures for improving profitability as well as investment in new product development. Over three years from 2020 to 2022, the Company is forecast to generate a cumulative total of 164 billion yen in operating cash flow. Of that amount, 57 billion yen will be allocated to capital investment, specifically to upgrade production plant equipment for the Group’s core businesses and to install equipment for reducing environmental burden. Another 15 18TOKAI CARBON ANNUAL REPORT 2019
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