TOYO TANSO
Results for the Fiscal Year Ended May 31, 2008

July
2008
２００８年１月
Toyo Tanso Co., Ltd.
Copyright © Toyo Tanso Co., Ltd. All Rights Reserved

Table of Contents

1. Overview of the Consolidated Results for the Fiscal Year Ended May 31, 2008
1-1.
1-2.
1-3.
1-4.
1-5.
1-6.

P. 3

Business Results
Results for the Fiscal Year Ended May 31, 2008
Overview of Operations by Product and Segment
Overview of Net Sales by Region
Balance Sheet for the Fiscal Year Ended May 31, 2008
Statement of Cash Flows for the Fiscal Year Ended May 31, 2008

P. 4
P. 5
P. 6
P. 9
P. 10
P. 11

2. Estimate for the Fiscal Year Ending May 31, 2009 (Consolidated)

P. 12

2-1.
2-2.
2-3.
2-4.

Earnings Forecast for the Fiscal Year Ending May 31, 2009
Future Investment (Capital Investment, Depreciation Cost, R&D Cost)
Key Performance Indicator Trends
Return of Profits to Shareholders

3. Topics
3-1. Strengthening of C/C Composites
3-2. Participation in Exhibitions Worldwide

Copyright © Toyo Tanso Co., Ltd. All Rights Reserved

P. 13
P. 14
P. 15
P. 16

P. 17
P. 18
P. 21

2

1. Overview of Consolidated Results for the
Fiscal Year Ended May 31, 2008

Copyright © Toyo Tanso Co., Ltd. All Rights Reserved31-1. Business Results(Unit: Yen, millions)

Net sales
40,000Recurring profit
37,40012,00034,53135,00031,381

10,00030,00025,49225,00020,00023,003

7,795

7,900

8,000

7,123

20,1796,000
4,961

15,0004,000

3,724
10,000
1,828

2,000

5,000
0

04/5

Copyright © Toyo Tanso Co., Ltd. All Rights Reserved

05/5

06/5

07/5

08/5

09/5
(Forecast)04

1-2. Results for the Fiscal Year Ended May 31, 2008

(Unit: Yen, millions)

07/5

08/5

%
increase

Net sales

31,381

34,531

10.0%

Operatingprofit

6,925

8,031

16.0%

Recurringprofit

7,123

7,795

9.4%

（22.7%）（22.6%）

Profit before
income taxes

7,514

8,162

8.6%

Net income

4,439

5,143

15.9%

Net income
per share

329.65 yen(Ratio of recurring profit to net sales)*

PointszzzContinued to achieve increased
profits in spite of a significant risein depreciation costs (1,046
million yen) associated withexpanded investment, higher
costs due to the relocation of head
office and the tightening ofinternal controls, and the severe
impact of sharp yen appreciation
and rising fuel and raw material
prices, particularly from thesecond half.

zRecorded grant received (427
million yen).

247.33 yen* A 3-for-2 stock split was conducted on June 1, 2007

Copyright © Toyo Tanso Co., Ltd. All Rights Reserved

Sales of composites such as CC
composites increased along withstrong demand for main isotropic
graphite products including solar
cells from domestic and overseas
markets, supported by enhanced
production capacity.
We will continue to focus on shifts
to growing fields and increasing
numbers of high added value
products.
Achieved two-digit year-on-yearincrease in sales in spite of the
impact of sharp yen appreciation.

5

1-3. Overview of Operations by Product and Segment(1) Net Sales(Unit: Yen, millions)

40,00034,53135,000Special Graphite Products[Electronics Applications]

31,381
8,098

30,00015,0005,000
0125,492
23,003
20,17910,824

4,364
12,837
12,837
6,636

4,804

1,837

15,916

15,916

13,807

7,227

2,086
3,811

1,978
3,248

4,369
404

4,499
438

5,261
525

04/5
04/5月期

05/5
05/5月期

06/5
06/5月期

1,871

Special Graphite Products[Others]

8,100

13,807

1,762
2,818

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17,96817,968

7,783

1,776

10,000[General Industries Applications]

6,261

25,00020,000Special Graphite Products

1,769

2,682

2,991

4,257

4,598

5,524
7,555
7,555

6,454
7,924
7,924

2,031

1,469

969

1,047

07/5
07/5月期

08/5
08/5月期

Carbon Products for GeneralIndustries[Carbon Products
for Mechanical Applications]
Carbon Products for GeneralIndustries[Carbon Products
for Electrical Applications]Compound Materials andOther Products[Three Major Products]
Compound Materials andOther Products[Other products]

Related goods

61-3. Overview of Operations by Product and Segment(2) Summary and Market Conditions (1/2)

Special Graphite Products[Electronics Applications]z

Demand for special graphite products used in the manufacture of solar cells rose rapidly and significantly,
bolstered by growing worldwide awareness of the environment and commitment to energy efficiency andsoaring crude oil prices. Supported by the proliferation of solar cells especially in Europe, demand grew
markedly in China, a rapidly expanding production center, and in countries like Korea and Taiwan. Demand
growth is expected to accelerate globally going forward, driven by an increase in the production of raw
material polysilicon. We also expect to see demand not only for silicon crystals but also for membranes andcompounds (including C/C composites).
z Special graphite products for the manufacture of single crystal silicon also continued to enjoy firm demand,with no major change in the increase in the production of 300mm wafers by large manufacturers, in spite ofsome adjustment. Demand weakened for wafers of 200mm or smaller due to poor cost competitiveness,
which further accelerated the trend toward large wafers. Demand is expected to remain strong particularly
for large carbon products, an area of strength for us.
z As a consequence of these developments, demand for special graphite products for the production ofpolysilicon grew, and this growth is set to accelerate.

Crucible

Heater[General Industries Applications]z

Demand for EDM electrode products for the production of dies increased, particularly overseas, driven by
superfine grain high functional graphite launched onto the market the previous year. However, automotive
products weakened partly due to the effect of the slowdown of the US economy.
z We also enjoyed robust growth in metallurgy-related demand for continuous casting and industrial furnacerelated products. This demand is expected to remain firm supported by solid capital investment.

Continuous
casting dies

EDM electrode
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71-3. Overview of Operations by Product and Segment(2) Summary and Market Conditions (2/2)
Carbon Products for General Industries[Carbon Products for Mechanical Applications]zz

In general industries applications, demand for bearings and seals was solid on the back of firm capital investment andhigher petrochemical plant operating rates. Demand related to energy-saving water heaters (bearings for pumps andcompressors) continued to expand. Generally, stable growth is expected to continue.
For pantograph sliders, the market is steadily expanding, backed by replacement demand associated withintroduction of new rolling stocks by an existing large customer and the adoption of our products by some large
private railway and new transportation companies. For the medium term, we are setting our sights on sales for the
Shinkansen and overseas markets.

Bearings

Pantograph sliders[Carbon Products for Electrical Applications]z

Demand for our mainstay small brushes used in consumer electronics motors steadily increased globally, thanks to ourefforts to aggressively capture demand in China through our local subsidiary and progress in the expansion of sales for
power tools and washing machines, despite the hollowing-out of the domestic industry. Although there is concern overthe effect of the slowdown in the US economy, demand is expected to remain firm, with increased demand in emerging
economies.

Small brushes

Compound Materials and Other Products
z

z

z

z

Demand for SiC coated graphite grew, particularly in Asia, centering on uses for compound semiconductors
such as susceptors set in the production of LED devices. Demand for SiC coated graphite for semiconductors(epi process) remained generally firm, with the continuous decline in demand for 200mm lines offset bydemand for 300mm. Further growth is expected in the medium term on the strength of the expansion of the
optical device market.
In C/C composite products, demand for our mainstay large crucibles for the production of 300mm wafers
increased significantly, sales of industrial furnace-related products and solar cell related products also
expanded, and overall demand grew. With the trend toward large wafers, demand for large crucibles is
expected to rise and further growth in demand including solar-cell related and atomic fusion-related demand is
expected.
Demand for graphite sheets was generally firm, particularly for automobiles and semiconductors. Demand forheat sinks also expanded satisfactorily for mobile phones, and we also expect to see expansion into automotive
applications and electronic device applications.
Regarding the on-site fluorine generator business, we are proceeding with further assessment of projects forthe semi-conductor field, which is currently a focus of our efforts. We are also proceeding in parallel with anumber of projects for broad-reaching business expansion, including surface treatment using fluorine
technology.

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SiC coated graphite

GraphitesheetsC/C composite
products

On-site fluorine
generator
8

1-4. Overview of Net Sales by Region
Overseas Sales Growth Ratios, Particularly in Asia, with Progress in Globalization(FY 04/5 : 40.7% ⇒ FY 08/5 : 51.0%)(Unit: Yen, millions)
40,00034,53135,00031,381Japan

30,00025,49225,00020,00015,00023,003(Huge progress in
China and also Korea)

13,940Europe12,914
11,966
7,146
3,077

0

Asia

16,313

20,17910,0005,000

16,927

2,620
2,348
166
04/5月期
04/5

Copyright © Toyo Tanso Co., Ltd. All Rights Reserved(Growth ratio fell relative
to other regions)

3,734

9,867

(Share gradually
expanding)North
America

4,970
3,826

4,158

3,219

3,337

2,874
259

2,928
315

3,864
229

3,324
254

05/5月期
05/5

06/5月期
06/5

07/5月期
07/5

08/5月期
08/5(Virtually unchanged if
decrease caused by yen
appreciation is excluded)

Other regions91-5. Balance Sheet for the Fiscal Year Ended May 31, 2008

Points(Unit: Yen, millions)

07/5

08/5

Total
Total assets
assets54,83057,706Trade
Trade notes
notes and
andaccounts
accounts receivable
receivable

9,942

10,992Inventory
Inventory

6,573

7,224

Tangible
Tangible fixed
fixed assets
assets

19,633

21,269Total
Total liabilities
liabilities andandnet
net assets
assets54,83057,706

Interest-bearing
Interest-bearing debt
debt

3,296

1,701

Net
Net assets
assets41,386

46,523EquityEquity ratio
ratio

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74.8%

79.0%

z

Increased 1,636 million yen
from May 2007 due to anincrease in production
capacity of isotrophic graphite
as well as post-processes andadded value processes.

zGradually curtailing interestbearing liabilities, backed bycash flow from operating
activitiesz

Increased with net income of
5,143 million yen.

10

1-6. Statement of Cash Flows for the Fiscal Year Ended May 31, 2008

(Unit: Yen, millions)

07/5

08/5

Cash and cash equivalents at
the end of the period

11,558

10,491

Changes in cash and cash
equivalents

6,691(1,143)

Cash and cash equivalents atthe beginning of the period

4,867

11,558

CF from operating
activities

4,993

6,635

CF from investing
activities(1,635)(5,924)

CF from financing
activities

3,292(1,753)Copyright © Toyo Tanso Co., Ltd. All Rights Reserved

Pointsz

Increase attributable to increased
accounts receivable associatedwith sales expansion, increased
profit and increased depreciation
costs.

z

Cash used rose. Thoughexpenditure on acquisition of
tangible fixed assets was
unchanged from the previous
year, payments for purchase oftime deposits increased.

z

Cash used increased. In theprevious year the company
increased capital through public
offering, but this year thecompany applied funds obtainedin cash flow from operating
activities to the repayment ofloans.

11

2. Consolidated Forecast for the Fiscal
Year Ending May 31, 2009

Copyright © Toyo Tanso Co., Ltd. All Rights Reserved122-1. Earnings Forecast for the Fiscal Year Ending May 31, 2009

Points(Unit: Yen, millions)Net
Net sales
sales

08/5

09/5
(Forecast)%increase

34,53137,400

8.3%

OperatingOperatingprofitprofit

8,031

7,800

(2.9%)

Recurring
Recurringprofitprofit

7,795

7,900

1.3%

(22.6%)(21.1%)Net
Net income
income

5,143

4,900

Net
Net income
incomeperper shareshare

247.33 yen

235.59 yen(Ratio of recurring profit to net sales)zThis year is positioned as a year of
preparation and consolidation in readinessfor a large increase in isotropic graphite
production capacity (4,000t new plant),
which will contribute from the second halfof next year.

z

Sales expected to increase 8.3% fromthe previous year through increased
sales of isotropic graphite and efforts to
expand sales of composites, including
C/C composites and SiC coatings.

zAchieve profits on the same level as theprevious year through efforts to raise
selling prices in face of the manyfactors squeezing profits both in Japanand overseas, such as the impact of thejump in fuel costs and raw material
costs, higher depreciation costs(increase of 894 million yen, of which
increase due to tax system revision is459 million yen), and higher retirement
benefit expenses.
Recurring profit of 8,359 million yen(year-on-year increase of 7.2%),
excluding impact of higher depreciation
costs caused by tax system revision(4.7%)

zz

Exchange rate assumed for FY09/5: 100 yen/US$, 150 yen/EUR
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Increased profit in real terms,
excluding grants received of 427 million
yen recorded the previous year.
13

2-2. Future Investment(Capital Investment, Depreciation Cost, R&D Cost)(Unit: Yen, millions)(Unit: Yen, millions)

Large investments and expanded R&D for the future.

12,000Substantial increase in depreciation costs including theeffect from the revision of the tax system.
1,130

1,300
1,174
10,247

10,000

1,100

941

1,000

R&D cost (right axis)

8,000

900
800

2,000

672

1,684

Depreciation cost(left axis)

4,000

Capital investment(left axis)

731
6,000

1,306

1,200

700
5,437

600
4,300

4,255

500
2,755

1,392

3,650
459

400
300

1,709

200
100
0

0
05/5月期
05/5

06/5月期
06/5

07/5月期
07/5

08/5月期
08/5

09/5
09/5月期（予想）(Forecast)

Impact of FY2008 tax system reform (revision of useful life)
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142-3. Key Performance Indicator Trends

Recurring profit ratio

25%

ROE

22.7%

22.6%

12.4%

11.9%

8.9%

9.1%

07/5
07/5月期

08/5
08/5月期

ROA

21.1%

19.5%

20%
16.2%

15%

14.2%
11.3%

10%

7.7%

7.1%

05/5
05/5月期

06/5
06/5月期5%

0%

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09/5
09/5月期(Forecast)(予想）15

2-4. Return of Profits to Shareholders
Dividends

Payout ratio(Unit: Yen)

35円
35

Dividends per share

30
30円

30

Dividends per share(Figure taking the share
split into account)

25円
25

12%

Consolidated
payout ratio

22.5

10%

20

20円
20

15

15円
15

12
10

10円
10

4.1%
5円
5

14%

4

8.5%

8%
6%

6.1%

4%

3.6%
2%

1.8%
0
0円

0%
05/5月期
05/5

06/5月期
06/5

07/5月期
07/5

08/5月期
08/5

09/5
09/5月期(Forecast)(予定）* A 3-for-2 stock split was conducted on June 1, 2007
Copyright © Toyo Tanso Co., Ltd. All Rights Reserved

16

3. Topics

Copyright © Toyo Tanso Co., Ltd. All Rights Reserved173-1. Strengthening of C/C Composites (1) Characteristics of C/C Composite
What are C/C Composite products?

Carbon Fiber Reinforced Carbon Composite
Manufacturing process
Lightweight indestructible carbon material
with the features of carbon fiber

CF raw material

Plastic

Molding process

Features of C/C composites- Excellent strength, elasticity and ductility- Super heat resistant- Lightweight, excellent handling- Excellent sliding properties- Very high thermal conductivity (Certain Grades)

FW molding

Impregnation

Graphitization treatment

Shipment of raw materials

Inspection of raw materials

Surface treatment process

Processing

Equipment for safety disposal

Halogen gas

Reaction gas
Purification

Shipment
Copyright © Toyo Tanso Co., Ltd. All Rights Reserved

Hot rolled molding

Sintering

Differences from other materials
Isotropic graphite : carbon bonded in a granular structure
C/C composites (carbon fiber reinforced carbon) are more high added value
products than isotropic graphite due to features such as greater elasticity,strength, and light weight, but these products are used for different
applications as a result of differences in manufacturing processes,
production volumes, and prices (C/C composites are more expensive).
CFRP: Carbon fiber reinforced plastic
Though both materials are reinforced with the same carbon fiber, CFRP
demonstrates excellent strength at room temperature while C/C composite
demonstrates excellent strength under high temperature conditions(Examples of uses of CFRP: fishing rods, golf shafts)

Hot press molding

Product research18

3-1. Strengthening of C/C Composites (2) Expanding application
Application of C/C Composite products
Application

Example of products

Single crystal silicon
manufacturing

Crucibles, Rings, Innershields, Seed chucks, etc.

With its superb characteristics, it has a broad array of
applications, and it is expected to find new uses in the future.

Product pictures

Crucibles

Solar cellmanufacturing
furnaces

Square crucibles, Sheets,
Inner shields, etc.

General industrial
furnaces

Furnace trays, Heaters,
Furnace driving parts,
Bolts, Nuts, etc.

Sliding equipment

Squarecrucibles

Brakes, Clutches, Sliders,etc.
Wall tiles used in nuclear
fusion reactors
Wall tiles used innuclear fusion reactors

Other

Copyright © Toyo Tanso Co., Ltd. All Rights Reserved

Hot press molds, Heatsinks, etc.

With global expansion indemand for solar cells, orders
for solar cell applications arealso increasing steadily.

Furnace trays

Clutches

Nuclear power

C/C composites are suited tothe manufacture of large
crucibles. Due to the shift
toward large silicon wafers,
orders for crucibles are also
increasing.

With growing awareness of theenvironment and commitment
to energy efficiency, metals arebeing replaced with C/Ccomposites.
Our supply of C/C composite
products to nuclear fusion
reactors will continue steadily(ITER etc).

Dies used in hot
press furnaces
193-1. Strengthening of C/C Composites (3) Future growth strategy
Changes in Sales of C/C Composite Products
Relative values taking year ended May 2005 as 100
200
150

Sales in the year ended
May 2008 almost
doubled comparedwith the year ended
May 2005.

100
50
0

05/5
05/5月期

06/5
06/5月期

07/5
07/5月期

08/5
08/5月期

Planning to double
manufacturing capacity(compared with year
ended May 2007) in2010.

Strategy for Further Growth(1)

Expansion of production facilities=> Respond to significant growth in demand and strengthen delivery response capabilities.

(2)

Further strengthening of areas of superiority=> Consolidate position through further strengthening of areas in which the Company has technical superiority such as single crystal
silicon manufacturing applications and solar cell manufacturing applications. Harness strength in C/C composites to increase
competitiveness in large carbon products.

(3)

Aggressive expansion of share=> Strengthen application development capability and seek to expand share in all areas.

(4)

Bolstering of competitiveness against rival products=> Increase price responsiveness and produce differentiated products and high added value products through the development oftechnology.

Copyright © Toyo Tanso Co., Ltd. All Rights Reserved203-2. Participation in Exhibitions Worldwide
Solar power generation and solar cells are attracting global attention as a form of renewable energy, and large exhibitions arebeing held worldwide. Since this is also a priority area for Toyo Tanso, we have taken part in exhibitions in Japan, China andKorea with the aim of developing new customers and promoting the superiority of our products and technologies.
International Photovoltaic Power Generation Expo PVEXPO2008

Korea Green Energy Expo 2008

The Company took part in the 1st International Photovoltaic
Power Generation Expo PVEXPO2008, the world’s largest
exhibition in the solar cell industry, which was held at Tokyo Big
Site from February 27 - 29, 2008. We presented crucibles andplates made from C/C composites and graphite heaters andsusceptors.More than 1,000 people visited out booth.

The Company participated in the 5th International Green
Energy Expo Korea 2008 held at EXCO (Exhibition &Convention Hall) in Daegu, South Korea from May 21 - 23,
2008. We presented crucibles, heaters and other products used
for solar cell manufacturing. More than 900 people visited ourbooth.

SEMICON CHINA 2008
The Company took part in SEMICON CHINA 2008 held at Shanghai International Exhibition
Center, China from March 18 - 20, 2008. We presented products for the “Semiconductor” and“Solar Cell” categories, crucibles made from C/C composites and susceptors used in MOCVD.
More than 600 people visited our booth.

Copyright © Toyo Tanso Co., Ltd. All Rights Reserved

21

Note: This presentation contains “forward-looking statements” and forecasts of business results. Thesestatements are not historical facts but instead represent the Company’s beliefs regarding future
events, many of which, by their nature, are inherently uncertain and out of the Company’scontrol. It is possible that the Company’s actual results may differ, possibly materially, from theanticipated results and financial condition indicated in these forward-looking statements.
IR Contact
E-mail: ir@toyotanso.co.jp

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22