TOYO TANSO
Results for the First Half of the Fiscal Year Ending May 31, 2011

January 2011
Copyright © Toyo Tanso Co., Ltd. All Rights Reserved

Toyo Tanso Co., Ltd.

Table of Contents

1-1. Business Results
1-2. Results for the First Half of the Fiscal Year Ending May 31, 2011
1-3. Factors Affecting Changes in Recurring Profit
1-4. Overview of Operations by Product and Segment
1-5. Results by Region
2-1. Earnings Forecast for the Fiscal Year Ending May 31, 20112-2. Future Investment (Capital Investment, Depreciation Cost, R&D Cost)
2-3. Return of Profits to Shareholders
2-4. Key Performance Indicator Trends
3. The Expanding Asian Market(Reference 1) Balance Sheet for the First Half of the Fiscal Year Ending May 31, 2011
(Reference 2) Statement of Cash Flows for the First Half of the Fiscal YearEnding May 31, 2011

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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. 16
P. 17

2

1-1. Business Results(Unit: Yen, millions)

Net sales

Recurring profit

40,00012,00035,00031,381

30,00025,00035,00034,531

10,00030,97427,92425,492

7,795

8,000

7,123

20,000

6,000
4,961

15,00014,866

10,00017,97917,372
12,227

4,100
3,369

(Q2 cumulative)

3,754

2,280
(Q2 cumulative)

4,800(Q2 cumulative)(Q2 cumulative)

5,000

18,413
18,413

4,483

4,000

12,646

2,070

2,796

2,000

(Q2 cumulative)(Q2 cumulative)

661

0

FY06/5

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

FY07/5

FY08/5

FY09/5

FY10/5

FY11/5(Forecast)03

1-2. Results for the First Half of the Fiscal Year Ending May 31, 2011
(Unit: Yen, millions)

Change%increase

18,413

5,767

45.6%

817

3,019

2,202

269.6%

6.5%

16.4%

661

2,796

2,135

322.9%

Ratio of recurring
profit to net sales

5.2%

15.2%

Profit before
income taxes

782

2,568

1,786

228.4%

FY10/5

FY11/5Q2 cumulative

Q2 cumulative

Net sales

12,646

OperatingprofitRatio of operating
profit to net sales

Recurringprofit

Net income

369

1,916

Net income
per share

17.84 yen

92.45 yenExchangerate

92.9 yen/$
134.0 yen/€

85.5 yen/$111.6 yen/€

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1,547

418.2%

Notes
・There has been a rebound from losses causedby the high yen as net sales have increased by
1.5 times year-on-year, and resulting in net
sales of 18.4 billion yen, a record high for a
six-month period.
・By application, solar cell and compound
semiconductors, mainly LEDs, led net sales
overall. The share for compound materials
has increased considerably. In terms ofregions, there has been significant growth in
Asia focusing on China and South Korea.
・The concentration of new large-scale nuclear
fusion-related and solar cell-related projects(C/C composite products) also made acontribution.

・Recurring profit increased by more than 4times year-on-year, despite the impact of
rapid yen appreciation and the high burdenof depreciation costs.
・In addition to increased profits, thanks toexpanding sales against the backdrop of ahigh marginal profit ratio, increased sales ofhigh-value-added products including coatedproducts contributed to profits.

41-3. Factors Affecting Changes in Recurring Profit
Profits grew significantly as a result of increases in sales quantity and high-value-added
products, despite the impact of increased depreciation costs and the high yen(Unit: Yen, millions)

4,000

3,000

2,000

1,000

Recurringprofit

FY10/5First Half

Change insales
volumes

1,683

661

Product
structuredifferences
and pricerevisions

412

1,670

Improved productivity mainly throughincreased operations

756
Change indepreciation
costs

537
Impact ofexchange
rates

Improvement in mix of products available mainly through theincrease in high-value-added products

24
Change inrawmaterials
prices312
Differencein othercosts

FY11/5First Half

RecurringprofitStreamlining
and differencein operating
rates

5,000

2,796

0

Copyright © Toyo Tanso Co., Ltd. All Rights Reserved51-4. Overview of Operations by Product and Segment(1) Net Sales Trend(comparison with previous year)(Unit: Yen, millions)
20,00018,000Total ofSpecial Graphite Products

18,413

17,97917,372

3,897

12,944

9,451
8,902

4,219

Special Graphite Products[Others]

3,836

12,646

3,880

3,666

3,793

3,220

3,581
3,387

950

609

819
1,537

6,733

6,472

2,803

399
1,233

448
1,041

1,704

1,915

1,502

487
1,228

2,487

2,110

2,377

4,000
2,000
0

3,780

3,086
4,145

3,369

3,453
3,096

694
584

776
463

803
450

2,544

FY08/5

FY08/5

FY09/5551
226
FY09/5

Q1 + Q2
cumulative

Q3 + Q4
cumulative

Q1 + Q2
cumulative

Q3 + Q4
cumulative

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2,761 2,349

411
456

Carbon Products for General Industries[Carbon Products for Electrical
Applications]Compound Materials andOther Products[Three Major Products]

4,382

4,198

(6.1%)(8.7%)

2,191

2,016

3,395

Carbon Products for General Industries[Carbon Products for MechanicalApplications]

409
1,303

2,666

(-16.0%)

9,233

7,712

10,0006,000(5.7%)

5,241

12,0001,453Special Graphite Products[General Industries Applications]

15,278

5,048

4,201

14,0008,000(36.6%)

17,15916,0009,066

Special Graphite Products[Electronics Applications]

5,072

3,950

690
612

FY10/5496
371
FY10/5

FY11/5

Q1 + Q2
cumulative

Q3 + Q4
cumulative

Q1 + Q2
cumulative

Compound Materials andOther Products[Other products]

Related goods(26.9%)(39.0%)(64.9%)

6

1-4. Overview of Operations by Product and Segment(2) Notes and future outlook (1/2)
Image of net sales byapplication

Application

Electronics applications
General industries applications
and others

Special graphite products

FY10/5
Q3, Q4

Products for solar cellmanufacturing

Products for single
crystal silicon
manufacturing

FY11/5
Q1, Q2

FY11/5
Q3, Q4
Forecast

Notes and future outlook

・ The sudden recovery trend from 4Q of the previous fiscal year has accelerated. Demand in the Asian region
including the leading countries of China, South Korea, and Taiwan, has grown significantly. Performance has also
been solid in Japan, Europe, and North America.
・ Sales in the first six months of the fiscal year have already surpassed previous peak levels, increasing by
approximately 1.8 times year-on-year and by approximately 1.7 times over the last six months of the previous fiscal
year (excluding C/C).
・ Motivations for expansion of facilities remain strong for major customers in China, South Korea, and Taiwan, andthere are many expansion plans in the works. Although there are concerns that the market could be overheating,there is a shortage of short-term supplies of graphite and it is expected that they will remain tight.
・ The market for finished products is expanding due in part to increasing environmental awareness. In the future,even if there are adjustments in the short-term, there will be a steady growth trend for these products over the
medium to long-term.
・ The impact of customers’ inventory adjustments has already been resolved and demand has recovered. However,there has been some stagnation in the domestic market due in part to a temporary lull in the semiconductor industry.
This marks a significant increase year-on-year, but in comparison to the last six months of the previous fiscal year,
growth has flattened out.
・ The pending issue of increasing the production of 300 mm wafers still remains unclear, with no changes expectedin the domestic market in the near future. Overseas markets are expected to gradually expand.

Products for EDM
electrode
manufacturing

・ Owing to the recovery of the automobile and consumer electronics industries, there has been a gradual recovery
from the second half of the previous fiscal year, particularly in China and other overseas markets.
・ However, in the domestic market, the situation is difficult for the mold industry as a result of structural issues suchas the high yen. We are placing our hopes on further increases in demand in Asia and emerging countries.

Products forcontinuous casting andmetallurgy, etc.

・ Demand is steadily recovering as a result of the economic recovery and increased infrastructure investments,
particularly in emerging countries.
・ Despite backlash against reducing economic measures, steady demand is anticipated in the future given theunderlying strength of the automotive and semiconductor/electronic parts industries.

Copyright © Toyo Tanso Co., Ltd. All Rights Reserved71-4. Overview of Operations by Product and Segment(2) Notes and future outlook (2/2)
Image of net sales by application

Carbon products formechanical applications

Carbon products forelectrical applications

Three major products

Compound materials and other products

Carbon products for general industries

Application

FY10/5
Q3, Q4

FY11/5
Q1, Q2

FY11/5
Q3, Q4
Forecast

Notes and future outlook

Products for generalindustries

・ In the domestic market, the recovery trend for mainstay bearings and seals continued thanks to the positive effect of economic
measures and the bounce back of pumps and air conditioners.
・ Overseas demand is finally picking up and showing positive growth, with successes in cultivating new customers and increased sales,
as a result of recovery in the energy and infrastructure industries.

Products fortransport machinery・ Pantograph sliders remain unaffected by economic conditions, and continue to enjoy steady demand. We continue to promote a
pending overseas advancement.

Products for small
motors・ Given the recovery of the global economy, demand has increased since the last six months of the previous fiscal year, mainly in thecore Chinese market. Overseas sales account for approximately 80% of net sales and are gradually increasing, although there has beensome losses caused by the strong yen. Sequential facility expansions are also being planned in China.
・ Although there were some adjustments in the market for vacuum cleaner applications in China from the second half of the year, steady
growth over the medium to long-term is expected.

Industrial andautomotive products,
etc.

・ Products for industrial uses emerged from their slump and are steadily recovering, but sales remain small. Demand for automobile
products such as fuel pumps, etc. slumped during the second half of the year, as a result of the end of the eco car subsidy program.

SiC coated graphite
products

・ Compound semiconductor products continued to perform well, supported by the strong growth of LED-related products, mainly LCD
backlight applications. In addition to expansion in South Korea, Taiwan and China, the belated increase of domestic demand has also
contributed to solid performance. Overheated demand is expected in the near-term, and it will slow down due to an adjustment period
for orders from some customers, mainly in South Korea. However, this adjustment is expected to end in the second half of the fiscal
year.
・ Semiconductor-related products (for Si-Epi, etc.) have fully recovered. On the whole, sales in the first half of the year increased
approximately 60% year-on-year, and by approximately 20% when compared with the second half of the previous fiscal year. We arestrengthening our supply system by considerably expanding facilities in our production bases in Japan and the United States. We aim
to secure an advantage over our competition by increasing our competitive power in integrated manufacturing, from material
development to processing and coating.

C/C composite
products

・ As major customers have finished making inventory adjustments, orders have gradually recovered for semiconductor applications(C/C crucibles for the manufacture of 300 mm wafers). Clients are beginning to increase, and solid trends are expected in the future.
・ The increase in sales of solar cell-related products continues since the previous Q4. Due to a concentration of new projects and a spot
delivery related to nuclear fusion reactors for which orders were already received for the 2Q, sales continued to grow on a large scale.
・ On the whole, sales in the first half of the year increased over 300% year-on-year, and by approximately 40% when compared with thesecond half of the previous fiscal year. Even though the concentration of projects may slow down during the second half of the year, it
is expected that growth will continue again from the next fiscal year.

Graphite sheets

・ Recovery centering on our mainstay products for automobiles and semiconductors continues. Domestic demand for automobile
products has slumped due in part to the end of the eco car subsidy program, but positive results overseas have compensated for this.
The market is expected to remain solid in the future.

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81-5. Net Sales by region

Net Sales Trend

Overseas sales continued to be high (57.9%). In particular, Asia has expanded and constituted 40% of overall sales.
(Unit: Yen, millions)
Percentage
Distribution

20,00018,00017,372

18,413

17,979Japan

17,15916,000Demand recovered for all applications. Highvalue-added products and new large-scale
projects also contributed.

15,2787,774

14,0008,627

7,759
12,994

8,300

Asia

12,646

12,000

6,843
5,651

10,0005,448Europe
6,253
4,855

4,138

Recovery focused on solar cell products
against the recovery of European economies.

5,473
4,544

North America

4,000
2,093

2,064

2,021

0

1,657
139

1,666
115

1,675
255

1,539
1,620
43

1,401

1,657

1,675

1,170
81

1,206
98

1,380
119

FY08/5

FY08/5

FY09/5

FY09/5

FY10/5

FY10/5

FY11/5

Q1 + Q2
cumulative

Q3 + Q4
cumulative

Q1 + Q2
cumulative

Q3 + Q4
cumulative

Q1 + Q2
cumulative

Q3 + Q4
cumulative

Q1 + Q2
cumulative

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7,479

5,011

2,000

(40.6%)

There was drastic growth for solar cell andcompound semiconductor products. Brushes
also fared well.

8,000
6,000

(42.1%)(7.5%)

There has been a bottoming-out for mainly
semiconductors and solar cells. However, thehigh yen has had a negative effect.

Other regions(0.6%)
9

2-1. Earnings Forecast for the Fiscal Year Ending May 31, 2011
(Unit: Yen, millions)

FY10/5

FY11/5
Forecast

Change%increaseNet
Net salessales

27,92435,000

7,075

25.3%

OperatingOperatingprofitprofit

2,253

5,000

2,746

121.9%

Ratio of operating
profit to net sales

8.1%

14.3%

Recurring
Recurringprofitprofit

2,070

4,800

2,729

131.9%

Ratio of recurring
profit to net sales

7.4%

13.7%

Net
Net income
income

1,442

3,300

Net
Net income
incomeperper shareshare

69.56 yen

159.16 yen

Exchange
Exchangerate
rate

92.0 yen/$
129.3 yen/€

85.5 yen/$111.6 yen/€
80 yen/$110 yen/€

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1,857

128.8%

Notes
・Performance was solid for all applications,particularly for solar cells and other productsin the environment and energy sector. By
region, the emerging countries and Asia
including China and South Korea willcontinue to lead the trend.
・ However, the market for LED applications
may have overheated and some orders could
enter a temporary adjustment period. There
were many large-scale projects that led tosudden expansion concentrated in the firsthalf of the fiscal year, and it is expected thatthe market, including C/C composite
products, will become more spread out
during the second half.
・ Based on the above factors and taking into
consideration losses caused by the high yen,
we estimate full-year net sales of 35 billion
yen (up 25.3% year-on-year).

・Factoring in the impact of the high yen andincreased depreciation costs, we estimate an
operating profit of 5 billion yen (up 121.9%
year-on-year) and a recurring profit of 4.8
billion yen (up 131.9% year-on-year).
102-2. Future Investment(Capital Investment, Depreciation Cost, R&D Cost)
Large-scale investments are completed. We are focusing on investments at ordinary levels such as
developing high-value-added products and research and development. Depreciation costs remain at a highlevel as a result of large-scale investments made during the previous year.
(Unit: Yen, millions)(Unit: Yen, millions)

6,000

4,255
4,000
2,166

2,000

10,141

1,100

1,014

1,000

1,018

R&D cost (right axis)

900
731

1,392
(Q2 cumulative)

0

1,200

1,130

941

1,300

649

FY06/5
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800
R&D cost

8,000

1,192

Depreciation cost(left axis)

10,000Capital investment (left axis)

・ Depreciation cost
Capital investment

12,000

700
5,484

5,437

5,113

5,223 5,169

4,300

500

3,753

3,255

3,291
2,755
2,091

1,709

(Q2 cumulative)(Q2 cumulative)

746

FY07/5400(Q2 cumulative)

1,892

300

1,561
(Q2 cumulative)

1,276

600

2,372
2,372
1,615

1,300

1,300
(Q2
cumulative)

200
100
0

FY08/5

FY09/5

FY10/5

FY11/5(Forecast)11

2-3. Return of Profits to Shareholders Dividend Trend
We plan to increase dividends this year, keeping in mind the balance with reinvestment for future growth.
Payout ratio

Dividends
35 yen(33)

40%

Dividends per share(30)

Dividends per share(Figure taking theshare split into account)

30 yen35%

28.8%

Consolidated payout ratio

25 yen(30)(22.5)

22
20

20 yen

30%
25%

20

20%

15

15 yen12
10 yen

15%

10

16.2%

13.8%

5 yen

5%

6.1%
4.1%
0 yen

FY06/5

3.6%
FY07/50%
FY08/5

FY09/5*A 3-for-2 stock split was conducted on June 1, 2007
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10%

FY10/5

FY11/5(Forecast)122-4. Key Performance Indicator Trends

25%
22.7%

22.6%
Recurring profit ratio

20%

19.5%

ROE
ROA

14.5%

15%
12.4%

11.9%

8.9%

9.1%

11.3%
10%

13.7 %

7.4%

7.1%
5.5%
5%
4.4%

3.0%
2.4%

0%
FY06/5

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

FY07/5

FY08/5

FY09/5

FY10/5

FY11/5(Forecast)13

3. The Expanding Asian Market (1/2)

1. Signs of growth (Net sales trend / Breakdown)
Trends in Asian sales

Growth trends by region(Unit: Yen, millions)

20,000400

China
South Korea, Taiwan, etc.
In parentheses: Ratio of Asian sales to total sales

14,958(40.6%)

15,0009,867(28.6%)

10,000

5,000

4,970
(19.5%)

7,146(22.8%)

2,758

3,017

7,634

7,000

FY09/5

FY10/5South Korea and Taiwan
Other Asian countries

300

Japan

4,914

200
10,044

6,846

100

4,641

0
FY06/5

10,017(35.9%)

2,505

1,790
3,180

3,021

10,392(33.6%)

China

FY07/566

FY08/5

FY11/5(Forecast)*Sales for FY11/5 are calculated as two times actual figures for the 2nd quarter.

0

FY06/5

FY07/5

FY08/5

FY09/5

FY10/5

FY11/5(Forecast)*Figures calculated with figures for FY06/5 as 100

1. In the past five years, Asian sales figures have increased rapidly, expanding by approximately threefold.
The presence of Asia is also increasing in total sales, with the percentage represented by Asian sales risingfrom 20% to 41%.
2. Within the Asian market, sales in China and South Korea have increased by more than threefold, raising
the total. Sales in China are significantly increasing their contribution, moving towards 10 billion yen andincreasing as a percentage of total sales from 12% to 27%.
3. By application, sales of solar cell and compound semiconductor products expanded significantly,
increasing several-fold. These two products represented more than half of total sales in Asia. Brushes also
increased steadily.
4. Sales figures were led particularly by sales of solar cell products in China and compound semiconductor
products in South Korea. Sales for these products are moving towards representing half of total sales forthe respective countries.
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14

3. The Expanding Asian Market (2/2)
2. Advancement into global markets and recent topics
KTT (South Korea)

JTT (China)

Sep 2006 / 100%Apr 2005 / 55%■●

Sep 2003 / 100%JTT

YTT (China)▲●● Apr 2000 / 45%

STI (China)

STT (China)
Aug 1994 / 100%●

TTI (India)
Apr 2011 (plan) / 100%

TTTh (Thailand)

TTT (Taiwan)

Mar 2008 / 49%

Nov 1991 / 55%●■

TTS (Singapore)Aug 2010 / 100%STT

1. Our movement into Taiwan in 1991 has led to an
expansion to nine Asian bases today (including
planned bases).
2. We led the world in establishing STT in China in
1994. Following this, we also established YTT,STI and JTT. The annual sales of STT, ourcentral base, have grown to exceed five billionyen.
3. We are also focusing on areas of Asia other thanthe Chinese zone. From 2006, we establishedbases in South Korea, Thailand and Singapore,
and we have now decided to advance into theIndian market.
4. We are expanding all of our Asian bases. We
moved STT to a newly built plant last year (on16-acre grounds), and we are looking towards
further expansion.

■

3. Future expansion strategy
Company name (Abbreviation)
Year of establishment or advancement into local market /Ratio of shares held in the Group(●Production / marketing base
■Marketing base ▲Production base)

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1. Responding to further expansion in demand, we are planning to enhance thecapacity of each of our Asian bases.
2. We will enhance cooperation between each of our bases in the Asian region, andwork to expand our operations in the region.
3. We are examining the potential for providing our sales bases with production(processing) functions at an early stage.
4. We are also considering transferring some of our development functions (brushdevelopment in China, etc.).
5. We are looking at expanding into high-value-added products.
6. We are also conducting studies concerning advancement into new regions.
15

(Reference 1) Balance Sheet for the First Half of the Fiscal Year Ending May 31, 2011

(Unit: Yen, millions)

FY09/11

Total
Total assets
assets59,624

FY10/561,786

FY10/1161,894Trade
Trade notes
notes and
andaccounts
accounts receivable
receivable

8,519

10,656

12,214Inventory
Inventory

10,28910,91011,339Tangible
Tangible fixed
fixed assets
assets25,80728,29026,979Total
Total liabilities
liabilities andandnet
net assets
assets59,62461,786

61,894

Interest-bearing
Interest-bearing debt
debt

1,911

2,113

2,850

CapitalCapital

7,692

7,692

7,692

Net
Net assets
assets47,726

48,96049,711EquityEquity ratio
ratio

78.2%

77.4%

78.5%

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Notes・Increase of 1,558 million
yen from the end of
FY10/5 as a result of
increased sales.

・Increase of 429 million
yen from the end of
FY10/5, as a result of thesystematic accumulationof intermediate stock.

16

(Reference 2) Statement of Cash Flows for the First Half of the Fiscal Year Ending May 31, 2011

(Unit: Yen, millions)

FY10/5First Half

FY11/5First Half

Cash and cash equivalents at
the end of the period

4,678

5,745

Changes in cash and cash
equivalents(1,734)(56)

Cash and cash equivalents atthe beginning of the period

6,412

5,802

1,703

3,702

CF from operating
activities

Notes

 Increased due to increased

CF from investing
activities(3,349)(3,915)profit and an increase indepreciation costs caused by
the capital investments fromthe previous fiscal year.

CF from financing
activities

48

308

 Decreased due to increase in

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receivables balance fromthe recovery in sales.

17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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18