Integrated Report

2022

TOKAI CARBON CO., LTD.
https://www.tokaicarbon.co.jp/
Aoyama Building, 1-2-3 Kita-Aoyama, Minato-ku,
Tokyo 107-8636, Japan
Tel: +81-3-3746-5100 (Switchboard)

TOKAI CARBON CO., LTD.

Graphite Electrode

Carbon Black

Graphite Electrodes Supports Infrastructure

Carbon Black Supports Safety in Our Daily Lives

Steel scrap is recycled by electric arc furnace (EAF) and then

Carbon black is an important raw material that accounts for abouttransformed into structural materials, such as materials for buildings

30% of the weight of a tire. With bases in North America, Thailand,and bridges, and stainless steel products. Tokai Carbon’s graphite
electrodes are manufactured in Japan, Germany, and the United States,
supporting EAF steel production around the world.

and Japan, we support the performance and safety of automobiles.
Manufacturing world largest diametergraphite electrode32 inchesin diameter

It is also used as a black pigment in many of the black-colored products
you come across daily.

Largest capacity in the U.S.

No.

1

800mm
1

Tokai Carbon Co., Ltd.

Integrated Report 20222Fine Carbon

Smelting & Lining

Fine Carbon Supports the
Semiconductor Industry
As one of the few companies in the world that manufactures finecarbon, we develop and supply components for manufacturing
equipment that enable semiconductor quality to be improved.
We support the rapidly changing semiconductor industry with ourdiverse product lineup.

3

Tokai Carbon Co., Ltd.

Cathode Blocks Supports the Developmentof the Aluminum Industry
Largest solid SiC
producer in the world

70

Demand for aluminum is growing worldwide due to the need to reduce
the weight of electric vehicles (EVs) and transportation equipment.
Our long-life cathode blocks used in aluminum electrolytic furnaces are%

Global Shareindispensable for its manufacture. Tokai Carbon holds global top sharewith its outstanding stability and performance.

Cathode blocks used in aluminum
smelting

30%

Global Share

Integrated Report 2022

4

Contents

Basic Principle

1 Prologue
7 Top Message
13 Corporate Strategy

Ties of Reliability

15
17
19
21
23
25

Our stakeholders, including customers, business partners, employees,society, and shareholders, are indispensable partners for the Company to

Picture of Value Creation
1 Technological Prowess
2 Management Strategy
3 Reinvestment for Growth
4 Business Area Expansion
5 Business Portfolio

27 Business Strategy

contribute to the realization of a sustainable society. Coexistence and

29
31
33
35
37
39
40

co-prosperity with our stakeholders are the Company’s earnest
wishes, and the key to “co-creation” that creates new value is trusting
relationships.

Graphite Electrodes
Carbon Black
Fine Carbon
Smelting and Lining
Industrial Furnaces and Related Products
Friction Materials
Anode Materials/Others

41 Sustainability
43
47
49
51
52
53
56
57

A Talk with Our External Directors
Basic Policy and Structure
To a Carbon-Neutral Society
Respect for Human Rights
Supply Chain Management/Occupational Safety and HealthCorporate GovernanceComplianceManagement

59 Data
61
63
64
65
66

Long-Term Earnings Summary
Performance by Business Segment/Non-financial Indicators
Company Overview
Stock Information
Independent Third-Party Assurance Report

67 Epilogue
Overview

Consolidated Data for 2022

Net Sales

340.3
5billion yen

Tokai Carbon Co., Ltd.

Operating Income(Operating Income
to Sales)Net Income
Attributable to
Owners of the Parent
Company (profit rate)

40.5

22.4

billion yen(11.9%)

billion yen(6.6%)

Total Assets

576.4

billion yen

Capital-to-Asset Ratio

ROIC

46.6

7.1

%

Overseas Sales Ratio

%

79.6

%

GHG Emissions

2,408

thousand tCO2

Number of Employees(Consolidated)

Overseas
Employee Ratio

4,378

70.7

%

Integrated Report 2022

6

Top Message

Top Message

We will boldly take on thechallenge of investing in cuttingedge fields while cultivating thepillars of our earnings
With a sense of urgency, we will raise Tokai Carbon to a higher level. Whileenhancing the profitability of our core businesses, we will continue to invest in
cutting-edge fields for stakeholders and the next generation of employees whowill be responsible for Tokai Carbon in the future.

Hajime Nagasaka
President and CEO

7

Tokai Carbon Co., Ltd.

Integrated Report 2022

8

Top Message

Top Message

Our Structural Reforms and Business
Portfolio Transformation to Date
Nine years have already passed since I became Presidentof Tokai Carbon in February 2015.
During my second year in office in 2016, I devoted myself tothorough structural reforms, and from 2017 onward, I shifted
my focus to a growth strategy, leading to multiple overseas
M&As. As a result, Tokai Carbon’s business portfolio has
been diversified, and the scale of its business has expanded
to approximately three times in terms of sales and ten times
in terms of operating income compared to 2014.
Tokai Carbon is a global company with a 105-year
history. If you follow the Company’s trajectory so far, it canbe said that our business has developed along with theautomobile industry, which has flourished over the years.
Japan’s automotive industry accelerated in the late 1970s
as the country shifted its main focus from the steel industry
and heavy industry to the auto industry. Many automotive
parts manufacturers have continued to grow in line with thedevelopment of finished goods manufacturers, with some
suppliers now exceeding 500 billion yen in sales and some
top suppliers now witnessing sales in excess of 1 trillion yen.
In contrast, our company’s sales remained stagnant ataround 100 billion yen even in 2014. Our Graphite Electrodeand the Carbon Black businesses, which were our corebusinesses at the time, complemented each other’s market
fluctuations and produced relatively stable profits. At thattime, we did not have a keen awareness of the issue ofbusiness stagnation. However, upon assuming the positionof President, I once again felt a sense of crisis which told
me that the Company needed to change its direction.
Although our business performance was stable, I knew fromexperience that we would not be able to gain the trust ofinvestors and financial institutions if we remained to be acompany with sales of just around 100 billion yen. Therefore,
I felt it was my mission to draw up a clear growth strategy for
our Company and work tirelessly to implement it.
In an equipment industry like ours, the bottom line isachieving profits of scale. A company needs to be a certain
size when a large amount of funds are needed for future
capital investment or research and development and to
attract excellent human resources. With this in mind, I
decided that our medium-term target would be to achieve
net sales of 300 billion yen.

Decisive implementation of structural reforms

Results right in front of us

At first, we decisively implemented bold structural reforms
without being preoccupied with immediate sales and profits,
and focused on the thorough elimination of waste within
the company. As a result, revenue and profits fell sharply
in 2016, which resulted in a negative net income. Naturally,
although people around me began to criticize me more andmore, I continued with my reforms believing that the results
would follow rather than being concerned about the shortterm numbers.
I thought it would be a good idea to proceed with structuralreforms all at once. We accomplished 60% of the structuralreforms that we had originally envisioned in about one year.
However, I determined that the remaining 40% of reforms,
especially for changing internal awareness, would take sometime, so I decided that the Company should move on to thenext stage while continuing to work on the remaining reforms.

In 2022, while the multi-year COVID-19 pandemic began
to show signs of abating, supply chain disruptions triggeredby the crisis in Ukraine, the global inflationary trend, and theresulting tightening of monetary policy were major downward
pressures. Uncertainty regarding the global economic
outlook increased once again. Under these circumstances,in accordance with our basic policies of “returning corebusinesses to a path of growth,” “optimizing the businessportfolio (selection & concentration),” and “strengthening
the consolidated governance structure” set forth in therolling medium-term management plan “T-2024” announced
in February, the Company expanded its business activities,
and was able to achieve significant increases in both revenue
and profit compared to the previous fiscal year. I believethat the reason why we were able to exceed our initial plantargets despite the challenging business conditions is that
our structural reforms and business portfolio transformation
have gradually begun to show results.
As for 2023, we aim to achieve net sales 484 billion yen,an operating income of 69 billion yen, and an operating
income to net sales ratio of 14% in 2025 in accordancewith our basic policies of “returning core businesses
to a path of growth,” “optimizing the business portfolio(selection & concentration),” and “establishing a foundation
for sustainability management” set forth in the new rolling
medium-term management plan “T-2025.”
With regard to shareholder returns, Tokai Carbon willcontinue to focus on consistent, stable dividends whilesetting the target dividend payout ratio at 30%. Although
the current business environment is quite severe and does
not allow for optimism, we will continue to be vigilant.

Business portfolio transformation
From 2017 to 2020, the Company implemented five
M&As overseas. We focused on increasing the sizes of ourearnings pillars with the aim of moving away from a profit
structure that relies on our Graphite Electrodes and Carbon
Black businesses. Until that time, the Company had been
operating virtually debt-free. However, as a result of actively
raising funds from financial institutions as well as directlyfrom the capital markets and investing a cumulative total of
approximately 180 billion yen, our balance sheet structurechanged significantly. Despite this, I believe we havesuccessfully diversified our business portfolio, making us
less susceptible to fluctuations in the graphite electrode andcarbon black markets.

Shareholder Returns
Dividends Per Share and Net Income Attributable to Owners of the Parent Company
Dividends per share(Yen/share)(Million yen)

70

70,000

Forecast

50,000

36
30

24

30

30

30

30,00012
6 yen/share

6

6

6

10,0000

0(10)(10,000)

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Total dividends
1,280(Million yen)

1,280

1,280

1,280

2,556

5,114

10,230

6,395

6,395

6,395

7,674

Dividend
payout ratio

50%

52%

−

21%

7%

32%

628%

40%

29%

30%

Fiscal Year

Tokai Carbon Co., Ltd.

48

50

10

9

Net income attributable to owners of the parent company (right axis)

106%

2023

(forecast)Integrated Report 2022

10

Top Message
Further Strengthening Our Core
Businesses to Realize Our Long-term
VisionIt goes without saying that I could not carry out structuralreforms and business portfolio transformation on my own.
I am very grateful for the deep understanding and supportof the management team and the efforts of our employees.
Going forward, I will continue to work together withmanagement and employees to achieve even higher level
results aimed at our long-term vision for 2030: “Contributeto a sustainable society through advanced materials andsolutions.”

Top Message

with M&A, so the contribution to profit is yet to come.
However, I have high expectations for the expansion of our
Smelting and Lining business.
Fine carbon is a product made from tiny carbon particles
broken down to the micron level. More than 70% of finecarbon is used for semiconductor-related applications.
Although memory semiconductors used in PCs and mobile
phones are currently in an adjustment phase, demand for
power semiconductors used in EVs and other applications
is growing significantly. I see our Fine Carbon business as
another highly profitable business with great potential.

Nurturing our businesses and generating stable
cash flows

The potential of our core businesses
Our graphite electrodes are mainly used in electric
furnaces where scrap iron is melted down to produce steel
for construction and other uses. One medium- to long-termbusiness opportunity is the shift from blast furnaces toelectric furnaces, which is aimed at reducing CO2 emissions
in the steelmaking process. Although the blast furnace
manufacturing method emits a large amount of CO2, theelectric furnace manufacturing method is said to reduce
the amount of CO2 emissions to about 25% of that amount.
Since the shift from blast furnaces to electric furnaces is a
global trend, particularly in the United States, we expect
business opportunities for the Company to expand further.
About 70% of the carbon black produced is used fortires. The automotive industry is undergoing a majortransformation with the shift from gasoline and diesel
vehicles to EVs moving forward. However, the demand fortires will not diminish as long as the vehicles are runningon the ground. We are working with a sense of mission toensure that we can meet demand, which is expected tocontinue to grow, with high-quality products.
Smelting and Lining is a business closely related toaluminum smelting and is mainly performed at our plants
in Poland and France. Although I expect that demand foraluminum vehicles and wheels will grow as a result of theshift to EVs, the aerospace industry will be the key to the
future. There is currently goodwill amortization associated11

Tokai Carbon Co., Ltd.

First, I would like for the Company to fully nurture these
existing businesses and generate stable cash flows while
allocating some of the cash we earn to cutting-edgebusiness fields. It goes without saying that the researchand development of cutting-edge businesses involves ahigh level of risk. However, I would like for the Company
to continue taking on challenges looking toward nextgeneration business expansion. Although I do not expectthat we will easily succeed, we will move forward with asense of speed by grasping the changes of the times, andwill indicate the direction in which we are headed whileconsidering not only internal management resources but
also co-creation with like-minded external partners.

Increasing Management Sustainability
In terms of contributing to the sustainability of society,our efforts are just getting started. The most important
issue that we face is carbon neutrality. Of the Company’s
six businesses, the Carbon Black business accounts forthe largest amount of CO2 emissions, so reducing CO2
emissions in this business is an urgent issue. In addition toconventional, steady efforts to save energy and improve theyield ratio, we will pursue with a sense of urgency innovativetechnologies such as product recycling and CO2 recovery,
as well as dream technologies such as the development ofcarbon products that utilize recovered CO2.
With regard to governance, we have viewed thestrengthening of governance of domestic and foreign groupcompanies as a key issue that must be prioritized. Since
overseas sales account for approximately 80% of our sales
in our company, governance is particularly important for ouroverseas subsidiaries. While many Japanese companies
appoint Japanese nationals as the CEOs of their overseas
subsidiaries, we appoint local personnel as CEOs of all of
our overseas subsidiaries except one in Thailand and one
in the United States. This is because we are convinced of
the superiority of our style of delegating what needs to bedelegated based on a relationship of trust with competent

local personnel. Naturally, this does not mean that we canjust appoint anyone that is local to the position of CEO.
However, I believe that each of our subsidiaries has a goodCEO right now.
Three of our eight directors are external directors. In orderfor them to guide our Board of Directors, it is important forthem to know us well. Therefore, we also invite them toattend the weekly meetings of the Management Committee
so that they can better understand the status of businessexecution. Since the outside directors have extensive
experience in their respective fields, we place a high degreeof trust in them.

Tokai Carbon Will be Further Expanded
for the Next Generation
While achieving our net sales target of 484 billion yen andoperating income target of 69 billion yen for 2025 will bechallenging, my dream is to take our business scale to aneven higher level in the not-too-distant future beyond “T2025.”
As we continue to invest in cutting-edge businesses
and continue to conduct research and development, themost important thing is that those efforts lead to businessexpansion. However, it is also true that the hurdles toovercome are high. Currently, working on post-merger
integrations related to past M&As is a top priority, and M&As
will continue to be an option for the Company.
I want Tokai Carbon to be a company that is trusted andrecognized by society by doing what we can do now for the
next generation of employees who will be responsible for
Tokai Carbon in the future.
I welcome you to look forward to the future initiatives ofTokai Carbon, a company that boldly takes on challenges
for the future.

Integrated Report 2022

12

Corporate
Strategy

13

Picture of Value Creation

P15-16

1 Technological Prowess

P17-182 Management Strategy

P19-203 Reinvestment for GrowthP21-22

4 Business Area Expansion

P23-245 Business Composition

P25-26

Tokai Carbon Co., Ltd.

Integrated Report 2022

14

Corporate Strategy

Corporate Strategy

Picture of Value Creation“Contribute to a sustainable society through advanced materials and solutions” ―― Our long-term
vision for 2030. Amid the trend toward carbon neutrality, this statement demonstrates our resolve toboldly take on the challenge of entering new business areas and clarifies the reason for the existenceof Tokai Carbon.

High Quality/Stable Supply

1

Technological
Prowess
Stable Cash Flow

Profit Generation

5

In order to realize our long-term vision, it is important toco-create with our stakeholders, including our customers
and business partners around the world. In this context,
we would like to play a role in global co-creation by
further combining our strengths.
In order to achieve this, it is a prerequisite for us tomeet the expectations of our stakeholders by maximizing
and expanding our technological capabilities basedon superior management strategies and governance.
“Reinvestment for Growth” and “Business Area
Expansion” are the means to achieve this, and they arealso the means to expand the areas in which we cancontribute. As a result, they promote the soundness of
our “Business Portfolio” and lead to a stable managementfoundation for the Company.
This cycle leads to the next stage of co-creationfrom which new value is created. We believe that Tokai
Carbon’s cutting-edge materials and solutions can makethis world more prosperous.

Business
PortfolioLong-Term Vision

Contribute to a sustainable
society through advanced
materials and solutions

4

Business Area
Expansion
Market Creation

15

Tokai Carbon Co., Ltd.

2

Management
Strategy

3

Reinvestment
for Growth
Empowering Growth Engine

Integrated Report 2022

16

Corporate Strategy

Corporate Strategy

1 Technological Prowess

High Quality/Stable Supply
We cannot build a relationship of trust with our customers unless we can provide
a stable supply of high-quality products by making use of our sound technologicalprowess. Only when our technology is superior can we provide value to society.

Tokai Carbon was founded in 1918. We were the first Company in Japan to realize domestic production of highquality graphite electrodes. Graphite electrodes are indispensable for steelmaking, which was considered a national
industry. At present, we have been supplying the world’s top graphite electrodes from our plants in three countries to
EAF steel producers around the world.
In 1941, we began mass production of carbon black for the first time in Japan at the Kyushu-Wakamatsu Plant inFukuoka Prefecture. Since then, we have continued to grow and now support our customers in production by having
established plants in Japan, Thailand, and North America, where demand for tires is strong. Carbon black is a raw
material that determines tire performance and requires management of its characteristic conditions at the nano level.
We continue to respond to these demands and work to improve the product performance of tire manufacturers andthe mobility industry.
The Fine Carbon business has been developing in earnest since 1986 when the Tanoura Plant in Kumamoto
Prefecture became a dedicated fine carbon manufacturing plant. Utilizing the heat treatment technology cultivatedin our Graphite Electrode business, the Company has expanded its business to date meeting demand from generalindustries, aerospace, and semiconductor industries. Tokai Carbon is supporting the accelerating technologicalinnovation of semiconductors by advancing SiC coating technology.
The primary reason our products have been widely used by our customers over the years is their trust towards ourstable supply of high quality materials. By solving customers’ issues day by day, our core technologies have beenrefined ever since. Tokai Carbon’s core technologies continue to evolve also from the newly acquired technologies
through M&As and co-creation activities.

The Sources of Our Technological Prowess
Core Technology

Primary Products

Description

Heat Treatment

Graphite Electrodes
Fine Carbon
Smelting and Lining products
Anode Materials

Heat treatment technology for unique environments up to
3,000°C
Further evolution of technology through fusion with othercompanies’ technologies acquired through M&A, etc.

Industrial furnaces (nicheheat treatment furnaces)

Tokai Carbon holds the global top share in sintering furnaces
heated by electric furnaces and SiC heater materials

Carbon Black

Control of powder properties of nano-level particles andproduction of more than 60 varieties(for rubber products)

Surface Treatment

By developing surface treatment technology, the Company
succeeded in developing Aqua Carbon Black that can beused for pigment inks

Aqua Carbon Black(for pigment inks)

SiC Mass Production
Technology

World’s leading high-speed deposition-based SiC mass
production technology
Global top share of solid SiC production

SiC Coated Carbon
Solid SiC

Core Technologies That Continue toEvolve Locally
By developing and manufacturing products in
the regions where our customers operate, we arecommitted to long-term quality improvement andstable supply of products. In addition to grasping
the needs surrounding local production for local
consumption, we are also working to diversify
regional risks.
High-temperature heat treatment is a technology
common to our four main businesses. We havemultiple heat treatment facilities in Japan, the U.S.,
and Europe. Our Carbon Black business, which
employs surface treatment technology, has basesin the U.S., the region with the second highest levelof demand after China, as well as in Japan and
Thailand to meet demand in each region. Although
the SiC mass production technology possessed by
the Fine Carbon business was born from researchand development in Japan, it has grown significantly
by expanding it to the U.S., and South Korea where
semiconductor customers are concentrated.

17

Tokai Carbon Co., Ltd.

Graphite Electrodes

Tokai ErftCarbon
Fine Carbon

Tokai Carbon Deutschland
Smelting and Lining

Fine Carbon

Tokai Carbon Europe

Carbon Black

Tokai COBEX

Cancarb

Smelting and Lining

Fine Carbon

Tokai COBEX(Beijing)
Smelting and Lining

Tokai COBEX Polska
Fine Carbon

Tokai Carbon Korea Co., Ltd.

Fine Carbon

Tokai Carbon (Dalian) Co., Ltd.
Graphite Electrodes

MWI

Fine Carbon

Tokai Carbon U.S.A.

Hofu Plant/Shiga Plant

Graphite Electrodes
Carbon Black

Tokai Carbon CB

Industrial Furnaces and Related Products

Tokai Carbon GE
Smelting and Lining

Tokai COBEX Savoie

Shanghai Tokai Konetsu Co., Ltd.
Industrial Furnaces and Related Products

Tokai Konetsu (Suzhou) Co., Ltd.

Carbon Black

Ishinomaki Plant/Chita Plant/
Kyushu-Wakamatsu Plant
Fine Carbon

Tanoura Plant
Carbon Black

Thai Tokai Carbon ProductIndustrial Furnaces andRelated Products

Tokai Konetsu Kogyo Co., Ltd.

Integrated Report 2022

18

Corporate Strategy

Corporate Strategy

2 Management Strategy

Profit Generation
We will realize a “stable supply of high-quality products” at sustainable manufacturing costs.
We will maximize profits by effectively investing management resources in the medium-term
management plan.

Tokai Carbon formulates its medium-term management plan on a rolling basis to prevent the plan and awareness frombecoming obsolete, updating the three-year forecast annually so that it can respond quickly and agilely to the rapidlychanging business environment.
Under the medium-term management plan “T-2025,” which covers the period from 2023 to 2025, we aim to achievesignificant increases in sales and profits. The net sales target for 2025, the final year of the plan, is 484 billion yen, whichis 1.4 times higher than in 2022, which will be a record high if achieved. The operating income target for 2025 is 69 billion
yen, 1.7 times higher than in 2022, the second highest level after 2018, the year when electrode price market conditions
were booming. As for EBITDA, the target for 2025 is 113 billion yen, 1.5 times higher than in 2022.
We will stabilize our earnings base by returning to the growth path of our core businesses, select and concentrate ourbusinesses in light of environmental changes, such as carbon neutrality and supply chains, and promote initiatives to build
a sustainability management foundation based on our long-term vision to achieve our goals.

Medium-term Management Plan “T-2025” Quantitative Targets

Net sales

Operating income

484 billion yen

ROS

EBITDA

69 billion yen

14 %113 billion yen(EBITDA margin: 23%)(billion yen)484

(billion yen)(%)

Measures for Each Business Segment
Business Segment

Main Market

Measures by Segment

Graphite Electrodes

Electric steelmaking
furnaces

Increase production capacity for super-size electrodes

Carbon Black

Tires

Stabilize operations at U.S. base by completing theimplementation of environmental measures

Fine Carbon

Semiconductors

Expand facilities to meet growing demand forsemiconductors

Smelting and Lining

Aluminum

Improve our ability to produce cathodes designed foraluminum smelting

Industrial Furnaces
and Related ProductsElectronics/Lithium-ion
batteries

Increase production capacity for industrial furnaces and
EREMA heating elements

113
14

340.4

EBITDA Growth Forecast by Business Segment

12

75.6

10

40.6

Tokai Carbon aims to increase the EBITDA of each business by returning our core Graphite Electrodes and Carbon Blackbusinesses to paths of growth, bringing about the stable growth of the Smelting and Lining business, and strengthening
production capacity in the Fine Carbon and Industrial Furnaces and Related Products businesses.

(billion yen)

69

258.9

EBITDA Growth Forecast by Business Segment(billion yen)

54.5

30

24.6
20

2021

2022

2025
(target)

2021

2022

2025
(target)* ROS (Return on Sales) = Operating income to net sales* Assumed exchange rate for “T-2025” targets: 1 USD = 130 JPY; 1 EUR = 140 JPY

19Tokai Carbon Co., Ltd.

2021

2022

2025
(target)

2021

2022

2025

31
27

Carbon Black
Fine Carbon

25

Graphite Electrodes

20

Smelting and Lining

8

Industrial Furnaces
and Related Products

10(target)

0

2022

2023

2025

(outlook)(target)Operating cash flow
2023–2025

210 billion yen
Three-year total

Integrated Report 2022

20

Corporate Strategy

Corporate Strategy

3 Reinvestment for Growth

Empowering the Growth Engine through Reinvestment
The reinvestment of generated profits strengthens the engine (driving force) that generates new growth. Tokai
Carbon will accelerate its growth by effectively investing in the following areas: Facility expansion for the growthof each business segment, global environmental preservation, R&D that contributes to social development, M&A
and investments that create new co-creation, and human capital, which is the source of value creation.

Business Investment
Conceptual Diagram of the Growth Engine

Medium-term Management Plan “T-2025”
Purpose

Corporate
Administration• Sustainability promotion• Global governance• Strengthening of our
financial position

Human
Capital• Diversity• Engagement• Recruitment/
development of
human resources

Business• Expansion of production capacity• Environmental system investment• Creation of synergies between
businesses

GrowthEngineM&A/
Investment• M&A/Investment• Joint research• New business exploration

Technology• Development of new
products applications• Reduction ofenvironmental
impact• Evolution of coretechnologies

Investment Amount

Description(three-year total)

Expansion of
production capacity

36 billion yen

Increase production capacity for fine carbon and industrial furnaces,
two business areas that are witnessing promising growth

Environmental
system investment

17 billion yen

Environmental measures to be carried out at North American plants
where carbon black is produced

Facility renovation

70 billion yen

Renovation of facilities to realize stable supply and improve throughput

Technology Investment
Our five research centers (the Fuji Research Laboratory, which serves as our general research laboratory andmain research facility, the Chita Laboratory, Hofu Laboratory, Tanoura Laboratory, and Chigasaki Laboratory)
conduct everything from basic research on carbon materials to the development of new products.
In the development of new products, we have developed solid SiC Focus Rings using our proprietary CVD*
method. Solid SiC Focus Rings are used in equipment for manufacturing high-performance semiconductors.
To reduce environmental impact, we plan to develop anode materials for lithium-ion batteries used in EVs andother vehicles in Japan using heat treatment technology developed in our Graphite Electrodes business. Now
planning to expand the anode production technology to Europe and the U.S. Based on our surface treatment
technology, one of our core technologies, we have also developed Aqua Black, a modified version of carbon
black that is mixable with water. This material is used in black ink for inkjet printers and other applications. Tokai
Carbon will continue to focus on the development of advanced technologies that meet the needs of the times.

Research andDevelopment Expenses(Million yen)

3,171

3,200
2,682

2,823

1,600

0

2020

2021

2022

* CVD (Chemical Vapor Deposition): A method of depositing a film through a chemical reaction by supplying a raw material gas containing the components of thedesired thin film to the surface of a base material heated in a reaction tube

Human Capital Investment
Providing opportunities to learn and take on challenges
In order to develop human resources to take on global challenges and make a leap forward, we conduct study-abroad language training
and global training, as well as next-generation leader training and executive management training to develop human resources who will be
responsible for future management.

Promoting diversity
Tokai Carbon actively hires experts who can respond quickly and flexibly to issues that require expertise. In addition, we have set targets forraising the percentage of females to the total number of new graduates taken on for career-track positions, increasing the number of womenin managerial positions, and increasing the number of foreign employees in managerial positions. These are initiatives that the Company
promotes.

Strengthening our strategic foundation by improving engagement
Tokai Carbon is promoting initiatives that lead to increased engagement, such as reviewing the personnel compensation system and shortening
working hours. From 2023, we plan to visualize and analyze engagement levels and implement initiatives to improve and enhance them.
See pages 47 - 48 for the targets and progress of each initiative.

21

Tokai Carbon Co., Ltd.

Integrated Report 2022

22

Corporate Strategy

Corporate Strategy

4 Business Area Expansion

Market Creation
Our enhanced growth engine will invigorate our market creation efforts. As a manufacturing
company that possesses materials production technology, Tokai Carbon's products are used ina wide range of industrial fields. We will continue to create new value by utilizing our expertise incarbon materials to contribute toward achieving carbon neutrality and solving relevant issues.

Market Creation Opportunities

Advanced Materials Investment

Advanced Materials• For SiC semiconductor manufacturing
equipment• R&D products

Solutions• RUC (Ready-to-use Cathode)• Eco-friendly industrial furnaces• EREMA recycling products• Used tire recycling®

Due to the miniaturization of semiconductors and increases
in cell height, the load on components used in semiconductor
manufacturing equipment is increasing. Tokai Carbon was thefirst company in the industry to succeed in the mass productionof solid SiC Focus Rings. Their adoption is expanding as a newmaterial that offers twice the service life of conventional siliconcomponents. In addition to high-purity SiC products, we havedeveloped and supply TaC (tantalum carbide), which has evenbetter heat resistance than SiC, to respond to the higher-loaded
manufacturing process for SiC semiconductors, which are
expected to become the next-generation semiconductors.

Solid SiC Focus Ring

TaC susceptor

Solutions for Future Needs

Expansion of
Existing Markets
EAF…………………… 4-5% annual growthTires……………… 4-5% annual growth
Aluminum………… 4% annual growth
MLCC*…………… 10% annual growth* Multi-Layer Ceramic Capacitors* EAF: Electric arc furnace

Needs Surrounding Local
Production for Local Consumption• Expansion of the anode materials business in
Europe and the U.S.
• Respond to the needs of local semiconductor
procurement

New Businesses• New business areas not restricted
to carbon-based materials• Innovative technologies for achieving acarbon-neutral society (including CO2 reduction,
immobilization, and utilization technologies)

With the demand for carbon neutrality and resource recycling initiatives, thechallenges facing our customers are also changing dramatically. We will contributeto solving issues through co-creation with customers so that we can move ahead ofdemand in response to the new needs that arise in these circumstances.
RuC® solution-type next-generation cathode

Initiatives for Creating New Businesses
Exploring new business opportunities through the promotion of carbon neutrality
Tokai Carbon has set a goal of achieving carbon neutrality by 2050. Through our efforts to achieve this, we aim to solve
issues through various technological innovations. In addition to creating businesses that do not depend on fossil fuels, we aremaking efforts to review the use of raw materials in our existing businesses, switch to clean energy, and invest in CO2 collection
technology. In addition, through co-creation with other companies, we will promote research on tire recycling technologies andtechnologies for manufacturing carbon materials using CO2 as a resource with the aim of creating new business opportunities.

Establishment of the Business Incubation Department
In September 2022, Tokai Carbon established the Business Incubation Department. In addition to creating new businesses, we
aim to build a system for launching new businesses on an ongoing basis. In order to create new businesses in the non-carbon
fields that do not rely on fossil fuels and to convert CO2 into a resource (manufacturing of carbon materials and products from
CO2), we will develop cross-departmental activities, actively co-create with external organizations, and promote initiatives.
Activities of the New Business Promotion Department• Explores new business areas that are not restricted to carbon• Makes use of external institutions (collaborates with universities, research institutes, venture firms, etc.)• Co-creates carbon-neutral technologies• Tallies and deeply investigates Group technologies and finds way to utilize them

23

Tokai Carbon Co., Ltd.

Integrated Report 2022

24

Corporate Strategy

Corporate Strategy

5 Business Portfolio

Stable Cash Flow
With a diverse and well-balanced business structure, we will reduce the impact of market fluctuations
and generate stable cash flow. This will serve as the foundation for realizing a “stable supply of highquality products” and the loops in the direction of our long-term vision will continue to rotate towardfurther growth.

Industrial Furnaces
and Related Products2022 Business Composition

Other

4.8%

Although our largest business was the Graphite Electrodes
business, the acquisition of a U.S. base for our Carbon Blackbusiness, growth in the Fine Carbon business, acquisition of the
Smelting and Lining business, etc. made our business composition
less dependent on Graphite Electrodes by the end of 2022, which
contributes to cash flow stabilization.

Graphite Electrodes

17.5%

Smeltingand Lining

19.2%

3.3%

2022
Sales Composition
by Business
Segment

Fine Carbon

14.5%

Carbon Black

40.7%

ROIC Measures by Business Segment
Our consolidated WACC (weighted average cost of capital) was 5% and consolidated ROIC (return on invested capital)
was 7% at the end of FY2022. At the same time, the ROIC of each segment exceeded WACC. We target ROIC higher than
10% for 2025 by promoting business “selection & concentration” and implementing measures tailored to the businessenvironment of each segment.
We will expand our business areas, especially in the Fine Carbon and Industrial Furnace and Related Products businesssegments, which are growing businesses and each have a high ROIC, by increasing production capacity and developing
next-generation products. In Graphite Electrodes, our core foundation business, Carbon Black, and Smelting and Lining
businesses, we will secure stable cash flows and stabilize profits across the Group by implementing measures tailored toeach market environment.

“Selection & Concentration” Aimed at Optimizing Our Business Portfolio
In November 2021, the Board of Directors approved the Business Portfolio Management Policy. In addition tosetting and monitoring profitability and capital efficiency targets based on the cost of capital, the Board of Directors
deliberates on the direction of our business portfolio on an annual basis, taking into account consistency with our
long-term vision and perspectives toward medium- to long-term growth. We will pursue a business portfolio that
continuously improves corporate value by analyzing businesses, products, product types, bases, etc. from various
perspectives and promoting selection and concentration.
In addition, amid the trend toward decarbonization, we aim to realize our long-term vision of “Contribute to asustainable society through advanced materials and solutions” by transforming our portfolio to incorporate new
businesses that do not rely on fossil fuels while maintaining our core carbon-related businesses, such as our Graphite
Electrodes and Carbon Black businesses in the medium term.

Perspectives
Consistency with our
long-term vision
Management environment
ROIC/WACC

25

Tokai Carbon Co., Ltd.

High
Increased ROIC・Reducing costs byreviewing raw
materials and processes

GraphiteElectrodes

Fine
Carbon

ROIC

ROIC

8%

・Setting of appropriate
selling prices

Incorporation into the capital
investment plan

・Business area expansion
・Production capacity
increases (throughaggressive investment)

Industrial
Furnaces
ROIC

30%

Low

Restructuring in terms of business,
products, product type,and location

New business development
and M&As

High Growth/High ROIC

16%

Incorporation into
the management strategy

Synergy
Potential

MarketGrowthBusiness
Portfolio
Optimization

CarbonBlack

Smeltingand Lining

ROIC

ROIC

7

ROIC
(2022)

High

17%

%

Stable Sales (cash cows)

Stabilization of High ROIC

・Project promotion for establishing a newbase in Thailand (TCP)・Differentiation by offering high qualityand development proposal-based products

・Enhancement of our production systemthrough the early completion ofenvironmental investment in the U.S.

・Product output for overall optimization

Low

Integrated Report 2022

26

Business
StrategyGraphite Electrodes

P29-30Carbon BlackP31-32Fine Carbon

P33-34Smelting and Lining

P35-36

Industrial Furnaces and Related Products P37-38

27

Friction Materials

P39

Anode Materials/Other Operations

P40

Tokai Carbon Co., Ltd.

Integrated Report 2022

28

Business Strategy

Business Strategy

Graphite Electrodes

Large diameter with higher quality standard.
We will contribute to support the coming expansionof the EAF and its higher productivity.

Business
Segment
Sales Ratio

17.5%

Mitsuharu Nobata
Q

Roles of Our Products and Their Connections with Society
There are two methods of steel production: The blast furnace
method and the EAF method. In the blast furnace method, iron is
produced through a process of reducing iron ore, while in the EAF
method steel scrap is melted in an EAF and recycled as steel products.
Graphite electrodes are used as conductors in an EAF to melt steel
scrap at once by arc discharge. The temperature of the electrodes in
an EAF exceeds 1,600°C, and graphite electrodes, which can be used
under such harsh conditions, are indispensable for EAF steelmaking.
We support the stable operation of EAF by supplying electrodes thatcan withstand high thermal shock and have high strength.

What is your current market position andcompetitive advantage?

The world supply capacity of graphite
electrodes, excluding China, is less than 800,000
tons per year. Our supply capacity is approximately
100,000 tons, giving us a 13% share of the global
market in 2021, ranking us fourth in the world. We
have operational sites at three major demand centers
as Asia (Japan), Europe (Germany) and the U.S., This
platform allows us to procure raw material, produce,
sell and take care of the customer when the electrodes
are used, which helps us maintain longer relationships
with customers and improve quality to match theirneeds. The world’s best manufacturing technologies
are shared among the global production sites, which
also support our performance to be outstanding.

A

Q

How was business performance for thesegment in 2022?

In 2022, net sales increased 46.8% fromthe previous year to 59.630 billion yen andoperating income was 8.032 billion yen (operating
loss of 400 million yen in the previous year) due to theA

Main Products

General Manager,
Graphite Electrode Division

recovery of the electrode market, higher selling prices
in the second half of the year, and steady sales oflarge-diameter, high-quality electrodes in the UnitedStates, where EAFs are used for 70% of the total steel
production.

Q

What is your outlook for future market trends
and what are your priority measures?

The EAF method can reduce CO2 emissions
to about 1/4 that of the blast furnace method.
From the perspective of carbon neutrality, there is a
global shift from blast furnaces to EAFs. That said,
steel production using the EAF method is expected toincrease from the current 500 million tons to 700 million
tons by 2030. Demand for electrodes will increase
accordingly, especially for large-diameter electrodes
used in large furnaces. The large-diameter electrodemarket demands high quality, in other words, a market
where we can demonstrate our competitive advantage.
Since these are high value-added products, we intend
to raise production capacity of the larger ones to meetstrong demand.

A

TOPICS
Efforts to Reduce CO2 Emissions from Electrode
Manufacturing

29

Graphite Electrodes for DC Furnaces(direct current furnaces)

Graphite Electrodes for AC Furnaces(alternating current furnaces)

Size: 22-32 inches (550-800 mm)

Size: 16-28 inches (400-700 mm)

Electrodes for DC furnaces, which require 1 column ofgraphite electrodes. Often used for high-current operations,the allowable current amount increases due to the larger
diameter. The largest size diameter currently available is 32
inches.

Electrodes for AC furnaces, which require 3 columns ofgraphite electrodes. This is the main type of graphite electrodeused for EAF, with electrode diameter sizes of 20-28 inches.

Tokai Carbon Co., Ltd.

The baking process carried out in the manufacture of graphite electrodes
uses a large amount of fossil fuels. Tokai Carbon is working to reduce CO2
emissions and save energy by improving the thermal insulation propertiesof our firing facilities. We are also working to reduce CO2 emissions byswitching fuels and using green electricity for the entire plant.

Integrated Report 2022

30

Business Strategy

Business Strategy

Carbon Black

Stable supply to the local needs. We will propel
our efforts toward carbon neutrality through ourenvironmental equipment and technologies.

Business
Segment
Sales Ratio

40.7%

Norikazu Kawabe
Q

Roles of Our Products and Their Connections with Society
Carbon black is mainly used for tires. This material, which can make up
about 30% of the weight of a tire, supports the safe driving of trucks, buses andpassenger cars, which are indispensable for daily life. Due to its characteristicof increasing the strength of rubber, it is used in a variety of other products
besides tires, such as rubber hoses, belts, and anti-vibration rubber.
Carbon black is also used as a pigment for coloring. It supports society andour daily lives in familiar ways since it is used for black pigment in plastics, ink
for printing newspapers, documents and more.

Main Products

General Manager,
Carbon Black Division

What is your current market position andcompetitive advantage?

Tokai Carbon started the production of carbon
black for the first time in Japan in 1941. Since
then, the technology and know-how that we havecultivated over many years as well as our solid trackrecord have become our major strengths.
Since carbon black has a low bulk density and islightweight, manufacturing and supplying carbon
black at locations where it is in demand will reducetransportation costs and CO2 emissions. We havethree carbon black plants in Japan, three in the U.S.,
one in Thailand, and one in Canada. Our supply
system, which is based on local production for local
consumption, is the source of our competitiveness.
Besides being a reinforcing material for rubber,carbon black is also used as a pigment for coloring.
It is used as a black pigment for plastic such as TV
frames and as ink for newspapers. In addition, byapplying a special surface treatment to our carbon
black, it is used as black ink used in inkjet printers
by various manufacturers, supporting society and ourlives in familiar ways.

A

Q

How was business performance for thesegment in 2022?

In 2022, sales were strong due to strong demand
for aftermarket tires for trucks and buses. In
addition, the rise in raw material costs was reflected in
the selling prices. As a result, net sales increased 39.2%
year on year to 138.484 billion yen and operating income
increased 39.8% year on year to 12.282 billion.

A

Q

What is your outlook for future market trends
and what are your priority measures?

Global demand for carbon black is expected to
grow at an annual rate of 4% to 5% through 2025,
driven by increased demand for replacement tires and thewidespread use of automobiles in emerging countries.
We have been intensively investing in large-scale
environmental facilities at our U.S.-based plants for several
years with system installation expected to be completed
by 2023. As a result, we are now ready to meet the strong
demand for carbon black in the U.S. in the future. In Thailand,
we are planning to start operation of a new plant in 2025 ona new site owned by the company. We will further improve
productivity and quality, reduce environmental impact, andbuild a sustainable supply system.

A

TOPICS

SEAST

Aqua Black

SEAST is a type of carbon black that is added to rubber
to make it stronger and more resistant to wear, improving
vehicle fuel efficiency. It is used in the rubber parts ofindustrial machines and various sizes and models of tire. Asa furnace black product for rubber*, SEAST proudly holds
top share on the domestic market.

Aqua Black is used as black ink in inkjet printers. Sincecarbon black is manufactured from oil, it is difficult to blend
with water. We succeeded to modify it to mixable properties
using our exclusive surface treatment technology. The
technology allows to realize the deep black color, which is
unique to carbon materials.

Promoting the Development of Technologies
for a Recycling-oriented Society
We are developing advanced technologies that contribute tocarbon neutrality and to reducing environmental impact. Specifically,
we will develop materials to extend the life of tires and other rubber
products, utilize raw materials other than those derived from fossil
fuels, recycle used tires, and recover/reuse energy. This will beachieved through co-creation with customers, business partners,
universities, and other research institutions.

* Carbon black produced by the incomplete combustion of heavy oil

31

Tokai Carbon Co., Ltd.

Integrated Report 2022

32

Business Strategy

Business Strategy

Fine Carbon

We will expand the supply of materials that contributeto semiconductor sophistication and productivity
improvement to support the higher market demand.

Business
Segment
Sales Ratio

14.5%

Hideo Shin
Q

Roles of Our Products and Their Connections with Society
Fine carbon is a carbon product characterized by its denseness, andisotropic graphite, which is manufactured using micron-level fine carbon
particles, is a typical fine carbon product.
Isotropic graphite, with its high purity and ability to withstand hightemperatures, is used in manufacturing processes of semiconductors, solar
cells, airplane engine parts, and various metals.
Since materials of particularly high purity are required in the semiconductor
field, demand for fine carbon has been growing along with the developmentof communication technology, AI, IoT, and other technologies. Also,
since semiconductors are quickly evolving, components incorporated insemiconductor manufacturing equipment are subject to stricter conditions.
This means that the materials themselves must also evolve. In response, weplay a role in co-creating industrial development.

Main Products

What is your current market position andcompetitive advantage?

With production bases in Japan, South Korea,
China, the U.S., Germany, Italy, and the United
Kingdom, which are countries of demand, we are thethird largest supplier of isotropic graphite material in
the world with an annual supply capacity of 7,000 tons.
We have expertise in controlling baking temperatures toachieve stable quality with little variation.
We are the global top supplier of SiC Focus Rings,
which were developed and put into production in 2013.
Because of its higher strength and lower degree ofwear and tear compared to metallic silicon and quartz
glass, its use is expanding in increasingly sophisticatedsemiconductor manufacturing processes. At our bases inJapan, the U.S., and South Korea, where semiconductor
device manufacturers and semiconductor equipment
manufacturers are concentrated, we have an integrated
production system that covers everything from forming
to surface CVD-SiC coating to accurately meet customer
needs and capture demand.

A

General Manager,
Fine Carbon Division

Q

How was business performance for thesegment in 2022?

In 2022, while demand for smartphones and PCs
declined, demand for power semiconductors
such as SiC semiconductors steadily increased, andsales of SiC Focus Rings and products for generalindustrial applications expanded, resulting in a 26.2%
increase in net sales year on year to 49.393 billion yen
and a 54.3% increase in operating income year on year
to 14.825 billion yen.

A

Q

What is your outlook for future market trends
and what are your priority measures?

The semiconductor market is expected to growfurther in the medium term due to the spread of
IoT, AI, and EVs. Since semiconductor manufacturers
are enhancing their production systems and improving
the performance of semiconductors and manufacturing
processes. Under these circumstances, the proportion of
SiC products used in the semiconductor manufacturing
process is expected to increase. We plan to increase
our SiC production capacity 1.5 times higher in 2025
from the 2022 level to capture the demand.

A

TOPICS
SiC Focus Rings Support the Evolution of
Semiconductors

33

Isotropic Graphite Material

Solid Silicon Carbide (SiC)

In contrast with ordinary graphite, which has anisotropic
properties, because of its importance in uniformity, fine carbon
material is based on isotropic graphite. It is used for electric
discharge machining for creating complex-shaped molds,
components for high-temperature processing furnaces,
nozzles for continuous casting, and many other products.

Manufactured using our unique chemical vapor deposition
method, solid SiC is a super high-purity solid siliconcarbide manufactured by thickening the SiC coating film,that is normally 100 micron (0.1 mm) thin. With its strengthand corrosion resistant properties, it is an ideal material for
semiconductor equipment parts.

Tokai Carbon Co., Ltd.

Focus rings are used in the etching process to create grooves insemiconductor circuits using plasmaized gas. The focus ring is placed on
the outside of the silicon wafer and is an important component necessary
to concentrate the plasma on the wafer and ensure uniform processing.
As the number of etching cycles increases and plasma output becomes
higher with the miniaturization of semiconductors and the move toward
three-dimensional design (stacking), there has been a shift to solid SiC
rings that have higher plasma resistance.

Integrated Report 2022

34

Business Strategy

Business Strategy

Smelting and Lining

With the aim of realizing a sustainable society,we will expand the use of products that reduce
environmental impact.

Business
Segment
Sales Ratio

19.2%

Takashi Masaki
Q

Roles of Our Products and Their Connections with Society
Our Smelting and Lining business consists of three main products:
Cathodes, carbon electrodes, and blast furnace blocks.
Cathodes are used in electrolytic furnaces for smelting aluminum. Throughthe supply of cathodes, we contribute to the stable production of aluminum.
Aluminum is lightweight, highly recyclable, and widely used in industries forautomobiles, airplanes, trains, and beverage cans.
Carbon electrodes are used to produce metallurgical grade silicon, a material
used in semiconductors, and support the production of semiconductors, forwhich demand is expected to grow further.
Furnace linings are installed as refractory materials in blast furnaces used
to produce steel for automobiles and other products.
In this way, we contribute to the development of society by supplying key
components that are indispensable for the production of each material.

Main Products

General Manager,
Smelting and Lining Division

What is your current market position andcompetitive advantage?

The company has manufacturing facilities in
Poland and France, sales and service basesin China, and headquarters functions in Germany.
We are the global top supplier of high quality cathodeand blast furnace blocks while second for carbon
electrodes. Based on technologies and know-how
accumulated through research and development, we
supply products with stable quality that is not affectedby raw material characteristics.
Cathodes, carbon electrodes and furnace linings are
manufactured using the same equipment and following
the same heat treatment process. Therefore, what
to produce is switchable that helps to optimize theproduct mix according to the demand of each product.
This kind of product line is unique, which is one of ourstrength.
In addition, each product requires significant
investment and various manufacturing know-how.
Since they are essential components for customers’
production, changing suppliers entails risks. That said,
the entrance barrier for this business is extremely high.

A

Q

How was business performance for thesegment in 2022?

In 2022, shipments of furnace lining decreased
due to the impact of the Ukrainian crisis whilesales of cathodes and carbon electrodes remained
firm. We also made efforts for adjusting sales prices
to cover cost increases and to maximize production
output. As a result, net sales increased 31.2% year on
year to 65.203 billion yen, however, operating income
decreased 30.1% to 1.345 billion due to the recordingof goodwill amortization and other expenses.

A

Q

What is your outlook for future market
trends and what are your priority measures?

Aluminum, which is lightweight and highly
recyclable, is attracting increasing attention fromthe viewpoint of reducing the environmental impact ofautomobiles, such as improving fuel efficiency. Global
demand for aluminum is expected to grow at an annual
rate of 3 to 4%. With the expected increase in aluminumproduction and expansion of electrolytic furnaces, wewill capture the growing demand for cathodes. In the
China market, we have been rolling out the RuC®, astrategic product that reduces environmental impact,from 2022 and working on to spread it over.

A

TOPICS
RuC® - a strategic cathode product35

CathodesCarbon Electrodes

Cathodes are used in electrolytic furnaces for smelting
aluminum. These products possess excellent thermal
conductivity, electrical characteristics, and mechanicalcharacteristics. Using coke as raw material, general-purpose
carbon cathodes are heat-treated at 1,000°C and high-end
graphitized cathodes at 2,500°C or higher.

Used as electrical current conductors in submerged electric
furnaces (melting furnaces) for production of metallurgicalgrade silicon, a material used in semiconductors, ferroalloys,
phosphorus, lead, nickel, and copper.

Tokai Carbon Co., Ltd.

When installing a regular cathode in an electrolytic furnace, the customer must
cast a steel bar for conductivity. RuC®, a product that we began supplying in
2017, is a cathode that incorporates a connector rod, which is a rod-shapedmaterial for conducting electricity. This eliminates the need for customers to
install the conductor. Furthermore, since the connector rod is made of copper,
it has excellent electrical characteristics. Therefore, it is possible to reduce
the power consumption of aluminum smelting by approximately 3%. We willcontribute to the reduction of environmental impact by spreading RuC® in orderto make it an industrial standard.

Integrated Report 2022

36

Business Strategy

Business Strategy

Industrial Furnaces and Related Products
Business
Segment
Sales Ratio

Contribute to our customer’s higher growth,higher quality and the stable production,
as a top brand supplier.

4.8%

Akihiko SatoQ

Roles of Our Products and Their Connections with Society
Many components such as MLCCs (Multi-Layer Ceramic Capacitors),
lithium-ion batteries, and glass are used in smartphones and cars.
Industrial furnaces are used for heating, sintering, melting, and heat
treatment at predetermined temperatures in the production of ceramics,
electronic components, secondary battery materials, metals, glass, andpowders. Based on the technology and know-how cultivated over many years,
the temperature (1,000 to 1,500°C), ambient gas (nitrogen, hydrogen, etc.),pressure, etc. are set according to the material. We supply industrial furnaces
capable of manufacturing large quantities of parts with stable quality. EREMA
heating elements installed and used in industrial furnaces were the first to be
sold commercially in Japan in 1927 and now we are the biggest producer ofsilicon carbide heating elements in the industry.
In this way, we contribute to society by supplying equipment and products
essential for the manufacture of electronic components and lithium-ion
batteries.

Main Products

President,
Tokai Konetsu Kogyo Co., Ltd.

What is your current market position andcompetitive advantage?

Over the years, we have honed our technology
by supplying major electronic component
manufacturers in Japan. As the performance ofelectronic components and battery materials evolve
significantly, we respond quickly to customer needs,building a track record of performance and trust. Even
for large-scale industrial furnaces that process large
quantities of parts, we have achieved the performance
to precisely control the temperature and atmosphere
gas in the furnace that lead to customers’ stableproduction and quality.
Since baking of electronic components and lithiumion batteries is an important process in the customer’s
production, industrial furnaces are an industry withhigh barriers to entry where trust formed by anexcellent track-record is important. The Tokai Carbon
Group supplies industrial furnaces and EREMA heating
elements to manufacturers around the world, mainly inJapan, China, and Korea, and has established “Tokai”
as a leading industrial furnace brand name with 50%
share of the global market for industrial furnaces
designed for MLCC sintering and 30% share of the
global market for heating elements.

AQ

How was business performance for thesegment in 2022?

In 2022, although demand in the energy-related
sector remained firm, net sales decreased 9.7%
year on year to 16.272 billion yen due to the impactof the lockdown in China and the slowdown in theelectronic component-related industry. Operating income
decreased 17.1% year on year to 4.475 billion yen.

A

Q

What is your outlook for future market
trends and what are your priority measures?

The MLCC market is expected to grow at anannual rate of approximately 10% and thelithium-ion battery market at an annual rate of 20-30%
backed by a growth in 5G base stations, EVs with
its electrification. There should be a series of capital
investment coming on line from our customers.
Under these circumstances, we are expanding our
production capacity for industrial furnace and EREMA
heating elements. Expansion for industrial furnaces
production in Shiga plant, Japan will be completed
in January 2023. Expansion for heating elements
production in Sendai Plant, Japan will be completed in
2025 bringing the capacity up to 1.6 times larger thanthe current level.

A

TOPICS
Promoting initiatives to reduce CO2 emissions

37

Industrial Furnaces

EREMA Heating Elements

MLCCs and lithium-ion battery materials are inserted into
industrial furnaces for heat treatment. We custom design
and manufacture our industrial furnaces taking into accountheat treatment conditions and material insertion methods tomeet customer needs.

EREMA heating elements are heating elements composedof high-purity SiC (silicon carbide). Since the heat dissipation
per unit area is very large, the temperature can be raised up
to 1,600°C. It is an environmentally-friendly heat source that
does not create air or noise pollution.

Tokai Carbon Co., Ltd.

For industrial furnaces, we are working to improve technologies to effectively
utilize the energy input during heat treatment in order to save energy. As for
EREMA heating elements, we have developed and introduced environmentallyfriendly products and launched an initiative to collect and recycle used products
from 2023. In terms of production, we are introducing forms of renewable energy
such as solar power that contributes to our energy saving and high efficiency
production.

Started recycling the cold ends ofused EREMA heating elementsCollection of Cold Ends
Cold EndHot Zone

Cold End

Technology for recycling
hot zone sections into
high-purity SiC is underdevelopment

Processing
Use of EREMA Heating
Element Cold Ends

Integrated Report 2022

38

Business Strategy

Business Strategy

Friction Materials

Anode Materials/Others

Business
Segment
Sales Ratio

Business
Segment
Sales Ratio

2.8%

0.5%

Roles of Our Products and Their Connections with Society

Roles of Our Products and Their Connections with Society

To “stop things that move” and “transfer power”, friction materials are used inbrakes and clutches of motorcycles, construction machinery, agricultural machinery,machine tools and robots.
Sintered metal friction materials, our main products, are manufactured by sinteringand processing a mixture of graphite, copper, etc. They are highly durable and areincorporated into brakes and clutches for large motorcycles and special vehicles(cranes, mining wheel loaders, combine harvesters, tractors, etc.). In addition, resinbased friction materials are used in control parts of machine tools and industrial
robots.
We simplify packaging and utilize returnable containers to reduce environmental
impact when delivering our goods. In manufacturing, we are working to reduce CO2
emissions by switching to carbon-free power at our plants.

Lithium-ion batteries are found in mobile phones, hybrid cars, and EVs. Graphite is used for the anodes of these batteries. Ouradvanced graphite manufacturing technology allows us to produce and supply high-quality, low-cost anode materials with less
CO2 emissions during production.

Direct match to the needs.
Our product will generate the
new market.
Q

Hirofumi
MasudaWhat is your current market position andcompetitive advantage?

We develop and propose products that matchthe detailed needs of our customers. Our
technology and know-how built over a long history
makes that possible. It was 1949 when Tokai was thefirst to produce sintered metal friction materials formotorcycles in Japan. Today, we dominant 60% sharein friction materials used for large motorcycles in Japan.

Q

How was business performance for thesegment in 2022?

A

In 2022, despite a slowdown in the Chineseconstruction machinery market and supply

Tokai Carbon Co., Ltd.

In 2022, sales of anode materials decreased 35.1% from the previous year to 1.888 billion yen due to sluggish sales of EVs inwhich our products are used and intensified competition caused by the emergence of new companies.
On the other hand, since efforts toward local production for local consumption of EV components are spreading in Europe andthe U.S., local production of anode materials for lithium-ion batteries is being encouraged. With heat treatment manufacturing
facilities in Europe and the U.S., we are well positioned for growth opportunities to utilize Japanese anode material production
technology in regions of demand. Currently, the production technology for anode materials is being transferred from Japan to ourbase in France under the umbrella of Tokai COBEX. The production capacity will be enlarged according to the market expansion.

TOPICSA

39

Looking back on 2022 and priority measures for the future

General Manager,
Friction Materials
Division

Positive terminal (+)

Electrolyte

How lithium-ion batteries made using graphite work
Rechargeable lithium-ion batteries for repeated use can be charged and discharged
by taking in and releasing lithium ions by using the movement of lithium ions in the

chain disruptions, sales increased 5.4% from theprevious year to 9.362 billion yen due to firm demand
for major applications.

Q

What is your outlook for future market trends
and what are your priority measures?

anode material. This design utilizes the structure and chemical stability of graphite,

Separatorand has a larger battery capacity and operating voltage than other rechargeable
batteries. It is smaller and lighter as well. It can withstand additional charging when
it is not fully discharged.

Anode
Negative terminal (–)

CathodeSeparator

In addition to expanding sales of sinteredmetal friction materials and resin-based friction
materials, which are our main products, we will also work
to develop the market for off-road vehicles, including four
wheeler buggies, which are gaining popularity mainly in
the U.S. On the production side, we are promoting theautomation of manufacturing and utilizing AI for material
formulation for further product development.

A

Integrated Report 2022

40

Sustainability

A Talk with Our External Directors

P43-46

Basic Policy and Structure

P47-48To a Carbon-Neutral Society

P49-50Respect for Human Rights

P51

Supply Chain Management/
Occupational Safety and Health

P52

Corporate Governance41

P53-55Compliance

P56

Management

P57-58Tokai Carbon Co., Ltd.

Integrated Report 2022

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Sustainability

Sustainability

A Talk with Our External Directors
regulations apart from delegating management
authority. Sometimes I go beyond the scope ofgovernance to provide future-oriented advice on theoverall management of the company. I believe it is
my role as an external director to provide appropriate
opinions when necessary, including such advice.

Enhancing the Effectivenessof the Board of Directors
As the globalization of business progresses rapidly, our three external directors discussed the ideal formof governance appropriate for a global company and the ideal form of the Board of Directors.

Nobumitsu Kambayashi

Mayumi Asada

Toshiro Miyazaki

External Director

External Director

External Director

The mission and thoughts of an external
director
Miyazaki One year has passed since I became an External
Director of Tokai Carbon. I personally have experience
working for many years in the area of corporate
management planning at a planning department of a
shipbuilding company after I worked at the company’s
departments that handled management accounting,plan execution follow-up tasks, etc. Later, I also
worked as an officer and CFO for several subsidiaries.
From there, I joined a company engaged in marine
development and became its President. 100% ofthat company’s business is conducted overseas. It
is a global company with only about 5% of Japaneseemployees. Our activities were based in areas where
oil could be excavated, such as the U.S., Brazil,
Singapore, Australia, Thailand and Africa. Since Tokai

43

Tokai Carbon Co., Ltd.

Carbon currently sees 80% of its sales come fromoverseas operations, I think that a common point is
the fact that we are developing our business globallyand that the majority of our employees are foreign
nationals.
In order for a company with global businesses
and employees to be effective in governance, it isnecessary to devise a certain level of ingenuity. As
a result of my previous experience, I need to pay
close attention to the governance of subsidiaries,
especially the governance of overseas subsidiaries.
Currently, with the exception of one overseas
subsidiary in Thailand and one in the United States,
the management of Tokai Carbon’s overseas
subsidiaries is basically entrusted to local managers.
However, Tokai Carbon, our parent company, needs
to take the lead in ensuring compliance among
employees, including adhering to internal rules andKambayashi I have a lot of experience in heavy industry
companies and have been employed at a shipbuilding
company for a long time, just like Mr. Miyazaki. I also
have experience as the general sales manager of an
entire company. As you know, there was a time whenheavy industry was positioned as a key industry inJapan. At that time, I did my best for the developmentof society and I think I was able to take on various
challenges. When I was approached about becoming
an External Director at Tokai Carbon, I was retiring as
the head of the shipbuilding company. Although I had
some doubts before making this decision, I decided toassume the position in December 2015 partly due toa strong request from President Nagasaka to take theposition. Seven years have passed since I took officeand I have had many experiences during this time.
Since the mission of an External Director is basicallymonitoring, it is of course important to point out andcall attention to runaway management and execution
by saying “it is risky, so it should be stopped,” “it isdangerous,” etc. I think it is also an important roleas an External Director to support corporate officers,
including President Nagasaka, who is also responsible
for business execution. I have taken these points into
consideration, sometimes admonishing management
and sometimes giving them a push.
Asada

Committee meetings, External Directors can grasp
how each department is trying to address the issues
that are occurring within the company. I think it isan extremely useful system that allows you to get intouch with real-life information within the company
before attending the Board of Directors meetings.

The role of the Management Committee
Asada

We also receive reports on accidents and troubles
during Management Committee meetings. When
this happens, I sometimes give advice during thosemeetings based on my own experience and knowledge,
such as conveying the importance of related surveys
and examinations in order to minimize troubles.
On the other hand, External Directors are required tocheck risks from the standpoint of shareholders rather
than simply agreeing with the ideas of the management
team. I always try not to forget that perspective.

Miyazaki Most of the proposals for the Board of Directors
are deliberated by the Executive Management
Committee. As Ms. Asada said, the Management
Committee is certainly useful. Because of that, I will
listen carefully to proposals made during Management

Sometimes it is important tomake comments that encourage
executive officers.

I have been working as a lawyer for over 20 years.
I think I have not always focused on corporate legal
affairs but rather on medical-related legal affairs,such as those of hospitals and medical corporations.
I have also been involved in criminal cases andjuvenile cases, working on them without specializing
in any particular field.
Tokai Carbon was the first company to appoint me
as an External Director. I was invited to assume thisposition in March 2021 in response to the growing
importance in society of external directors providing
advice from a female perspective.
Since I have no prior experience as an external
director, the existence of a system that allows
external directors to attend weekly Management
Committee meetings has greatly helped me.
Normally Board of Directors meetings are held oncea month. However, by attending weekly Management

Integrated Report 2022

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Sustainability

Sustainability

A Talk with Our External Directors
you will probably receive a lecture from the office inadvance. This takes up our time as well as their time
for the lecture. Considering this time burden, I cameto the conclusion that it would be most rational for
external directors to attend Management Committee
meetings. There is a Management Meeting every
Monday morning. To prepare for the meetings, I makeit a rule to do a “preparatory study” on each Sunday
the day before. I read Management Committeematerials in advance. This way, I have the points of
the agenda in mind so that I can ask questions if
interested and give advice if necessary. By doing so,
I can learn about the vivid feelings that Mr. Miyazaki
mentioned. By making such efforts, I can also deepen
discussions during Board of Directors meetings.

Tokai Carbon’s Board of Directors andthe qualities of President Nagasaka as
Chairman of the Board of Directors

Succession planning is also very
important from the perspectiveof management sustainability.
Committee meetings. This is because there is raw
information and vivid thoughts from the executive
side. However, since the proposals are often filled withthe passion of those bringing them forward, there isan undeniable tendency to drift in one direction. I am
afraid that even those of us in the position of External
Director will make a wrong decision if we know thedetails and go too deeply into them since there isa risk that we will be pulled by the passion of theperson making the proposal. I believe that execution
should only be conducted by executives and thatexternal directors should make statements that arefocused on monitoring and supervising management.
I try to calmly judge the content of deliberations of theManagement Committee and express my opinions at
the end of deliberations, paying attention to whether I
am too biased on one side with passionate proposals.
Of course, since there are many projects that I
am personally very supportive of, I sometimes giveencouragement. However, I am always careful to findthe right balance.
Kambayashi I totally agree. I think it all boils down to what
Mr. Miyazaki said and would like to add to this. If you
attend a monthly meeting of the Board of Directors
without attending Management Committee meetings,

45

Tokai Carbon Co., Ltd.

Asada During Tokai Carbon’s Board of Directors meetings,
directors speak frankly which allows us, as external
directors, to speak whenever we want to. Of course,
meetings are centered on those who propose theagenda, and President Nagasaka is the main person
for answering questions from external directors andAudit & Supervisory Board members. However, I
try to raise my hand without hesitation when I needto speak in order to confirm everything that needs
to be confirmed. I think the reason why discussions
at the Board of Directors are more likely to deepen
is because, as I mentioned earlier, discussions at
the Executive Management Committee serve as thefoundation. I believe that President Nagasaka, who is
the Chairman of the Board of Directors, is putting his
utmost effort into creating a Board of Directors where
directors speak frankly and operating the Management
Committee to invigorate the Board of Directors.

Thoughts about the Nomination
Committee/Remuneration Committee
Kambayashi I serve as Chairperson of the Nomination
Committee as well as the Chairperson of theRemuneration Committee.
The most important issue for the Nomination
Committee is the issue concerning successors. It
goes without saying that a succession plan must
be developed internally. It is a difficult issue for any
company to deal with. Even if a succession plan isdecided on internally, it should not be widely authorized
within the company let alone made public. At the
moment, although the Nomination Committee is only
listing successor candidates, it is a very sensitive issue.
The Remuneration Committee will consider mattersat the industry level and the level of companies of thesame size. There is no need to break out from thatlevel nor does the level need to be set to a level thatis very low. There is no correct answer worthy of 100
points, but we should try to get a sense of satisfaction
as a whole. It is important to give consideration to theamount of remuneration so that each officer will bewilling to work hard in the future.
Miyazaki Succession planning is also very importantfrom the perspective of management sustainability.
Given the age difference between the President
and executive officers of the Company, this is anextremely important issue, and I think it is necessary
to take immediate action. I think it is necessary toclearly state to the current executive officers and theirsubordinates at the general manager level who you
intend to succeed to your position. It is important tocarry out and update these initiatives every year.

Towards sustainable growth in the future
Asada

Kambayashi President Nagasaka is willing to spend enoughtime fully grasping the thoughts of people making
proposals in advance before discussing it at theBoard of Directors meetings. It may be possible tohave in-depth discussions at meetings of the Board of
Directors because we have prepared a casual meeting
environment and a solid place for communication.
President Nagasaka sometimes asks me to listen towhat directors are saying. Listening to them deepens
my understanding and allows me to clearly see that
Tokai Carbon is a company in which highly qualified
personnel have gathered together. I feel that Tokai
Carbon is an interesting company.

I do not see many women when I attend Management
Committee meetings and global meetings. Of course,
there are many female employees, but I have theimpression that the number of female employees isstill small at meetings of a certain level. There aremany excellent female employees in the Company,
and I hope that they will play more of an active role.
Although it is not appropriate to be preoccupied withgender, at this point in time, I think it is also necessary
to intentionally increase opportunities for women toplay an active role.
In terms of governance, as was previously indicated,with overseas sales approaching 80%, I think it isnecessary to keep an eye on business activities overseas

Women’s active participation is still at the
halfway point. It is also important to keep
an eye on overseas business.

and check problems. It is difficult to have control whenfacing language barriers and cultural differences, but I
think that is extremely important for us.
Miyazaki We must seriously raise management awarenessregarding ESG and the SDGs. Since Tokai Carbon
has “Carbon” in its company name, we need to moreclearly show how we will work toward carbon neutrality
in the future. Rather than being afraid of various
headwinds, it is important for us to be consciousof environmental harmony and coexistence withnature to acquire business opportunities and actively
contribute to the future of the Earth and society.
Kambayashi Since I became External Director, I havewitnessed five major M&As. As a result, 80% of oursales is overseas based. As I have already mentioned,
I think there is still more work to be done with regard to
the governance of overseas factories and companies.
Since M&As must be considered together with
PMI, it is important to make a plan for how to execute
PMI after M&As take place and carry it out. In thisregard, we are always thinking about how we can
improve our grip on things and what we should do in
the future. As an External Director, I intend to actively
work with the Board of Directors.

Integrated Report 2022

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Sustainability

Sustainability

Basic Policy and Structure
Sustainability Policy

Sustainability management structure

Identify the issues from the perspectives ofboth Tokai Carbon and our stakeholders

Tokai Carbon Group engages in corporate activities based on thecorporate philosophy of “Ties of Reliability” with our stakeholders.
Our management strategies are based on good consideration of ESG(Environmental, Social and Governance) to surely respond to the trustof our stakeholders and we work to solve social issues through ourbusiness that will contribute to the realization of a sustainable society
and enlarge our corporate value.

Materiality identification process

Nomination Committee

In January 2022, we set up the Sustainability
Committee as a voluntary advisory body to the Board of
Directors. Chaired by the President and CEO, it consistsof the officer responsible for the General Affairs andLegal Affairs Department, the officer responsible for the
Corporate Planning Department, the officer responsible
for the Human Resources Department, the General
Manager of the R&D Strategy Division, the General
Manager of the Technology & Engineering Division, andGeneral Managers of four principal business divisions.
It meets on a quarterly basis, in principle, to discuss
important matters related to sustainability, refer certain
matters to the Board of Directors, submit reports to
the Board of Directors, and supervise the disclosure of
information on sustainability, including the creation of
integrated reports.

Assess the importance of individual
issues identified

Discuss in the CSR Committee (under theumbrella of the Management Committee),the current “Sustainability Committee”
backed by the input from the external experts

In November 2019, we specified our “Materiality” that we should focus
on. We will sincerely face each materiality, contribute to the realization ofa sustainable society, and appropriately disclose the status of its efforts.

Voluntary Advisory Bodies

Resolution of the Board of Directors

Board ofDirectors
Management
Committee
Business, R&D, Administrative
Divisions, and Others

Remuneration Committee
Risk Management &Compliance Committee
Sustainability Committee

Carbon Neutral Committee
Office: Carbon Neutral OfficeGroup Companies

Sustainability targets (KPls) and results
Materiality
ThemesElements

Goals
Reduce greenhouse gas emissions

Reducing environmental impact
Harmony with the global
environment

Reduce pollution
Reduce water consumption

Realizing a recycling-oriented
society

Recycle waste
Use sustainable resources

2022
Scope

ActualTotal CO2 emissions for the Group in 2022: 2,408 thousand tCO2 (21% reduction from 2018)
This is result of primary efforts such as switching over to renewable energy and fuel switching

RatingReduce CO2 emissions by 25% (VS 2018) by 2030 and achieve carbon-neutrality in 2050

Consolidated

Specific numerical targets

Scope

〇

Reduce CO2 emissions by 25% (VS 2018) by 2030 and achieve carbon-neutrality in 2050

Consolidated

Dispose of all low-concentration PCB waste by March 31, 2025
Maintain zero environmental complaints against the Company (contamination of air, water, etc.)

Domestic group*1

Almost on target with about 62% of low concentration PCB waste having been disposed of〇

Reduce VOCs to 90% or less compared to 2015 level

Non-consolidated

Consolidated

No environmental complaints filed〇

Consolidated

ー

ー

ー

ー

Reduce water consumption (1% or more of reduction from FY2018)
Recycle 80% or more of waste
Final disposal rate of 25% or lower

Non-consolidated

4% reduction from FY2018
87% of waste recycled
18% final disposal rate〇〇〇

Maintain zero environmental complaints against the Company (contamination of air, water, etc.)
By the end of 2024, 30% of product packaging for transportation will be changed toenvironmentally friendly packaging
Reduce water consumption (less than the 2021 level)
Recycle 80% or more of waste
Final disposal rate of 25% or lower

ー

ー

ー

ー

Acquire ISCCPLUS certification at three CB plants in Japan by 2024

Chita Plant/Ishinomaki Plant/
Kyushu-Wakamatsu Plant

Devote 80% or more of development expenditures to reducing environmental burden

Domestic group*2
Tokai Konetsu Kogyo
Co., Ltd.
Domestic group*2
Tokai Konetsu Kogyo
Co., Ltd.

91% of development expenditures devoted to reducing environmental burden〇

Devote 90% or more of development expenditures to reducing environmental burden

Domestic group*2

Devote 60% or more of development expenditures to reducing environmental burden
Technological Innovation

Emphasize research and development

Make 80% or more of patent applications in areas related to reducing environmental burden
Make 70% or more of patent applications in areas related to reducing environmental burden

Supplying safe and secure
products
Contributing to society
through our businessSupply chain management

Respect for Human Rights

Conduct CSR survey of key suppliers on a consolidated basis
Revise Harassment Manual and conduct harassment training at domestic subsidiaries

Consolidated

Domestic group*1

Conduct annual human rights due diligence
Improve understanding of global human rights policy

Consolidated

Actively engage in community
contribution activities

Enhance disclosure of community contribution activities

Consolidated

Strengthening Corporate
Governance

Establish a consolidated governancesystemーConsolidated

Maintain ethical standards,
regulatory compliance

Commit no serious regulatory violations
Formulate a global code of conduct [tentative name] and inform subsidiaries around the world about it
Double the number of female employees in managerial positions (by the end of 2024)

Developing human resources

Promoting occupational healthand safety

Develop diverse human resources

Percentage of new female graduates hired for career-track positions: 30% on a non-consolidated basis

Consolidated

Non-consolidated

Domestic group*1〇

Devote 70% or more of development expenditures to reducing environmental burden

Tokai Konetsu Kogyo Co., Ltd.

〇

Make 90% or more of patent applications in areas related to reducing environmental burden

Domestic group*2

100% of patent applications filed in areas related to reducing environmental burden〇

Make 70% or more of patent applications in areas related to reducing environmental burden

Tokai Konetsu Kogyo Co., Ltd.

〇

Establish electrode consumption rate reduction technology(Rate for 2023: 3% reduction from 2022)

Consolidated

Increased 3.2% over the 2021 level (as of December 31, 2022)

Disseminate procurement policy to new suppliers on a consolidated basis and conduct CSR survey

Reduce CSR risks at suppliers

Consolidated*3

85.1% of development expenditures devoted to reducing environmental burden

Raise the ratio of mid-career hires in managerial positions (by the end of 2024)

Raise supplier awareness of CSR

Consolidated

Tokai COBEX

100% of patent applications filed in areas related to reducing environmental burden

Increase the number of non-Japanese employees in managerial positions (by the end of 2024)

Reduce electrode consumption rate (3% reduction from FY2021)

Contribution to community

Ensuring compliance

Strengthening ourmanagement baseDomestic group*1

Among target users, there was a reduction in the electrode consumption rate of 3% or more. The
overall target has been met since there are also users that have witnessed electrode consumption
rates that have surpassed planned targets
From April 2022, when we start regular transactions with new raw material suppliers, we will informthem about our procurement policy and conduct a CSR procurement survey
Report on the analysis results of a survey conducted on five key overseas base suppliers in 2022
Harassment Manual was revised. Harassment training was conducted at domestic subsidiaries(attendance rate: 100%, average score of comprehension test: approximately 90%)
Conducted human rights due diligence in 2022
Conducted training related to global human rights policy and due diligence
Total amount of donations and activity spending: approx. 48.4 million yen(donations to support Ukraine, donations to support regional culture and sports, etc.)
Community contribution activities: Cleanups, tree planting, food donations, etc.
Promotion of internal controls, North American operations holding company’s functional
upgrading, subsidiary management, etc., have been conducted as planned
Commit no serious regulatory violations
Formulated new Guidelines and Global Code of Conduct and promoted their adoption within the Group
Increased 1.66 times over the 2021 level (as of December 31, 2022)
Percentage of new female graduates hired (non-consolidated) who entered the company in April
2023: 40%
Conducted employment activities, including for management candidates, as planned

Further elevate quality

Raise employee awareness of humanrights2023

Specific numerical targets

〇

ー

ー

〇

Conduct CSR survey of key suppliers on a consolidated basis

Consolidated〇

Distribute Harassment Manual to domestic subsidiaries

Domestic group*1〇〇

Expand human rights due diligence to overseas subsidiaries
ー

Consolidatedーー

Enhance disclosure of community contribution activities

Consolidatedーー

Consolidated〇〇〇

Commit no serious regulatory violations
Consolidated
Create a business base aimed at building a global compliance system
Double the number of female employees in managerial positions (by the end of 2024)
Percentage of new female graduates hired for career-track positions: 30% on a non-consolidated
basis
Non-consolidated
Increase the number of non-Japanese employees in managerial positions (by the end of 2024)〇〇〇

Raise the ratio of mid-career hires in managerial positions (by the end of 2024)

Effectively implement training

Total training hours planned by head office (new-hire training/specialist training)

Domestic group*1

Specialist training in 2022: 1,747 hours, New-hire training in 2022: 1,674 hours〇

Total training hours planned by head office (new-hire training/specialist training)

Domestic group*1

Reduce occupational accidents

Reduce frequency rate (1.8 or lower)

Consolidated

Frequency rate: 1.20〇

Reduce frequency rate (1.20 or lower)

Consolidated*1 Tokai Carbon Co., Ltd. and its principal subsidiaries in Japan (i.e., Tokai Konetsu Kogyo Co., Ltd., Tokai Fine Carbon Co., Ltd., and Tokai Material Co., Ltd.)*2 Tokai Carbon Co., Ltd. + Tokai Fine Carbon Co., Ltd., and Tokai Material Co., Ltd.
*3 Tokai Carbon Co., Ltd. and its 9 principal subsidiaries (i.e., Tokai ErftCarbon GmbH, Tokai Carbon GE LLC, Tokai Carbon CB Ltd., Cancarb Limited, Thai Tokai Carbon Product Co.,Ltd., Tokai Fine Carbon Co., Ltd., Tokai Carbon Korea Co., Ltd., Tokai COBEX Polska sp. z o.o., Tokai COBEX Savoie SAS)

47

Tokai Carbon Co., Ltd.

Integrated Report 2022

48

Sustainability

Sustainability

To a Carbon-Neutral Society
The Tokai Carbon Group is working to reduce total CO2 emissions with a goal of carbon neutral by 2050.
Recognizing that addressing climate change is an important management issue, and in November 2021, theGroup expressed its support for the Task Force on Climate-related Financial Disclosure (TCFD). We will takeappropriate measures toward achieving a carbon-neutral society by assessing the impact of climate change
on our business.

Tokai Carbon Group’s CO2 Emissions
Reduction Target

CO 2
emissions(Scope 1 and 2
company wide)

Tokai Carbon Group targets reducing CO2
emissions by 25% (VS 2018) by 2030 andachieving carbon-neutral in 2050.

2030 target:

2050 target:

25% reduction in
CO 2 emissions

CarbonNeutral

3,056
thousandtCO 2* The targets pertain to Scope 1 and 2 emissions company wide2018

(base year)

2,292

Net zero CO2emissions

thousand
tCO 2

2030

2050

Emissionstrading

Roadmap to Carbon Neutral
will also make capital investments in energy conservation.
In addition, we will actively use new technologies andinnovation towards net-zero carbon emissions in 2050. Amid
revolutionary technological advances worldwide to reduce
CO2 emissions, we will actively introduce technologies thatare likely to find full practical application.

2022-

2030-

2050

Reduce emissions
by making use ofexisting technologies

Make use of newtechnologies
and innovations

Achieve net-zero emissions● Carbon offset through CCUS, DAC,
methanation, etc. (Scope 1)● Mixed and pure combustion of hydrogen and ammonia (Scope 1)● Introduction of CCS at power plants, DAC (Scope 2)● Diversification of fuel types and fuel switching (Scope 1)● Electrification, use of renewable energy (Scope 1 and Scope 2)● Reduction of CO 2 emission factors for purchased electricity, reduction of electricity intensity, energy conservation, etc. (Scope 2)*CCS: Carbon dioxide Capture and Storage (Capturing and storing CO2) *DAC: Direct Air Capture (Technology for directly capturing and using CO2 in the air)
*CCUS: Carbon dioxide Capture, Utilization and Storage (Technology to utilize CO2 that has been isolated and stored)

49

Tokai Carbon Co., Ltd.

Carbon Neutral Committee
Chairperson: President Office: Carbon Neutral Office

We reorganized the Carbon Neutral Project launched in May
2021 into a Carbon Neutral Committee in February 2022 toreinforce the organization. Serving as a high-level command
tower for our carbon neutral efforts, it plans company wide
policies and strategies. It visualizes issues and actions andcentrally controls them. Under the committee, we have set
up different related meetings, technical subcommittees, andtechnical study groups to implement specific strategies andmeasures for increasing the Group’s competitiveness crossdivisionally.

Carbon Neutral
Steering Conference
Carbon Neutral
Technology Conference

Carbon Neutral BusinessSpecific Review Conference

Each technical subcommittee /investigation group

Response to Climate Change in Accordancewith TCFD Recommendations
We analyze the impacts of climate change on our businessin accordance with the TCFD recommendations and publish
information specified as disclosure requirements in the
TCFD recommendations and the results of scenario analysis
on our website.

Response to Climate Change
https://www.tokaicarbon.co.jp/en/sustanability/climate-change.html

GHG emissions (Scope 1 and Scope 2) (consolidated)

We will take steps to reduce CO2 emissions using existing
technologies to achieve a 25% reduction in CO2 emissions
by 2030, aiming for the earliest possible time. With respect to
raw materials, we are considering introducing nature-derived
and renewable resources. We will promote fuel diversificationand conversion, such as shifting from fossil fuels to electricenergy and utilizing renewable energy for manufacturing. We

Achieve a 25%
reduction as soon
as possible

Structure for Aiming Carbon Neutral★Third party assurance

2018

2019

2020

2021

2022

GHG emissions(thousand tCO2e)

3,056

2,687

2,232

2,409

2,408★

Scope1(thousand tCO2e)

2,430

2,164

1,825

2,070

2,018★

Scope2(thousand tCO2e)

626

523

406

339

391★

Calculation of Scope 1 and Scope 2 GHG emissions
Boundary

CO2

All the consolidated production sites, head office, branches, and laboratories (Tokai Carbon (Dalian) Co., Ltd., Tokai Carbon(Suzhou) Co., Ltd., Shanghai Tokai Konetsu Co., Ltd., Tokai Konetsu (Suzhou) Co., Ltd., and Tokai Carbon Europe Ltd. Italia
Branch were added in 2022)

CH4, N2O

Starting in 2022, major production sites that account for approximately 98% of consolidated CO2 emissions have been added
to the scope of the calculation
Japan

Overseas

Energy sources

Until 2020: April to March(Tokai Konetsu Kogyo: January to December)
2021 and after: January to December

January to December

Non-energy sources

January to December

Period covered

CO2

CH4, N2O-

January to December(*calculation period from 2022)

Calculation Method
CO2 equivalent emissions are calculated using the global warming potentials of CO2, CH4, and N2O gases. HFCs, PFCs, and SF6 are excluded from calculations
because these emissions are negligible.
Scope 1:	Direct GHG emissions from corporate activities, including energy-derived GHG emissions and non-energy-derived GHG emissions (emissions fromindustrial processes) are calculated. In principle, GHG emissions from non-energy sources are calculated from the amount of raw and auxiliary materials
used and the balance of products and waste.
Scope 2: ● Indirect GHG emissions associated with use of energy in corporate activities.
● The market-based method in the GHG Protocol is used. For emissions in Japan, the emission coefficient by electricity utility under the Act on
Promotion of Global Warming Countermeasures applies. For overseas emissions, emission coefficients published by electricity utilities are used,although the latest emission coefficients published by IEA or national and regional authorities are used for emissions from some plants.

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Sustainability

Sustainability

Respect for Human Rights

Supply Chain Management

At Tokai Carbon, we believe that consideration for human rights is important in order to realize our corporate
philosophy of “Ties of Reliability”. The Universal Declaration of Human Rights declares the “common standards
that all peoples and all countries must achieve” in order to respect and ensure human rights and freedoms, andwe support this declaration.

We recognize that maintaining a stable supply of high-quality products is our most fundamental responsibility,
and we are continuously striving to comply with various laws, regulations and social norms, and to reduce theenvironmental impact of our manufacturing processes.

Global Policy on Human Rights
In order to fulfill our corporate responsibility to respecthuman rights, we conduct business activities with a highsense of ethics based on the Guiding Principles for Businessand Human Rights. In July 2020, based on these international
regulations on human rights, we established the Tokai Carbon
Group Global Policy on Human Rights. Under this policy,
we will further promote initiatives to respect human rights as
Tokai Carbon Group. The Tokai Carbon Group Human Rights
Promotion Committee plays a central role in promoting thisglobal policy and the concept of respect for human rights.
We support the “Children’s Rights and Business
Principles”, too, because we believe that special
consideration is needed regarding children’s human rights
since they are vulnerable to violations of their rights. We
are also engaged in social contribution activities to avoid
violations of children’s rights in our business and to realize
children’s rights.

Provisions of Tokai Carbon Group Global Policy on Human Rights
1

Compliance with laws and regulations

2

Prohibition of discrimination

3

Prevention of child labor and slave labor

4

Support of basic labor rights

5

Reduction of excessive working hours and securing
rights to wages

6

Health and safety standards

7

Prohibition of harassment

8

Respect for privacy

9Prevention and mitigation of negative impacts onhuman rights

10

Response to human rights violations
Tokai Carbon Group Global Policy on Human Rights
https://www.tokaicarbon.co.jp/en/sustanability/pdf/human_rights.pdf

CSR procurement policy/Implementation of CSR procurement survey
In order to face global environmental and social issues asa concerned party, the Company has established the Tokai
Carbon Group Procurement Policy. For our new and priority
business partners, we request they agree with our Group
Procurement Policy and respond to the CSR Procurement
Survey to confirm their compliance status. Its major survey
items are determined in accordance with the Procurement
Policy.
The process is characterized by assessing business
partners based on the survey result and requesting them totake necessary improvement actions.

In 2022, we conducted a survey on our priority five raw
material suppliers located in overseas to assess the statusof existing business partners. The survey found that there
were no incidents that needed to be reviewed among thebusiness partners.
Tokai Carbon Group Procurement Policy
https://www.tokaicarbon.co.jp/en/sustanability/pdf/pdf_procurement.pdf

Tokai Carbon Group Implementation of CSR procurement
survey for our business partners
https://www.tokaicarbon.co.jp/en/sustanability/procurement.html

Occupational Safety and HealthAs its global safety policy, the Group has adopted “Safety is a critical core value shared by the entire Tokai
Carbon Group. We aim to provide a safe working environment for all people working in our plants by eliminatinghazards and reducing risks.”

Human rights due diligence

Initiatives for human rights awareness

The Tokai Carbon Group conducts human rights due
diligence to ensure corporate respect for human rights inorder to identify and assess, as well as prevent and address,
potential human rights risk arising from the entire value
chain and corporate-related human rights-issues. Suchissues shall be identified based on the engagement with our
stakeholders including employees, suppliers and business
partners.

Tokai Carbon conducts group-wide and division-specifictraining to instill an awareness of human rights in its employees.
Based on the Global Human Rights Policy of theTokai Carbon Group, training focuses on reinforcing an
understanding of the basic way of thinking about respecting
human rights. In doing so, it uses present-day examples,
including ones addressing discrimination, harassment,
violations of the rights of people with disabilities, andviolations of the rights of people from other countries. Humanrights training is conducted for employees who have been
newly hired or promoted to management. Particularly when
promoted to management, they are educated on humanrights issues such as bullying and harassment, by clarifying
harassment-based issues, and using actual examples ofmeasures taken in each case.
In 2022, human rights training was conducted with theparticipation of 1,060 employees at Tokai Carbon andpartner companies, and 625 employees at Group companies
in Japan. Harassment training was conducted with theparticipation of 209 employees at Tokai Carbon and 527
employees at Group companies in Japan.
Based on our awareness that human rights are thefoundation of sustainability, we have joined human rights
organizations for businesses in Tokyo, Osaka, and Nagoya.
We use our memberships in these organizations to share
information on and expand our understanding of humanrights to ensure that respect for human rights remains a key
aspect of our corporate culture.

Process of our human rights due diligence1

51

Identifying country risks

2

Defining the scope of assessment

3

Putting investigation into practice4

Assessing5

Monitoring and conducting improvement measures

Tokai Carbon Co., Ltd.

Health and safety management structure
The Group’s safety policy and initiatives are subject
to approval by the Executives Meeting and the Board of
Directors. At the Company, the Board of Directors supervises
occupational health and safety risks, and the director in
charge of risk reports to the Board of Directors on importantmatters such as occupational accidents as necessary.
In addition, we hold Central Work Committee meetings
attended by the director in charge of health and safety,
department managers in charge, and the labor union to

discuss health and safety issues and to work on continuous
improvement of health and safety. Further, we hold Healthand Safety Committee meetings at each site with theparticipation of managers and supervisors at each site andthe labor union to report and discuss matters related tooccupational health and safety. Cooperating companies towhich the Company outsources its work also participate in
the Health and Safety Committee meetings as observers.

Improving occupational safety and healthIn order to eliminate hazards and reduce risks, the Group
promotes the implementation of risk assessments andcountermeasures. In the risk assessment, we evaluate therisks that lead to injury and the risks that affect health, clarify
the priorities for the identified risks, and improve the work
environment. When installing new production equipment
or refurbishing existing equipment, we conduct risk
assessments from the equipment design stage, and work to
reduce risks in advance if the risks are high. For work-related
injuries (occupational accidents), poor physical condition,and serious incidents, we first grasp the situation throughon-site verification, thoroughly investigate the root causethrough the five whys analysis, and formulate measures toprevent recurrence to confirm its effectiveness. Moreover,in order to prevent similar accidents, we share informationon the details and countermeasures with all business sites.
In addition to these initiatives, we conduct safety education
to enhance our safety awareness. In 2022, 118 employees,
including newly hired employees, participated in training
provided by an external organization in order to improve their
sensitivity to danger. We also held a training session using
virtual reality (VR) for people to experience danger, with 67
participants in 2022. Furthermore, we are conducting safety
training with the aim of thoroughly enforcing safety rules within
our workplaces and measures to prevent the recurrence of pastoccupational accidents, and in 2022, the training program wasprovided to 106 employees who have been with the Company
for less than five years at all of our business sites.

Integrated Report 2022

52

Sustainability

Sustainability

Corporate GovernanceTokai Carbon recognizes that enhancing medium- to long-term corporate value is the most important management
objective. We believe that responding to the expectations of all stakeholders, including customers and shareholders,and building favorable relationships, are essential in achieving this objective. To this end, we embrace the basic
philosophy of “Ties of Reliability”. Through this philosophy and the policies and values outlined in our Guidelines andGlobal Code of Conduct, we are working to develop an effective corporate governance structure.

Subjects discussed at the Board of Directors in fiscal 2022
Subject category

As a company with an Audit & Supervisory Board, Tokai
Carbon focuses on enhancing the effectiveness of audits
by Audit & Supervisory Board members and our internal
audit functions. At the same time, we work to strengthen
the management supervision functions of the Board of
Directors by appointing multiple external directors andestablishing voluntary committees to realize an appropriate

corporate management structure. Furthermore, to clarify thefunctions and responsibilities of corporate officers engaged
in business execution, we have adopted an executive officer
system and established a Managing Executives Meeting toenhance and strengthen the business execution functions of
the organization.

General Meeting of Shareholders
Appointment/
Dismissal

Appointment/
Dismissal

Accounting Auditor

Appointment/
Dismissal

Voluntary Advisory Bodies

Audit & Supervisory Board

Board of Directors

Nomination Committee

Audits execution of duties
by board members andexecutive officers

Oversees execution of duties
by board members andexecutive officers

Appointment/dismissal of directors

Remuneration Committee
Determination of remuneration for board
members and executive officers

President
Management Committee

Other

3.8%

Reports on financing, investments, andmarket risk management

Management strategy
and sustainability

Reports on the state of internal control andinternal audits

Human resourcesand organization

Management
strategy andsustainability

Governance,risk management,
and subsidiarymanagement

15.2%

Risk Management & Compliance
Committee reports

43.2%

Establishment of new subsidiary plant/
Expansion of existing plants

Accounting andfinance

Corporate governance system (as of April 1, 2023)

Topic
Analysis and evaluation of the effectivenessof the Board of Directors

Governance, risk
management,
and subsidiarymanagement

Corporate governance system

Subject category

Accounting
and finance

Board member and executive officer
candidates

18.9%

Organizational/regulation revisions
Financial statements
Human
resources andorganization

Annual budget plans
Formulation of long-term vision andmedium-term management plans

18.9%

Sustainability Committee and Carbon
Neutral Committee reports

Steps in strengthening
governance● Established the Sustainability Committee as a voluntary advisory body to theBoard of Directors● Established the Carbon Neutrality Committee● Formulated our long-term vision for 2030

Risk Management & Compliance Committee● Newly-formulated the Global Code of Conduct

Risk governance advice● Started governance training for subsidiaries to strengthen group

governance2022

Sustainability Committee

Internal Auditing Office

Proposals on sustainability2021● Established committees including the Nomination Committee,
Executive bodies
Chairman (Board of Directors)/Chairperson (committees)

External/Independent

Internal

Control

Audit

Cooperation* Including Audit & Supervisory Board members

Remuneration Committee, Risk Management & Compliance
Committee as voluntary advisory bodies to the Board of Directors● Established the Management Committee● Monthly meetings of the Board of Directors and clarification ofmatters to be discussed● Appointed multiple independent external directors● Started rating theBoard of Directors
The Board of Directors is responsible for making decisions
on important management matters and overseeing businessexecution. In principle, the Board meets monthly. As of April
1, 2023, there are eight directors, including three external
directors. The Nomination Committee and Remuneration
Committee, for which the majority of members are external

effectiveness of the Boardof Directors on an annual
basis

directors, have been created as voluntary advisory bodies for
the Board of Directors. The Risk Management & Compliance
Committee and Sustainability Committee, also voluntary
advisory bodies, have been established immediately underthe Board of Directors.

2018

2017

53

Tokai Carbon Co., Ltd.

policies and audit plan adopted by the Audit & Supervisory
Board. Audit & Supervisory Board members attend Boardof Directors’ meetings and other important meetings andinvestigate the status of business operations and assets toconfirm the status of business execution by directors.

2019● Formulated

Global Policyon HumanRightsGroup Sustainability Policy● Changed system so that at least 1/3 ofthe directors are independent external
directors, and appointed a female
external director● Formulated the Business Portfolio
Management Policy● Disclosure of climate change risks
and opportunities in line with TCFD
recommendations● Disclosure of the skill matrix of theBoard of Directors● Established and started operation of a global financial andtax management system● Formulated the Tokai Carbon Group Procurement Policy

Audit & Supervisory Board members and the Audit & Supervisory Board
As a general rule, the Audit & Supervisory Board of theCompany meets monthly. As of April 1, 2023, there are four
Audit & Supervisory Board members, of whom two are External
Audit & Supervisory Board members. Audit & Supervisory
Board members perform audits based on the auditing● Newly established the Tokai Carbon

2020

2016

● Started building the ESG management foundation● Established independence standards for external officers● Introduced Group internal reporting system

Integrated Report 2022

54

Sustainability

Sustainability

ComplianceCorporate GovernanceIn line with our Basic Policy of “Ties of Reliability” and our Action Guidelines of “Integrity,” “Innovation,”Management Committee“Challenge,” “Co-creation,” and “Agility,” we have drawn up the Global Code of Conduct and other

The Company has established the Management Committee under the
Board of Directors. This committee deliberates and makes decisions onimportant management matters per basic policies adopted by the Boardof Directors. The Management Committee meets once a week, in principle,with participation from executive officers and Audit & Supervisory Board
members, etc. To assist the Management Committee with its work, we havealso established committees to deliberate certain matters and report theirfindings to the Management Committee for higher-level consideration.

Tokai Carbon Group Corporate governance reporthttps://contents.xj-storage.jp/xcontents/AS04435/9e046a1a/ce20/4f31/bfe3/2fae5188d3a0/20230419150237101s.pdf

Strengthening the effectiveness of the Board of Directors
In 2016, Tokai Carbon established the Nomination Committee,
Remuneration Committee, Management Committee, and Risk Management& Compliance Committee to radically strengthen governance system led by
the Board of Directors. What is special about this is that our three outside
directors actively attend important meetings other than meetings of theBoard of Directors to deepen their understanding of significant subjects. The
effectiveness evaluation reported that the outside director’s impartial andobjective comments were of great assistance in improving the supervisory
functions of the Board of Directors.
In 2022, the Board of Directors conducted an effectiveness analysis
and evaluation based on (1) quantitative and qualitative analysis of theoperational performance and status of the governance system, including
the Board of Directors and the Management Committee, (2) the results ofa questionnaire survey of all directors and corporate auditors regarding
the composition and operation of the Board of Directors and provision of

information to outside officers, and (3) the results of individual interviews
with external officers.
The new governance structure has largely been established. In addition
to the initial results being adequately maintained, in 2022, in accordancewith the Sustainability Policy and the Business Portfolio Management Policy
newly established in 2021, we steered toward strengthening sustainability
management and business portfolio management, expanded mattersreported by the Board of Directors, and discussed crisis events such as theimpact of the Ukrainian crisis and the emergency response to Taiwan. We
believe that we have been able to further improve the effectiveness of thesemeasures.
As future issues, we will continue to work on higher level themes such as(1) linking our sustainability (including carbon neutrality) and management
strategies, and (2) sophistication of business portfolio management.

Establishing an internal control system
To ensure that Tokai Carbon Group properly executes business operations
per relevant laws, regulations, and the Articles of Incorporation, theCompany continuously improves its internal control system. Improvements

are undertaken following the “Basic Policy for Establishing an Internal
Control System,” which was adopted at the May 2006 meeting of the Boardof Directors and revised as necessary.

55

Tokai Carbon Co., Ltd.

Management Structure
The Risk Management and Compliance Committee, an advisory bodyto the Board of Directors, discuss important matters concerning risk andcompliance, such as risk countermeasures for the entire company. At thesame time, it provides advice to relevant departments and sections basedon the outcome of the discussion, reports the progress, and proposes, forexample, countermeasures to the Board of Directors.

In addition, we have created a Compliance Manual based on our Action
Guidelines and Global Code of Conduct. This guidebook provides behavioral
standards required by all our officers and employees in conducting their
day-to-day duties. It is of some help to entrench the strict practice ofcompliance in the company.

Internal reporting system
We have introduced an internal reporting system for receiving reports
from employees who have found out about legal violations or fraud (orsigns thereof), including any acts linked to corruption such as bribery etc.
by executive officers or employees. We have established in-house contact
points (Legal Affairs Department, Audit & Supervisory Board Member)and external contact points (legal advisors) to receive reports or requests
for advice by phone, fax, email, letter, etc. Reports can also be madeanonymously. In addition, we also have a system allowing us to respondto reports from external third parties, reports received in a foreign language
and reports received by persons other than the prescribed points of contact.
The Company’s Guidelines on Handling Internal Reports clearly state that,apart from cases when the system is deliberately misused, informants will
not be dismissed or subjected to unfair treatment under this system, thereby

Prevention of bribery and other corrupt behavior
the Board of Directors, candidates for Director and Audit & Supervisory
Board positions are submitted to the General Meeting of Shareholders forapproval.
The Company discloses the reasons for nominating internal and external
candidates for Director and Audit & Supervisory Board positions in referencematerials provided for the General Meeting of Shareholders.

Executive remuneration
At Tokai Carbon, executive remuneration is composed of basic
remuneration, which is a fixed amount, and performance-based
remuneration, which varies depending on performance. For directors
with executive responsibilities, the proportion of variable remuneration
is designed to rise with executive rank, considering the significance of amanager’s responsibilities. Revisions and decisions regarding the executive
remuneration system and the performance evaluations and remuneration
for individual executives, are based on deliberations by the Remunerationhigh sense of ethics while also complying with the relevant laws, rules, and regulations.

ensuring the appropriate implementation of the system. Specifically, ourcompany’s Legal Affairs Department Manager is responsible for conducting
an investigation into facts reported by an informant, while strictly maintaining
the confidentiality of the informant. If it becomes clear after an investigationthat an illegal act was committed, we will take corrective actions andrecurrence-prevention actions, and impose a punishment under theemployment regulations. At the same time, we have a system whereby all
our employees and stakeholders can report to an external point of contact
without worries. We are making efforts to increase everyone’s awareness of
this system, by including it in the Compliance Manual and internal rules, andannouncing it using various tools, including in-house seminars, an in-housemessage board and in-house newsletters.

Prevention of corruption

Management Appointment Process
The appointment of Directors, Audit & Supervisory Board Members
and Executive Officers begins with the formulation of recommendations
by the Nomination Committee, which is an advisory body to the Board of
Directors and consists of one internal board member and three externalboard members. The Nomination Committee prepares its recommendations
by comprehensively considering the experience, knowledge, expertise,and other qualities of internal and external candidates. After approval byregulations for implementing fair business activities. We are working to conduct corporate activities with aCommittee, which is chaired by an external director and includes external
officers as members.
In addition, at the FY2019 Annual Meeting of Shareholders held on
March 27, 2020, a proposal was approved that directors (excluding external
directors) are provided with remuneration to add shares with restriction ontransfer, separate from maximum remuneration approved at the General
Meeting of Shareholders.

Our Global Code of Conduct stipulates that we conduct our businessthrough fair competition and maintain sound and normal relationships with
political parties, government, and business partners. In addition, we clearlystate that we will comply with laws and regulations and conduct businessactivities based on social norms and common sense. Therefore, we prohibit
and strive to prevent bribery, such as proposing or providing profits as
consideration for convenience, requesting or accepting profits from cash,
excessive entertainment, services, etc., or acts suspected of bribery. We
also prohibit employees from engaging in corruption, such as stealing

company funds or undertaking money laundering.
In FY2022, there was no exposure of corrupt behavior and no fines ormonetary penalties paid. There was no disciplinary action taken against any
employee due to corrupt behavior. We did not offer any political donations.

Supervision of the Board of Directors against corruption
The Board of Directors oversees initiatives on compliance, including theprevention of bribery and other corruption, and receives reports from the
Risk Management & Compliance Committee.

Education and training
To raise awareness of our comprehensive ban on corruption, including
bribery, we make our anti-corruption policy known to employees in training.
We continually provide compliance training for officers, personnel inmanagerial positions, and new employees, with both internal and external

instructors.
We also distribute compliance message videos internally and publish
related articles in our in-house magazine to improve compliance awarenessamong our officers and employees.

Integrated Report 2022

56

Sustainability

Sustainability

Management (As of April 1, 2023)

Title

President & Chief Executive
Officer

Name

Hajime Nagasaka Masafumi Tsuji Katsuyuki Yamaguchi Shunji Yamamoto Tatsuhiko Yamazaki

Nobumitsu Kambayashi Mayumi Asada Toshiro Miyazaki Yuji Serizawa Kazuyuki Kakehashi Kaoru Ogashiwa Yoshinori Matsushima

Date of birthJanuary 9, 1950

January 10, 1963

March 29, 1964

March 08, 1962

November 22, 1964

May 28, 1948

February 5, 1968

August 21, 1949

December 27, 1959

December 7, 1951

January 7, 1967

Term of office

17 years

6 years

4 years

4 years－

7 years

2 years

1 year

－7 years

3 years－

October 1990
Joined Research Center
Management Consulting Institute,
New Japan Securities Co., Ltd(currently Japan Investor Relations
and Investor Support, Inc.)

November 1997
Joined Deloitte Touche Tohmatsu

April 1972
Joined Tokai Electrode Mfg. Co.,
Ltd. (currently the Company)
March 2006
Member of the Board/Executive
Officer
Deputy General Manager, Carbon
Black Division
March 2008
Member of the Board/Managing
Executive Officer
Deputy General Manager, Carbon
Black Division
March 2011
Member of the Board/Senior
Managing Executive Officer
General Manager, Carbon Black
Division

Career Summary

March 2013
Representative Member of theBoard/Senior Managing Executive
Officer in charge of Carbon Black
Division and Graphite Electrode
Division
March 2014
Representative Member of theBoard/Executive Vice President incharge of Carbon Black Division,
Graphite Electrode Division,and Raw Material Procurement
Department
February 2015
Representative Member of theBoard/President & Chief Executive
Officer (incumbent)

Member of the Board/
Executive Officer

Member of the Board/
Executive Officer

Member of the Board/
Executive Officer

Member of the Board/
Executive Officer

April 1986
Joined the Company

April 1988
Joined the Company

April 1985
Joined the Company

April 1985
Joined the Company

March 2015
Executive Officer
General Manager, Carbon Black
Division

March 2018
Executive Officer
General Manager, Technology &Engineering Division

June 2015
General Manager, Production &Technology Department, Carbon
Black Division

March 2016
General Manager, Production &Technology Department, Carbon
Black Division

January 2016
Executive Officer
General Manager, Graphite
Electrode Division

March 2019
Member of the Board/Executive
Officer
General Manager, Technology &Engineering Division

March 2016
THAI TOKAI CARBONPRODUCT CO., LTD.
Director, Managing Director

March 2017
Business Director
General Manager, Sales
Department, Carbon Black Division

March 2018
Executive Officer
THAI TOKAI CARBONPRODUCT CO., LTD.
Director, Managing Director

January 2020
Business Director
THAI TOKAI CARBONPRODUCT CO., LTD.
Director, Managing Director

March 2019
Member of the Board/Executive
Officer
Director, Tokai Carbon CB
Genpar LLC

March 2023
Member of the Board/Executive
Officer
THAI TOKAI CARBONPRODUCT CO., LTD.
Director, Managing Director(incumbent)

March 2017
Member of the Board/Executive
Officer
General Manager, Fine Carbon
DivisionJanuary 2020
Member of the Board/Executive
Officer
Deputy Chairman, Corporate
Planning Department, Strategic
Investment Department, and Sales
Research & Planning Department
General Manager, Corporate
Planning Department

March 2021
Member of the Board/Executive
Officer
General Manager, R&D Strategy
Division General Manager,
Intellectual Property Department(incumbent)

March 2023
Member of the Board/Executive
Officer General Manager,
Technology & Engineering Division(incumbent)

September 2022
Member of the Board/Executive
Officer
responsible for Corporate Planning
Department, Affiliated Company
Business Management Department,
Strategic Investment Department,
Sales Research & Planning
Department, and New Business
Promotion Department
General Manager, Corporate
Planning Department

Committees

Attendance at meetings of the Board of Directors in FY2022

External Director(independent officer)

April 1971
Joined Kawasaki Heavy Industries,
Ltd.

October 2002
Registered as an attorney-at-law
Joined Hiranuma Takaaki Law Office

June 2002
Director, Kawasaki Shipbuilding
Corporation

January 2014
Representative, Marunouchi Building
Aoi Law Office (incumbent)

April 2008
Managing Executive Officer,
Kawasaki Heavy Industries, Ltd.
Director/Senior Vice President,
Kawasaki Shipbuilding Corporation

March 2014
Acquired Doctor’s degree in
Medicine at the Juntendo University
Graduate School of Medicine

April 2010
President & Representative Director,
Kawasaki Shipbuilding Corporation
Senior Vice President (part-time),
Kawasaki Heavy Industries, Ltd.
October 2010
Senior Vice President(Representative Director), Kawasaki
Heavy Industries, Ltd.
President, Ship & Offshore Structure
Company

April 2020
Business Director, Incorporated
Educational Institution Nikaido
Gakuen (incumbent)
March 2021
External Director of the Company(incumbent)

March 2011
Representative Director, President,
MODEC, Inc.
March 2019
Director, Chairman of the Board,
MODEC, Inc.

March 2012
Member of the Board/Executive
Officerin charge of Fine Carbon Division
General Manager, Fine Carbon
Division
March 2014
Executive Officer
General Manager, Graphite
Electrode Division
March 2015
Member of the Board/Executive
Officer
General Manager, Graphite
Electrode Division
January 2016
Member of the Board/Executive
Officer
General Manager, Corporate
Planning Division

June 2015
Chairman, Japan Ship Technology
Research Association (incumbent)

March 2017
Member of the Board/Executive
Officer
responsible for Human Resources
Department, General Affairs
Department, and Legal Affairs
Department

March 2016
External Director of the Company(incumbent)

March 2023
Audit & Supervisory Board Member(full-time) (incumbent)

April 1975
Joined Toyo Carbon Co., Ltd.
(currently the Company)
March 2001
General Manager, Production &Technology Department, Fine
Carbon Division
March 2004
General Manager, Tanoura Plant
March 2009
General Manager, Shonan Office
General Manager, Chigasaki Plant
Industrialization Group Manager,
R&D Strategy Division
March 2010
General Manager, R&D Planning
Department, R&D Strategy Division
August 2010
Member of the Board, Tokai
Konetsu Kogyo Co., Ltd.
March 2015
Managing Executive Officer, Tokai
Konetsu Kogyo Co., Ltd.

External Auditor(independent officer)

December 1992
Registered as a Certified Tax
Accountant
Representative, Ogashiwa Kaoru
Certified Tax Accountant Office(incumbent)
June 2005
Corporate Auditor, Senkon Logistics
Co., Ltd.

External Auditor(independent officer)

February 7, 1968

May 2001
Registered as a Certified Public
Accountant
Representative, Matsushima
Certified Public Accountant Office(incumbent)
May 2006
Registered as a Certified Tax
Accountant
March 2023
External Auditor of the Company(incumbent)

June 2017
External Director and Audit andSupervisory Committee Member,
Senkon Logistics Co., Ltd.
(incumbent)
May 2019
External Auditor of the Company(incumbent)

March 2016
Audit & Supervisory Board Memberof the Company
May 2019
Audit & Supervisory Board Member(full-time) (incumbent)

June 2017
External Director, Inui Global
Logistics Co., Ltd. (incumbent)

59,662 shares

32,205 shares

9,500 shares

22,338 shares

23,200 shares

6,500 sharesー

65,662 shares

19,900 shares

400 shares

ー

21/21

21/21

21/21

－

21/21

21/21

17/17

21/21

21/21

21/21

ー

Chairperson●●

Chairperson●●

Remuneration Committee●

Risk Management & Compliance Committee

Chairperson

Sustainability Committee

Chairperson●

Corporate management

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●
●

●

Legal affairs and risk management
Skills matrix

March 2008
Director, MODEC, Inc.

April 1984
Joined the Company

Audit & Supervisory Board
Member (full-time)

21/21
●

●

●

●
●

Manufacturing, technology, and ICT
Sales and marketing●

Personnel and HR development●●

ESG and sustainability●●

Tokai Carbon Co., Ltd.

June 2007
Director, Finance, Accounting,and Investor Relations andCommunications, Mitsui
Shipbuilding & Engineering Co., Ltd.

March 2022
External Director of the Company(incumbent)

Finance and accounting

57

April 1972
Joined Mitsui Shipbuilding &Engineering Co., Ltd. (currently
Mitsui E&S Holdings Co., Ltd.)

Audit & Supervisory Board
Member (full-time)

156,847 shares

Nomination Committee

Global business

External Director(independent officer)

March 2020
Executive Advisor, MODEC, Inc.

June 2013
Senior Advisor, Kawasaki Heavy
Industries, Ltd.

March 2023
Member of the Board/Executive
Officer
Executive Officer responsible for
Human Resources Department,
General Affairs Department,
and Legal Affairs Department(incumbent)

Number of shares held

External Director(independent officer)

●

●

●

●

●
●

●

●

●

●

●

●

●
●

●
●

●

●

●

●

●

●

●

Integrated Report 2022

58

Data

Long-Term Earnings Summary

P61-62

Performance by Business Segment/
Non-financial Indicators

P63

Company Overview

P64

Stock Information

P65

Independent Third-Party Assurance Report P66

59

Tokai Carbon Co., Ltd.

Integrated Report 2022

60

Data

Data

Long-Term Earnings Summary (2012–2022, consolidated)
2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Balance Sheet

Statements of Income
Net sales(Millions of yen)

98,704

100,935

114,576

104,864

88,580106,252

231,302

262,028

201,542

258,874

340,371

Total current assets(Millions of yen)

86,87990,984

94,68587,96877,64585,444

164,220

196,446

177,678

215,149

246,691

Gross profit(Millions of yen)

18,56015,267

18,651

19,96016,52927,451

99,37892,84049,55570,732

94,052On-hand liquidity(Millions of yen)

11,891

16,04814,862

23,04528,52822,152

46,797

52,69567,17478,85870,909Selling, general andadministrative expenses(Millions of yen)

12,85913,611

14,947

15,871

15,39816,35826,31238,495

41,69646,08553,463

Accounts receivables(Millions of yen)

28,25930,07533,972

26,897

24,22030,265

55,13750,64841,43856,66865,197

Operating income(Millions of yen)

5,700

1,655

3,703

4,088

1,131

11,09373,06554,344

7,858

24,64740,588Inventory(Millions of yen)

42,99341,507

41,29934,253

20,73427,56458,78986,38063,79772,479101,330

Ordinary income(Millions of yen)

6,470

3,114

4,180

4,317

1,702

12,85572,991

52,986

6,262

24,77042,521Other current assets(Millions of yen)

3,734

3,352

4,551

3,771

4,162

5,463

3,945

6,722

5,266

7,143

9,254

Net income before
income taxes(Millions of yen)

3,992

2,926

4,345

6,726

(7,938)15,533

95,811

51,226

6,116

23,354

42,111(Millions of yen)

79,78892,443

115,753

96,106

81,17899,286

165,648

266,425

282,031297,353

329,773

Income taxes(Millions of yen)

2,142

1,802

1,749

4,345

(67)

2,740

21,543

17,175

2,283

3,248

14,782(Millions of yen)

58,16961,98567,581

56,62943,12251,40580,312

101,343

125,007

144,165

181,948

Net income(Millions of yen)

1,993

1,213

2,562

2,484

(7,929)12,60374,26834,050

3,833

20,10627,329Intangible fixed assets (Millions of yen)

438

464

14,103

11,324

10,534

16,34361,805

141,966

133,349

123,349

118,839

EBITDA(Millions of yen)

16,084

12,47013,845

14,581

10,616

17,74085,374

77,05335,26254,51875,572

Total fixed assets
Tangible fixed assets Investment andother assets(Millions of yen)

21,17929,99434,06928,15327,521

31,537

23,52923,11523,67429,83828,986

Total assets(Millions of yen)

166,668

183,427

210,439

184,074

158,824

184,730

329,868

462,872

459,709

512,503

576,465

Sales ratio

Total current liabilities(Millions of yen)

38,05042,38544,897

31,12629,02836,87091,654

117,541

92,656130,418

146,696

Gross profit

(%)

18.8

15.1

16.3

19.0

18.7

25.8

43.0

35.4

24.6

27.3

27.6

 Short-term interestbearing liabilities(Millions of yen)

14,636

20,71821,576

9,537

12,91014,07441,70968,36351,87974,71080,745

Selling, general andadministrative expenses

(%)

13.0

13.5

13.0

15.1

17.4

15.4

11.4

14.7

20.7

17.8

15.7

Accounts payables(Millions of yen)

16,145

14,17916,051

11,397

9,591

14,52226,001

28,936

18,64826,22932,272

Operating income (ROS)

(%)

5.8

1.6

3.2

3.9

1.3

10.4

31.6

20.7

3.9

9.5

11.9

Other current liabilities (Millions of yen)

7,268

7,488

7,269

10,191

6,525

8,274

23,944

20,241

22,12929,47833,676

Ordinary income

(%)

6.6

3.1

3.6

4.1

1.9

12.1

31.6

20.2

3.1

9.6

12.5

Net income before
income taxes

(%)

4.0

2.9

3.8

6.4

(9.0)

14.6

41.4

19.5

3.0

9.0

Net income

(%)

2.0

1.2

2.2

2.4

(9.0)

11.6

32.1

13.0

1.9

EBITDA

(%)

16.3

12.4

12.1

13.9

12.0

16.7

36.9

29.4

17.5

Total long-term liabilities(Millions of yen)

15,351

17,80933,19827,976

16,806

20,72830,381

112,355

142,237

125,514

128,900

12.4 Long-term interestbearing liabilities(Millions of yen)

6,191

5,044

16,713

14,398

4,137

2,068

8,000

79,666

106,764

93,53990,7067.8

8.0 Other long-term
liabilities(Millions of yen)

9,160

12,765

16,484

13,577

12,66918,66022,381

32,68935,473

31,97438,19021.1

22.2

Total liabilities(Millions of yen)

53,40160,19578,096

59,10345,83457,599122,035

229,896234,894

255,932

275,596

Total net assets(Millions of yen)

113,266

123,232

132,343

124,971

112,989

127,130

207,833

232,975

224,815

256,570

300,868(Millions of yen)

106,887

106,807108,006

108,910

99,693110,089

179,500

203,819

196,543

206,269

218,761(Millions of yen)

166,668

183,427

210,439

184,074

158,824

184,730

329,868

462,872

459,709

512,503

576,465

Shareholder’s capital

Investment-related
Capital expenditure(Millions of yen)

12,287

9,007

6,830

5,301

6,013

4,282

11,794

24,341

28,87330,347

48,150Depreciation(Millions of yen)

8,712

8,656

8,629

9,242

8,124

6,647

10,39018,503

20,89022,90027,460R&D expenses(Millions of yen)

1,961

1,800

1,882

1,822

2,249

1,482

1,883

2,460

2,682

2,823

3,171

Cash flow

Total liabilities andnet assets

Ratio analysis
ROA

(%)

3.9

1.8

2.1

2.2

1.0

7.5

30.0

13.4

1.4

5.1

7.8

ROE

(%)

1.9

1.0

2.0

2.0

(6.8)

10.4

46.8

16.0

0.5

7.5

9.0

Capital-to-asset ratio

(%)

66.1

66.0

61.8

66.8

69.9

68.4

56.7

45.8

43.8

44.7

46.6

Operating cash flows(Millions of yen)

8,828

11,606

11,983

20,613

17,505

10,543

44,10941,66455,022

38,072

41,205Investment cash flows(Millions of yen)

(12,770)(10,791)(24,027)3,189(3,622)(14,039)(53,849)(99,159)(44,301)(35,282)(49,900)

Free cash flows(Millions of yen)

(3,941)815(12,043)

23,802

13,883(3,496)(9,740)(57,495)

10,721

2,790(8,695)

Indicator per share

Financing cash flows(Millions of yen)

(3,611)

1,441

9,728

(14,926)(7,613)(4,534)29,67764,568927

1,211(10,629)

EPS

(yen)

9

6

12

12

(37)

58

344

150

4.78

75.55

105.16

Increase (decrease)in cash and cash
equivalents(Millions of yen)

(6,674)

4,155(1,307)

8,180

5,602

(6,376)

18,9795,318

11,284

6,707(15,057)

BPS

(yen)

516

567

610

577

521

593

878

994

944.16

1,075.19

1,260.95

Dividend

(yen)

7

6

6

6

6

12

24

48

30

30

30

(USD/JPY)

79.82

97.65

105.85121.05108.85112.19110.43109.05106.82109.80131.43

Dividend payout ratio

(%)

75

106

50

52

ー

21

7

32

627

40

29

Exchange rate** Corporate exchange rate
* Figures have been revised retrospectively.

61

2012

Tokai Carbon Co., Ltd.

Integrated Report 2022

62

Data

Data

Performance by Business Segment (2020–2022, consolidated)
2020

2021

2022

Graphite Electrodes

Company Overview (As of April 1, 2023)

2020

2021

2022

Smelting and Lining

Net sales(Millions of yen)

37,87940,61959,630Net sales(Millions of yen)

36,421

49,696

65,203Operating income(Millions of yen)

(5,766)

(400)

8,032

Operating income(Millions of yen)

1,161

1,925

1,345

 Operating income
to sales(%)(15.2)

(1.0)

13.5

 Operating income
to sales

(%)

3.2

3.9

2.1

(Millions of yen)

(2,274)

4,162

13,549(Millions of yen)

11,564

14,097

14,829

(%)

(6.0)

10.2

22.7

(%)

31.8

28.4

22.7

EBITDAEBITDA Margin

EBITDAEBITDA Margin

Industrial Furnaces and Related Products(Millions of yen)

70,754

99,491

138,484

Net sales(Millions of yen)

13,87318,01916,272

Operating income(Millions of yen)

3,192

8,783

12,282

Operating income(Millions of yen)

3,765

5,396

4,475

 Operating income
to sales

(%)

4.5

8.8

8.9

 Operating income
to sales

(%)

27.1

29.9

27.5

(Millions of yen)

10,171

14,86820,491(Millions of yen)

3,997

5,701

4,797

(%)

14.4

14.9

14.8

(%)

28.8

31.6

29.5

Fine Carbon

EBITDAEBITDA Margin

Other

Net sales(Millions of yen)

31,775

39,12549,393

Net sales(Millions of yen)

10,837

11,922

11,387

Operating income(Millions of yen)

6,647

9,611

14,825

Operating income(Millions of yen)

298

754

1,108

 Operating income
to sales

(%)

20.9

24.6

30.0

 Operating income
to sales

(%)

2.8

6.3

9.7

(Millions of yen)

11,802

15,19921,270(Millions of yen)

832

1,313

1,589

(%)

37.1

38.8

43.1

(%)

7.7

11.0

14.0

2020

2021

2022

(people)

4,178

4,289

4,378

(people)

778

760

763

EBITDAEBITDA Margin

EBITDAEBITDA MarginNon-financial Indicators
2020

2021

2022

(thousand tCO2)

2,232

2,409

2,408

Scope1(thousand tCO2)

1,825

2,070

2,018

Number of employees

Scope2(thousand tCO2)

406

339

391

Overseas employee ratio

(%)

68.9

70.4

70.7

Water intake(consolidated)(thousand m3)

7,836

9,006

8,726

Percentage of female
employees (non-consolidated)

(%)

8.5

8.3

9.6

(t)

9,400

7,749

6,854

Employment rate forpeople with disabilities

(%)

2.53

2.55

2.36

(%)

62.9

69.3

*3

(%)

100

100

100

(hours)

7.9

11.2

*3

1.22

1.30

1.20

Greenhouse gas
emissions*1

Waste generation*2
Waste recycling rates*2

(%)

89

85

87

Waste consigned forprocessing*2

(t)

5,052

3,724

3,250

Waste sent for
final disposal*2(%)

No. of Patents
including Applications(non-consolidated)

Number of employees(consolidated)(non-consolidated)(non-consolidated)

Average acquisition rateof annual paid holidays(case)

17
88

19
81

18
80

Percentage of employees
returning from childcare leave(non-consolidated)

Average overtime hours permonth (non-consolidated)*1 See page 50 for calculation details*2 Scope: T okai Carbon Co., Ltd. and its principal subsidiaries in Japan (i.e., Tokai Konetsu Kogyo Co., Ltd., Tokai Fine Carbon Co., Ltd., and Tokai Material Co., Ltd.)*3 We plan to provide this data on our website around July 2023

Tokai Carbon Co., Ltd.

Head Office

Aoyama Building, 1-2-3 Kita-Aoyama, Minato-ku, Tokyo 107-8636, Japan
Tel: +81-3-3746-5100 (Switchboard)

Established

1918

Representative

Hajime Nagasaka, President and CEO

Accounting Period

January 1 to December 31
Tokai Konetsu (Suzhou) Co., Ltd.
DecemberTokai Carbon (Suzhou) Co., Ltd.
Shanghai Tokai Konetsu Co., Ltd.
20,436 million yen
Tokai Carbon (Dalian) Co., Ltd.
763 (4,378 including group(as ofLtd.
December 2022)
Tokaicompanies)
COBEX (Beijing)
Tokai
CarbonProduct segments:
Co., Ltd. Graphite Electrodes, Carbon Black, Fine Carbon,
Manufacture and salesThai
in thefollowingbusiness
Smelting and Lining, Friction
Materials,
Anode
Industrial Furnaces and Related Products
Tokai Carbon
KoreaCo., Materials,
Ltd.

Fiscal Year
Capital StockGroup Companies

Tokai Konetsu (Suzhou) Co., Ltd.
Tokai Carbon Deutschland GmbH
Tokai Carbon (Suzhou) Co., Ltd.
Tokai ErftCarbon GmbH
Shanghai Tokai Konetsu Co., Ltd.
Tokai Carbon Europe Ltd.
Tokai Carbon (Dalian) Co., Ltd.
Tokai COBEX GmbH
Tokai COBEX (Beijing) Ltd.
Tokai COBEX Savoie SAS
Thai Tokai Carbon Product Co., Ltd.
Tokai COBEX Polska sp. z o.o. Tokai Carbon Korea Co., Ltd.

Tokai Carbon Deutschland GmbH
Tokai ErftCarbon GmbH
Tokai Carbon Europe Ltd.
Tokai COBEX GmbH
Tokai COBEX Savoie SAS
Tokai COBEX Polska sp. z o.o.

Chita Plant
Chita Laboratory
Nagoya Branch
Tokai Konetsu Engineering Co., Ltd.
Shiga Plant
Osaka Branch(non-consolidated)

Occupational accident
frequency rate (consolidated)

63

TOKAI CARBON CO., LTD.

Operations

Net sales

EBITDA Margin

Trade Name

Number of Employees

Carbon BlackEBITDA

Company Overview

Hofu Plant
Chita Plant
Hofu Laboratory
Chita Laboratory
Production
Technology
NagoyaBranch Center
Kyushu-Wakamatsu
Tokai KonetsuPlant
Engineering Co., Ltd.
TanouraShiga
PlantPlant
TanouraOsaka
Laboratory
BranchTokai Carbon U.S.A., Inc.
Cancarb Limited
Tokai Carbon GE LLC
Tokai Carbon CB Ltd.
MWI, Inc.
Tokai Carbon US Holdings Inc.

Tokai Carbon U.S.A., Inc.
Cancarb Limited
Tokai Carbon GE LLC
Tokai Carbon CB Ltd.
MWI, Inc.
Tokai Carbon US Holdings Inc.

Tokai Noshiro Seiko Co., Ltd.
Ishinomaki Plant
Tokai Unyu Co., Ltd.

TOKAI CARBON Head OfficeFuji Research Laboratory
Shonan Plant
Chigasaki Laboratory
Oriental Sangyo Co., Ltd.
Mitomo Brake Co., Ltd.
Tokai Fine
Noshiro
Seiko
Co.,
Ltd.
Tokai
CarbonCo.,
Ltd.
Ishinomaki
Plant
Tokai
Konetsu
Kogyo Co., Ltd.
Tokai Material
Unyu Co.,
Ltd.
Tokai
Co.,
Ltd.

TOKAI CARBON Head OfficeFuji Research Laboratory
Shonan Plant

Integrated Report 2022

64

Data

Data

Stock Information (As of December 31, 2022)

Independent Third-Party Assurance Report

Stock Summary
Stock Exchange Listing

Prime Market of Tokyo Stock Exchange, Inc.

Securities Code

5301

General Meeting of Shareholders

March

Shareholder Record Date

General Meeting of Shareholders: December 31
Year-End Dividend of Surplus: December 31
Interim Dividend: June 30 (when applicable)

Share Unit

100 shares

Shareholder Registry Administrator

Mitsubishi UFJ Trust and Banking Corporation

Method of Public NoticeElectronic notice(If unavoidable circumstances prevent notice from being given electronically,notice shall be posted in the Nikkei.)

Stock Figures
Total number of shares issued by the company

598,764,000

Total number of outstanding shares (including treasury stock)

224,943,104

Total number of shareholders

88,650Major Shareholders
Number of shares held (1,000 shares)

Shareholding ratio (%)*

The Master Trust Bank of Japan, Ltd. (Trust Account)Name

43,878

20.58

Custody Bank of Japan, Ltd. (Trust Account)

22,397

10.51

MUFG Bank, Ltd.

5,827

2.73

Mitsubishi UFJ Trust and Banking Corporation  

4,609

2.16

JP Morgan Securities Japan Co., Ltd.

3,614

1.70

STATE STREET BANK WEST CLIENT - TREATY 505234

2,541

1.19

Tokio Marine & Nichido Fire Insurance Co., Ltd.

2,426

1.14

JP MORGAN CHASE BANK 385781

2,267

1.06

SSBTC CLIENT OMNIBUS ACCOUNT

2,205

1.03

Meiji Yasuda Life Insurance Company

2,032

0.95

(Note 1) Tokai Carbon holds 11,748,000 shares of treasury stock but has not been listed among the major shareholders above.
(Note 2) The shareholding ratio was calculated excluding treasury stock.
* Ratio of the number of shares owned to the total number of issued shares (excluding treasury stock)

Share Owner Information
Shareholder

65

Shareholding ratio (%)*
Number of shares held
(1,000 shares)

Financial Institutions

44%

Individuals/Others

28%

Financial Institutions

93,865

Foreign Corporations, etc.

17%

Individuals/Others

59,729Japanese Corporations

6%

Foreign Corporations, etc.

36,593Financial Instruments Business Operators

5%

Japanese Corporations

12,535

Financial Instruments Business Operators

10,470

Total

213,194

Tokai Carbon Co., Ltd.

(Note) The shareholding ratio was calculated excluding treasury stock.
* Ratio of the number of shares owned to the total number of issued shares(excluding treasury stock)

Integrated Report 2022

66

Issue Date

July 2023

Reporting
Scope

This report applies to Tokai Carbon Co., Ltd. and affiliatedcompanies. The scope of applicability for reports with alimited reporting scope shall be indicated separately.

Reporting
PeriodExcluding content with specific dates, this report reflects
activities between January 1, 2022 and December 31,
2022.

World can be enriched with moreadvanced materials and solutions.

Our website presents the latest information and details on
our businesses and on environmental and social matters.
We invite you to visit it to learn more about Tokai Carbon.
https://www.tokaicarbon.co.jp

67

Tokai Carbon Co., Ltd.

Integrated Report 2022

68