TOYO TANSOFirst Half Results for the Fiscal Year Ending May 31, 2008

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

Table of Contents

1. Overview of First Half Results for the Fiscal Year Ending May 31, 2008 (Consolidated)
1-1.
1-2.
1-3.
1-4.
1-5.
1-6.

Business Results (Consolidated)
First Half Results for the Fiscal Year Ending May 31, 2008 (Consolidated)
Overview of Operations by Product and Segment (Consolidated)
Overview of Net Sales by Region (Consolidated)
Balance Sheet for the First Half of the Fiscal Year Ending May 31, 2008 (Consolidated)
Statement of Cash Flows for the First Half of the Fiscal Year Ending May 31, 2008 (Consolidated)

2. Estimate for the Fiscal Year Ending May 31, 2008 (Consolidated)
2-1. Earnings Forecast for the Fiscal Year Ending May 31, 2008 (Consolidated)
2-2. Future Investment (Capital Investment, Depreciation Cost, R&D Cost)
2-3. Key Performance Indicator Trends (Consolidated)

3. Topics
3-1. Booming Solar Cell Market
3-2. Increase in Production Capacity
3-3. Relocation of Head Office/Presentation at International Photovoltaic Power Generation Expo
PVEXPO2008

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P. 3
P. 4
P. 5
P. 6
P. 9
P. 10
P. 11

P. 12
P. 13
P. 14
P. 15

P. 16
P. 17
P. 20
P. 21

2

Overview of First Half Results for the
Fiscal Year Ending May 31, 2008
(Consolidated)

Copyright © Toyo Tanso Co., Ltd. All Rights Reserved31-1. Business Results (Consolidated)

First
Half

(Unit: Yen, millions)

40,000(Unit: Yen, millions)

14,00034,30035,00012,00031,381
10,00030,00020,00010,0005,000

Net sales (left axis)

15,00020,179Recurring profit (right axis)

25,00025,492

8,100

23,003

8,000
7,123
6,000
4,961
3,724

4,100

12,227

4,000(Actual)2,280

0Copyright © Toyo Tanso Co., Ltd. All Rights Reserved(Actual)14,866
3,369

1,828

04/5

17,372

05/5

06/5

2,000

07/5

0
08/5 (Forecast)4

1-2. Results for the First Half of the Fiscal Year Ending May 31, 2008
(Consolidated)(Unit: Yen, millions)

07/5
First half

08/5
First half%
increase

Net sales

14,866

17,372

16.9%

Operatingprofit

3,286

4,343

32.2%

(Ratio of operating profit to net sales)(22.2%)(25.0%)

Recurringprofit

3,369

4,100

21.7%

Profit before
income taxes

3,755

4,085

8.8%

Net income

2,014

2,491

23.7%

Net income
per share

151.17 yen*

119.75 yen* A 3-for-2 stock split was conducted on June 1, 2007
Copyright © Toyo Tanso Co., Ltd. All Rights Reserved

Pointsz

Strong demand for isotropic
graphite in Japan and overseas for
all applications including solar
cells, backed by expansion of
production capacity, and shifting
focus to high value-added products
and growth areas.

z

The start of full operations at a
new base in China also contributed
to a 16.9% year-on-year increasein sales.

z

In addition to increased marginal
profits accompanying the increasein sales mentioned above,
operating profit rose 32.2% year on - year due to improved
productivity and expanded
production volume, which offset a
significant rise in depreciation
costs (529 million yen) and anincrease in other expenses,
including labor costs.

5

1-3. Overview of Operations by Product and Segment (Consolidated)(1) Net Sales(Unit: Yen, millions)
18,00017,372
16,00014,866
14,00013,265Special Graphite Products--General Industries Applications
Continuous casting dies, EDM electrodes, heaters for various industrial
furnaces

9,066
7,426

10,000
7,173
8,000

4,219
3,695

954
1,266

6,000
1,115
4,000

3,897

2,776

12,000

2,005

950
1,453
2,487

1,976

2,000

3,728

3,780

440

584

07/5
First Half

08/5
First Half

2,758
0

242
06/5
First Half

Special Graphite Products--Electronics Applications
For the manufacture of solar cells:
Crucibles, heaters
For the manufacture of single crystal silicon:
Crucibles, heaters
For the manufacture of compound semiconductors:
Susceptors for MOCVD systems, boats for LPE systems

Special Graphite Products--Others
Electrodes for ion implantation equipment, glass sealing jigs, cores forhigh-temperature gas reactors, parts for CT scans
Carbon Products for General Industries--Carbon Products
for Mechanical Applications
General Industries: Bearings for pumps and compressors, seals
Transportation :Pantograph sliders, automotive parts
Carbon Products for General Industries--Carbon Products
for Electrical Applications
For small motors: Brushes for vacuum cleaners and power tools.
For large motors:
Large brushes, brushes for wind-power
generators
Compound Materials and Other Products
Susceptors for semiconductor production and MOCVD systems,
C/C composite products, graphite sheets, on-site fluorine generators

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

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

Special Graphite ProductsElectronics Applicationsz Demand for special graphite products used in the manufacture of solar cells rose rapidly andsignificantly with growing worldwide awareness of the environment and commitment to energy
efficiency. Supported by the proliferation of solar cells in Europe and the United States, demand
grew in each region in Asia, Europe and Japan, especially in China, a rapidly expanding global
production center. Demand growth is expected to accelerate going forward, driven by an increase in
the production of polysilicon, a raw material that was previously in short supply.
z Special graphite products for the manufacture of single crystal silicon also continued to enjoy robust
demand because of aggressive increases in the production of 300mm wafers by large manufacturers.
Demand weakened for wafers of 200mm or smaller partly because of a lack of cost competitiveness,
which further accelerated the trend toward larger 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 Applicationsz Demand for EDM electrodes for the production of dies increased, particularly overseas, driven by

super-fine grain high functional graphite.
z We also enjoyed robust growth in metallurgy-related demand for continuous casting and industrial
furnace-related 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 (Consolidated)(2) Summary and Market Conditions (2/2)
Carbon Products for General Industries
Carbon Products for Mechanical Applicationsz In general industries applications, demand related to energy-saving water heaters (bearings for pumps andcompressors), including bearings and seals, remained solid on the back of firm capital investment. Stable growth isexpected to continue.
z For pantograph sliders, and replacement demand associated with introduction of new rolling stocks by an existinglarge customer, the market steadily expanded backed by the official adoption of our products by some large private
railway and new transportation companies. For the medium term, we are focusing on sales for the Shinkansen andoverseas markets.

Bearings

Pantograph sliders

Carbon Products for Electrical Applicationsz Demand for our mainstay small brushes used in consumer electronics motors increased globally, thanks to our efforts toaggressively capture demand in China through our local subsidiary and progress in the expansion of sales for power
tools and washing machines.
z We promoted an strategic alliance in sales, manufacturing and development through our operating bases in Japan,
China and Europe by creating a body to oversee cross-regional and cross-functional strategies so that we can respond to
demand globally. We are focusing on sustaining stable growth while maintaining and bolstering our leading market
share around the world by stepping up global operations.

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 coatedgraphite for semiconductors (epi process) remained generally firm, with the continuous decline indemand for 200mm lines offset by demand 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 continued to increase. Industrial furnace-related demand also rose substantially, driven by
growth in China and Europe. Demand for large crucibles is expected to rise together with advances
into new areas such as atomic fusion-related demand.
Demand for graphite sheets also increased, particularly for semiconductors, compound
semiconductors (LED-related) and solar cells. Demand for new applications such as heat sinks rosefavorably, and we continue to see growth in this area.
Regarding the on-site fluorine generator business, we intend to begin the assessment of actual
equipment for full deployment in promising semiconductor applications.

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

SiC coated graphite

C/C composite
products

GraphitesheetsOn-site fluorine
generator
8

1-4. Overview of Net Sales by Region (Consolidated)
Overseas Sales Growth Ratios, Particularly in Asia, with Progress in Globalization(06/5 First Half: 44.7% ⇒ 08/5 First Half: 50.3%)(Unit: Yen, millions)
20,00017,37218,00014,000Japan

14,866

16,00012,227

8,627

Asia

12,000
7,965

10,000Europe

6,756

8,000
4,855

6,000

3,195

4,000

2,208

2,000

1,612

1,747

1,474
175
06/5月期
06/5
上期First Half

1,863
95
07/5月期
07/5
上期
First
Half

0
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North
America

2,093

Other regions
1,657
139
08/5月期
08/5
上期
First
Half
9

1-5. Balance Sheet for the First Half of the Fiscal YearEnding May 31, 2008 (Consolidated)(Unit: Yen, millions)

06/11

07/05

07/11

Total
Total assets
assets

48,16554,83056,431

Trade
Trade notes
notes and
andaccounts
receivableaccounts receivable

9,009

9,942

10,755Inventory
Inventory

6,207

6,573

6,989

Tangible
Tangible fixed
fixed assets
assets

18,29919,633

20,736

Total
Total liabilities
liabilities andandnet
net assets
assets

48,16554,83056,431

Interest-bearing
Interest-bearing debt
debt

4,228

3,296

2,748

Paid-in
Paid-in capital
capital

5,000

7,692

7,692

Net
Net assets
assets33,411

41,38643,983EquityEquity ratio
ratio

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

Remarksz Increased 1,103 million

yen from May 2007 due
to an increase inproduction capacity ofisotropic graphite, etc.

z Declined 547 million

68.7%

74.8%

76.7%

yen from May 2007,
backed by cash flows
from operating
activities.

z Increased with net

income of 2,491 million
yen.

10

1-6. Statement of Cash Flows for the First Half of the Fiscal YearEnding May 31, 2008 (Consolidated)(Unit: Yen, millions)

07/5
First Half

08/5
First Half

Cash and cash equivalents at
the end of the period

4,143

5,732

Changes in cash and cash
equivalents（723)(5,903)

Cash and cash equivalents atthe beginning of the period

4,867

11,558

CF from operating
activities

2,485

3,007

CF from investing
activities(2,147)(8,157)

CF from financing
activities(1,078)(743)

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

Remarksz Substantially increased

with an increase in profit
before income taxes,
minority interests anddepreciation costs

z Cash used rose significantlywith payments into time
deposits and the acquisitionof tangible fixed assets
associated with large
investments.

11Forecasts for the Fiscal YearEnding May 31, 2008 (Consolidated)

Copyright © Toyo Tanso Co., Ltd. All Rights Reserved122-1. Forecast for the Fiscal Year Ending May 31, 2008 (Consolidated)

Remarks(Unit: Yen, millions)

07/5

08/5
(Forecast)%increaseNet
Net salessales

31,38134,300

9.3%

OperatingOperatingprofitprofit

6,925

8,200

18.4%

(Ratio of operating profit to net sales)(22.1%)(23.9%)

Recurring
Recurringprofitprofit

7,123

8,100

13.7%

Net
Net income
income

4,439

5,000

12.6%

329.65 yen* 241.12 yen

Net
Net income
incomeperper shareshare* A 3-for-2 stock split was conducted on June 1, 2007z

Initial forecast remains unchanged
based on our outlook that businessconditions for the Company willremain stable, although someuncertainties exist about theoverall economy.

zContinue to achieve high growthby encouraging the expansion of
our business and high value-added
products through an increase in
the capacity of isotropic graphite(the completion of a production
system to manufacture 11,000 tons
annually) and the acceleration of
global operation to addressongoing strong demand.

z

Repeat achievement of higher
profits through a greater focus onhigh value-added products forincreased net sales in order tooffset negative effects of a stronger
yen and substantial increases in
depreciation costs (1,201 million
yen) from heavy investments andrevisions of the tax system.

Exchange rate assumed for FY08/5: 110 yen/US$, 148 yen/EUR
Copyright © Toyo Tanso Co., Ltd. All Rights Reserved132-2. Investments in the Future(Capital Investment, Depreciation Cost, R&D Cost)(Unit: Yen, millions)(Unit: Yen, millions)

10,000Large investments and expanded R&D for the future.

9,000

Substantial increase in depreciation costs including theeffect from the revision of the tax system.
941

8,000

6,000
Depreciation cost(left axis)

2,000

613
Capital investment(left axis)

3,000

1,000

1,310 1,196

731
672

800

5,437

700
600

4,255

500
2,911
303

1,684

1,306

1,392

1,709

400
300
200

1,000
0

1,200
1,100

6,281

R&D cost (right axis)

4,000

1,175

900

7,000

5,000

1,300

100
04/5

05/5

06/5

07/5

08/5

0

(Forecast)
Effect of the tax system revision

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

142-3. Major Business Indexes (Consolidated)

All indicators have been rising favorably

25%

Recurring profit ratio
ROE

20%

22.7%

23.6%

19.5%

ROA

16.2%
15%

12.4%
14.2%

10%

9.1%
5.8%

5%

0%

11.3%

8.9%
7.7%

7.1%

05/5

06/5

2.9%

04/5

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

07/5

08/5
(Forecast)15

Topics

Copyright © Toyo Tanso Co., Ltd. All Rights Reserved16

3-1. Booming Solar Cell Market (1) Products for Solar Cell Production•

While solar cells use a variety of raw materials and production methods, carbon is
widely used to make both silicon and compound solar cells.

•

In particular, the silicon crystal type (single-crystal and multi-crystal types), which
accounts for nearly 90% of all solar cells, uses a large volume of carbon materials.
Type
SiliconCharacteristics

For the production of
single-crystal silicon solar cells
Crucible

HeaterSingle-crystal High power generation efficiency.
Strong track record. High cost.

Multi-crystal

Film
CompoundHigh power generation efficiency.
Strong track record. High cost, butless expensive than the singlecrystal type.

Square crucible

HeaterLess silicon used which can reduce
cost.
Rare metals are used. Costs can be
reduced.

Organic

For the production ofmulti-crystal silicon solar cells

Carbon plate for the production offilm solar cells

Low power generation efficiency.
Costs can be reduced.

Copyright © Toyo Tanso Co., Ltd. All Rights Reserved173-1. Booming Solar Cell Market (2) Market Overview•

Net sales of carbon products used in the production of solar cells increased favorably in step withmarket growth.

•

We will continue to meet demand in the market as much as possible in light of the balance ofsales mix.
(MW/Year) Production volume of solar cells and net sales of the Company for solar cells
16,00014,000[Left bar] Production volume of solar cells(Source: Photon Consulting)

12,0001,000[Right bar] Sales of TOYO TANSO for solar cells

10,000(Index: 100 = 63rd term)

8,000

500

6,000
4,000

100
0

2,000
0
2000

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

2001

2002

2003

2004
63rd
term

2005
64th
term

2006
65th
term

2008
2009
2010
2007
66th
term (Estimate)(Estimate)(Estimate)(Prospect)18

3-1. Booming Solar Cell Market (3) Overview by Region•

Net sales increased almost evenly in each of the major solar cell production regions of Japan, China andEurope. Demand is likely to rise even further in Asia, including China, and in Europe. Although lagging
now, demand could also rise sharply in the United States hereafter.

Market share of solar cell manufacturers (2004 and 2006)
2006

2004

Sharp (Japan) 17%
Others (Other) 25%

Sharp (Japan) 25%

Others (Other) 35%
Q-Cells (Germany) 10%

Motech Indestries (Taiwan)
3%
Suntech Power (China) 3%

Kyocera (Japan) 8%

Kyocera (Japan) 7%

BP Solar (Other) 3%

Sanyo Electric (Japan) 5%

Solar World (Germany) 4%

BP Solar (Other) 7%

Shell Solar (U.S.) 6%

Suntech Power (China) 6%
Schott Solar (Germany) 4%

Q-Cells (Germany) 6%

Schott Solar (Germany) 6%

Sanyo Electric (Japan) 6%

Motech Indestries (Taiwan)
4%

Mitsubishi Electric (Japan)
6%

Mitsubishi Electric (Japan)
4%(Source: Photon Consulting)

Net sales of the Company for solar cells by region(Index: 100 = 64th term)
64th term

Japan
EuropeAsia
U.S.
Copyright © Toyo Tanso Co., Ltd. All Rights Reserved

100
100
100
100

65th term

182
256
151
119

66th term (E)

245
288
297
106
19

3-2. Increase in Production Capacity
Accelerating growth and expansion of global operations by establishing a production system to manufacture
15,000 tons of isotropic graphitezzz

In autumn 2007, a production system to manufacture 11,000 tons a year was completed ahead of schedule. Full production continues to respond torobust demand.
We will establish a system to manufacture 15,000 tons a year in response to (1) the development of new growth areas such as solar-cell, compound
semiconductor applications for LED, atomic energy and medical applications, (2) the growth of existing semiconductor applications including
those for 300mm wafers and EDM electrodes, and (3) an increase in demand for high-function and high quality isotropic graphite on a global
scale as this market expands globally, particularly into emerging economies.
We will continue to strengthen our cost and quality competitiveness and pursue differentiation with a focus on high value-added products byconstructing a large new plant (with a capacity of 4,000 tons a year) incorporating uniquely designed facilities, proprietary new processes, andinnovative know-how.

Production Capacity of Isotropic Graphite
Since early 2007

After autumn 2009
Since November 20072005
Annualproduction:
8,000 tons

Annualproduction:
10,000 tons

Baking building

Annualproduction:
11,000 tons

Baking furnace

Annualproduction:
15,000 tons

Graphitizing furnace

Graphite block

The world’s largest isotropic
graphite plant, Takuma Division
Copyright © Toyo Tanso Co., Ltd. All Rights Reserved203-3. Relocation of Head Office/Presentation at International Photovoltaic
Power Generation Exhibition PVEXPO2008

Relocation of Head Officez To expand our business and improve the management efficiencies of theGroup by facilitating operations and communication throughout theCompany, we relocated in December 2007 from Nishiyodogawa-ku to
Umeda, Kita-ku in Osaka. The new headquarters offers greater convenienceand functionality.
z The old Head Office will be renamed Kondo Teruhisa Memorial Advanced

Carbon Technology Center, and will serve as a research and development
center to support in-house R&D.
Location: Umeda Daibiru, 10th Fl. 3-3-10 Umeda, Kita-ku, Osaka 530-0001

Entrance to the new Head Office

Presentation at International Photovoltaic Power Generation Expo PVEXPO2008z We will make a presentation at the International Photovoltaic Power Generation Expo PVEXPO2008 (February 27-29,

2008; Tokyo Big Sight). As the world’s largest exhibition in the solar cell industry, world-leading companies from
Germany, the United States, China, Taiwan and Korea, all come together and participate.
z We will exhibit actual graphite products used in the different production processes of solar cells and solar panel

manufacturing to highlight the competitive advantage of our products and technologies.

Copyright © Toyo Tanso Co., Ltd. All Rights Reserved21

At the end

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