Results for the Fiscal Year Ended May 31, 2011

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

Results for the Fiscal Year Ended May 31, 2011
Part 1 Summary of Consolidated Results

Masao Nakahara, Senior Managing Director

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

2Part 1 1. Key Points of Fiscal 2011 Financial Results

Point 1
Sales rose 30% from the previous year thanks to our success in capturing the brisk demand for products
for solar cell, LED and other environmental and energy applications and our proactive efforts in adding
high value to our products.

Point ２
Our overseas sales ratio reached 60% (ratio of sales to Asia: 42%) as we met increased demand from
China, South Korea and other emerging countries.

Point ３
Recurring profit recovered rapidly, posting a 2.7-fold year-on-year upsurge, weathering the impact of the
sharp appreciation of the yen and steep rise in depreciation costs stemming from our active investment.

Point 4
Our focus on expanding sales of high value-added products, especially coating and C/C composite products,
and our success in acquiring new applications and orders along with price hikes in the latter half of the
fiscal year contributed to our increased profit.

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

3Part 1 2. Results for the Fiscal Year Ended May 31, 2011
(Unit: Yen, millions)

FY10/5

FY11/5

Change% increase

Net sales

27,92437,577

9,632

34.5%

Operating profit

2,253

5,868

3,615

160.4%(Ratio of operating
profit to net sales)

8.1%

15.6%

Recurring profit

2,070

5,614

3,544

171.2%(Ratio of recurring
profit to net sales)

7.4%

14.9%

Net income

1,442

3,699

Net income
per share

69.56 yen

178.43 yen

Exchange rate

92.0 yen/$
129.3 yen/€
13.6 yen/ CNY

84.0 yen/$
112.9 yen/€
12.7 yen/ CNY

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

2,257

156.5%

Notes
1. Net sales
Net sales surged to a record high of
37.5 billion-yen, withstanding thelosses incurred from a stronger yen.
By application, net sales were
driven by demand for products,
particularly for the production ofsolar cells as well as that forcompound semiconductors,
primarily for LEDs. By region, sales
in Asia, chiefly China and South
Korea, rose significantly.
2. Recurring profit and operating
profitWe recorded a recurring profit of¥5.6 billion, a 2.7-fold upsurge fromthe previous year, despite astronger yen, high depreciation
costs and some negative impact
from the earthquake disaster at theend of the fiscal year.
In addition to the rise in marginal
profit from increased net sales,
expanded sales of high value-added
products, such as coating and C/Ccomposite products, and price hikes
contributed to the increased profit.
4

Part 1 3. Factors Affecting Changes in Recurring Profit(Fiscal 2010 vs. Fiscal 2011)
Recurring profit rose sharply, buttressed by expanded sales, an improved product mix andprice hikes, which eclipsed the effects of increased depreciation costs and the strong yen.
(Unit: Yen, millions)
9,000
8,000
Product
structuredifferences
and pricerevisions

7,000
6,000

Change in
sales

5,000
4,000
RecurringprofitStreamlining
and differencein operating
rates

2,497

1,246
Change indepreciation
costs
volumes

1,059
The improved productivity
was chiefly due to theincreased operations

FY 10/5

3,000

The main reason is theincreased depreciation costs
for our new isotropic graphite
material plant.

The contribution to profit by our
improved product mix resulting fromexpanded sales of high value-added
products is the same as that from our
price hikes.

2,902

953
Impact ofexchangerates

141
Change inrawmaterials
prices574
Differencein othercosts

FY11 /5

Recurringprofit

2,000
1,000

2,070

5,614

0
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5Part 1 4. Net Sales by Product and Segment
Net sales were driven by special graphite products (for electronics applications)and compound materials(comparison
withprevious
year)(comparison
withpreviousyear)(Unit: Yen, millions)
40,00039,000Special Graphite Products[Electronics Applications](+ 66.2%)

37,557
Special Graphite Products

34,53135,00031,381[General Industries Applications]30,974

11,731

8,098

30,00027,924

6,261

25,492
17,96815,916
7,783

20,000

2,086

2,728

1,008

2,991

2,682

893

6,190

1,776

10,00014,184

1,769

1,871

2,735

936
2,269

4,081

3,931

4,082

5,261

0

7,924

5,939
7,295

2,704
4,061

[Carbon Products for MechanicalApplications]

Carbon Products for GeneralIndustries[Carbon Products for Electrical
Applications]Compound Materials andOther Products[Three Major Products](+ 20.2%)(+ 3.8%)(+ 42.9%)

9,949

5,802

525

1,469
1,047

1,355
676

FY06/5

FY07/5

FY08/5

FY09/5Compound Materials andOther Products[Other products](+ 58.9%)

Related goods(+ 38.9%)

11,161

9,734

6,711

2,031
969

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862

8,290

6,454

5,524
7,555

(- 4.7%)

4,598

4,257

3,811

5,000

6,878

7,238

16,1846,460

13,807
7,227

15,0008,100

Carbon Products for GeneralIndustries

7,057

4,804

Special Graphite Products[Others]

20,453
19,863

8,715

25,00012,711(+ 16.9%)

908
827

1,443
1,149

1,212
619

FY10/5

FY11/5

FY12/05(Forecast)

6

Part 1 4. Net Sales by Product and Segment (half-year basis)(Unit: Yen, millions)
20,00018,00019,144
17,97916,00014,00012,994

9,451

3,666

3,793

6,000

6,733

3,220

2,803

2,377

399
1,233

448
1,041

1,704

1,915

487
1,228

2,000

2,191

3,656

3,096 2,544

551

2,761

2,349
411

3,950

3,453
496

450

226

456

371

FY09/5
Q1 + Q2
cumulative

FY09/5Q3 + Q4
cumulative

FY10/5
Q1 + Q2
cumulative

FY10/5Q3 + Q4
cumulative

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

Carbon Products for GeneralIndustries[Carbon Products for MechanicalApplications]

483
1,425
1,890

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

4,382

803

0

409
1,303

[General Industries Applications]

Special Graphite Products[Others]

2,016

3,395
4,198

10,630

9,233

3,581
3,387

2,666

6,490

5,241

7,712

6,472

609
1,502

4,000

3,836

12,646

12,0008,000

Special Graphite Products

15,2785,048

10,000Special Graphite Products[Electronics Applications]18,413

3,908
4,662

5,072

690

753

612

536

FY11/5
Q1 + Q2
cumulative

FY11/5Q3 + Q4
cumulative

Compound Materials andOther Products[Other products]

Related goods

7Part 1 5. Earnings Forecast for the Fiscal Year Ending May 31, 2012
（Unit: Yen, millions)

FY11/5

FY12/5

ChangeNotes% increase
1. Net sales

Net sales

37,55739,000

1,442

3.8%

Operating Profit

5,868

5,300

(568)

(9.7%)(Ratio of operating
profit to net sales)

15.6%

13.6%

Recurring profit

5,614

5,300

(Ratio of recurring
profit to net sales)

14.9%

13.6%

Net income

3,699

3,400

Net income
per share

178.43 yen

163.98 yen

Exchange rate

84.0 yen/$
112.9 yen/€
12.7 yen/ CNY

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

80 yen/$110 yen/€12.3 yen/ CNY

(314)

(299)

(5.6%)(8.1%)

Demand for products, particularly forenvironmental and energy applications
such as solar cells and LEDs, continued to
expand primarily in Asia. We assume thatthe environment surrounding carbon will
be positive. We forecast increased sales inspite of prospective losses from a stronger
yen.
That said, we expect demand for products
for solar cell manufacturing to undergo atemporary adjustment period in our core
Chinese market in the latter half of the
fiscal year. Expanded sales of high valueadded products, such as compoundmaterials, are expected to offset the impact
of such an adjustment.
2. Operating Profit/Recurring profit
We decided to invest in efforts tostrengthen our capabilities and develop
high value-added products as well as
research and development for future
growth. Although the burden of advanced
investment, depreciation costs and a strong
yen will weigh down the company, we will
strive to make up for it with expanded
sales of high value-added products andprice hikes.

8Part 1 6. Factors Affecting Changes in Recurring Profit(Fiscal 2010 vs. Fiscal 2011)
We project only a slight decrease in recurring profit as the improved product mix and price hikes cushion
the impact of the increased depreciation costs and advance expenditures as well as the strong yen.

(Unit: 100 mil. Yen)
80
2

70
13
60

56

Change insales
volumes

50
40

FY
11/05

30
20

2

RecurringprofitProduct
structuredifferences
and pricerevisionsStreamlining
andChange indifference
depreciationin operating
costs
rates

The contribution to profit by our
improved product mix resulting
from expanded sales of our coatingproducts is forecast to be the same asthat of our price hikes.

Primarily personnel
costs, increased R&D
costs

6

4
Impact ofexchangerates

The chief factor is the projected risein depreciation costs stemming fromincreased R&D investment(including the one-time NEDOrelated depreciation cost).

3
Change inrawmaterials
prices7
Costs
Changes ininventories
Other

53

FY
12/05
Forcast
Recurringprofit100

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9Results for the Fiscal Year Ended May 31, 2011
Part 2 Future management strategy-As a front-runner in high-functional carbon -Naotaka Kondo, President

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

10Part 2 1. Earnings trend
Sales and recurring profit recovered rapidly. Back on a growth track（Unit: Yen, millions)
Net sales

Recurring profit

45,00012,00040,00010,00034,53135,00030,974

31,381
7,795

30,0008,000

27,924

7,123

25,49225,00039,00037,55723,003
5,614
4,961

20,00015,000

4,000

4,100
3,754

(Q2 cumulative)

3,369

2,280

(Q2 cumulative)(Q2 cumulative)(Q2 cumulative)(Q2 cumulative)

12,646
2,070

5,000

19,00018,413(Q2 cumulative)

12,227

6,000

4,483

14,866

3,724

10,00017,97917,372

5,300

2,796

2,500 2,000(Q2 cumulative)

661

0
FY05/5

FY06/5

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FY07/5

FY08/5

FY09/5

FY10/50
FY11/5

FY12/5(Forecast)11

Part 2 2. Key Performance Indicator Trends
Recurring profit ratio recovered to the 15% level.
Considering the possibility of ROE reaching the double-digit level.
25%

20%

22.7%

ROA
ROE
Recurring profit ratio

22.6%

19.5%

14.9%

14.5%

15%
12.4%

11.9%

8.9%

9.1%

11.3%
10%

ｃ

7.1%

13.6%

7.4%

7.5%

3.0%

5.8%

5.5%
5%
4.4%
2.4%
0%
FY06/5
Copyright © Toyo Tanso Co., Ltd. All Rights Reserved

FY07/5

FY08/5

FY09/5

FY10/5

FY11/5

FY12/5(Forecast)
12

Part 2 3. Summary of Results for the Fiscal Year Ended May 31, 2011 andOutlook for Results for the Fiscal Year Ending May 31, 2012

Summary of Results for the Fiscal Year Ended May 31, 2011
➢Fortunately, our results were virtually unscathed by either direct or indirect impactsof the earthquake disaster.
➢We achieved a sharp increase in sales and profit largely due to expanded sales of products
for solar cell, LED and other environmental and energy applications.
➢Particularly, increased sales of high value-added products (coating and C/C composite products, etc.)
and price hikes contributed to our favorable results.
➢Globalization centering on Asia has accelerated.

Outlook for Results for the Fiscal Year Ending May 31, 2012

➢We assume that the indirect effect of the disaster, albeit uncertain, will probably be slight.
In fact, it may even have a positive aspect.

➢Demand for environmental and energy applications remains brisk. However, the somewhat
overheated demand for solar cells might undergo an adjustment in the latter half of the fiscal year.

➢We will continue to focus on the development of high value-added products and price hikes.
➢We will push forward efforts to invest actively (laying the groundwork for and expanding
and upgrading production and R&D systems) for the future.

➢Although we are making steady progress with our high-temperature gas reactor project in China,
it won't get fully under way until after the next fiscal year.
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13Part 2 4. Current Priority Policies

To expand actively and invest strategically in terms of both quality and quantity

To invest primarily in R&D for future growth

To accelerate our global expansion

To promote the “improvement/innovation movement” aimed at improving productivity,
which is an eternal theme

To balance our shareholder returns of profits
with our investments for the future as a growing company

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14Part 2 4. Current Priority Policies
To expand actively and invest strategically in terms of both quality and quantity-Trends in capital investment, depreciation and R&D costsInvestment in the fiscal year ended May 31, 2011 was at a low level
level due partly to the postponement of some investments.
To resume active investment in R&D and other areas for future growth
growth(Unit: Yen, millions)(Unit: Yen, millions)

1,770

12,0001,800

Capital investment

10,141

Depreciation

10,00010,3891,600

R&D costs

1,400
1,130
941

1,000

1,018

6,000

4,000

731

5,484

5,437

3,291

3,255

5,586

5,113

4,300

4,255

4,999

2,000

2,091

1,392
（Q2
cumulative）

0

1,709
（Q2
cumulative）

649

746

FY06/5

FY07/5

Copyright © Toyo Tanso Co., Ltd. All Rights Reserved（Q2
cumulative）

1,276

2,372

cumulative）（Q2
cumulative）

1,561

600

3,259
（Q2

1,892

800

3,753

2,755
2,166

1,200

1,047

1,014

R&D costs

Capital investment/ depreciation

8,000

400

（Q2
cumulative）

200

1,615
1,300

0
FY08/5

FY09/5

FY10/5

FY11/5

FY12/5(Forecast)

15

Part 2 4. Current Priority Policies
To expand actively and invest strategically in terms of both quality and quantity-Primary strategic capital investmentsIsotropic graphite

C/C composite

Coating

To expand new plant

Construction of new plant

Expansion and upgradingof production system

Production
scale“Increase by roughly 20%” from current
level“Roughly double” that of the current level

1st period: “roughly triple the size” ofthat in 2009
2nd period: an additional increase of“roughly 30%”

OperatingperiodFrom the beginning of fiscal 2013
(Expected to fully contribute to sales fromfiscal 2013 2Q)

From the summer of 2012
to the summer of 2013
(phased augmentation)

1st period: already running in spring 2011
2nd period: spring 2012

To enlarge new plant in Takuma(3rd plant)

To build a new dedicated, integrated planton an adjacent vacant lot

To augment manufacturing processes inJapan (Ohnohara plant) and the U.S.

Scale of investment:
Approx. 5 billion yen

Scale of investment:
Approx. 3 billion yen

Scale of investment:
Approx. 2 billion yen

We aim to further differentiate our products
and improve our competitiveness with this newplant, which is able to handle the
manufacturing of primarily large and/or highpurity materials.

Facility that is able to handle the manufacturing ofdifferentiated, high value-added products including
ultra-large materials (more than 2 meters indiameter). Equipped with an integrated production
line that is designed to take into consideration
automation as well as material handling.

Outline of facilities

Amount ofinvestmentincl. buildings, incidental
facilities

Features andstrengths

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

To incorporate cutting-edge manufacturing
processes and operating and management
know-how and further reinforce thestrengths of the integrated process frommaterial development, processing andcoating through inspection.
16

Part 2 4. Current Priority Policies
To invest primarily in R&D for future growth-To expand and upgrade R&D infrastructure and system for further growthTo strengthen basic development capabilities☆By introducing state-of-the art manufacturing research equipment
1. By introducing cutting-edge equipment to create originaltechnologies and products
2. By aiming to vastly differentiate our products from those of thecompetition and speed up the augmentation of our basic researchdevelopment capabilities➣To invest a total amount of about 1 billion yen in plantand equipment

To focus investment on growth areas☆To devote our efforts to environmental and energy applications
1. By focusing our efforts on developing compound technologies andproducts such as those upgrading surface modification techniques anddeveloping a class of porous carbon
2. By establishing the Green Innovation Development Department
3. By having our development projects adopted by the New Energy andIndustrial Technology Development Organization’s (NEDO) Innovation
Promotion Program➣To promote relevant investment totaling about 500
million yen
To increase and develop human resources and strengthen our systemsystem☆To build up a sturdy development system
1. By significantly increasing the number of personnel by promoting recruitment of new, primarily
young, staff
2. By laying the groundwork for an organizational system that strives for effective and efficientdevelopment
3. By strengthening the joint development system in alliance with universities, public organizations
and customers➣ To strategically increase research and development expenses

Tostrengthen
strengthenexisting
existingTocompetitivenesscompetitiveness
Copyright © Toyo Tanso Co., Ltd. All Rights Reserved

Pillarsof
ofour
ouroperations
operationsgoing
going
Pillars
forwardforward17

Part 2 4. Current Priority Policies
To invest primarily in R&D for future growth-Seeds of products under development (examples)Products underdevelopment

Porous carbon –porosity control carbon
powder

Metallized coating –carbonized metalcoated materials

CBC –new composite material
known as Carbon
Bonded Ceramic

MBC
new composite material
known as Metal
Bonded Ceramic

Features•Porous carbon powder that is
microporous and mesoporous•It is possible to control the poresize and surface area

•Coats arbitrarily shaped carbonsubstrates with carbonized metal•Prevents dust emissions while
sustaining the carbon's physicalproperties•CBC is a new carbon composite
material that has a special
microstructure•Lightweight, high-strength andflexible while having the features of
both•MBC is a new carbon composite
material that has a special
microstructure•The
world's
first
carboncomposite material that canundergo hot press processing

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

Phase/Progress

Targeted market

Design/manufacture
trial phase(Work sample/underevaluation by clients)

New applications
currently underconsideration

Design/manufacture
trial phase(Work sample/underevaluation by clients)

Basic research phase(Phase at which small
amounts are produced
on a trial basis)

Basic research phase(Phase at which small
amounts are produced
on a trial basis)

ImagesPhoto of external
appearance

TEM image

Photo of external
appearance

Cross-sectional view

Photo of organization

Examples of application

Submitted work
samples for jig
applications

Under consideration
mainly forspecial/highly
advanced medical andother applications

Seals, slidable
materials, heat sinks,
etc.

MBC’s extrusion
molding18

Part 2 4. Current Priority Policies
To accelerate our global expansion◆Overseas sales account for virtually 60% (59.5%) of net sales, with the presence of Asia (41.9%) expanding.
◆We have launched new sales operations in Singapore (August 2010) and India (March 2011).
◆The scale of the net sales of Shanghai Toyo Tanso Co., Ltd. (STT) has expanded to slightly less than ¥7 billion per annum.
We have moved STT to a newly built plant (on 16-acre grounds) in October 2010 as we look towards further expansion.
◆We are currently exploring new areas into which to advance in accordance with the philosophy of “local production for
local consumption" and "production in optimum locations.”

Sales trends by region
Percentage
distribution
in FY11/05(Unit: Yen, millions)

40,00037,55739,00034,53135,00031,38130,974
15,23025,49241.9％

Europe9.2％

NorthAmerica

7.5％

Other
regions

0.9％

13,426

16,313

12,291

13,94017,802

15,00010,000Asia

16,92725,00020,00040.5％

13,89527,92430,000Japan

15,719
7,146

9,867

10,392
10,017

4,970

5,000

3,337

0

2,928
315
FY06/5

3,826

4,158

3,561

3,864
229

3,324
254

3,295
298

3,058
2,376
180

FY07/5

FY08/5

FY09/5

FY10/5

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

3,464

3,443

2,819
323

3,707
149

FY11/5

FY12/5(Forecast)

19

Part 2 4. Current Priority Policies
To balance our shareholder returns of profits
with our investments for the future as a growing company－ Dividend Trend－
To continue to raise dividends while taking into account the balance between implementing such a hikeand reinvestment for future growth.
Dividend

Payout ratio（37.5）

40 yen40%

Dividends per share

35 yen30 yen（33）

Dividends per share(Figure taking the share
split into account)
Consolidated payout ratio

（30）

（30）
30%

28.8%
（22.5）

25 yen

35%

25
25%

22
20

20

20 yen20%

15
15 yen

15%

12

15.2%

16.2%

10
10 yen
5 yen
0 yen

10%

12.3%

5%

6.1%
4.1%

3.6%

FY06/5

FY07/50%

FY08/5

FY09/5*A 3-for-2 stock split was conducted on June 1, 2007
Copyright © Toyo Tanso Co., Ltd. All Rights Reserved

FY10/5

FY11/5

FY12/5(Forecast)20

(Supplementary material)
High hopes for nuclear application as we look toward the next generation
1. Dawn of the Era of HighHigh-temperature Gas Reactors
Characteristics of the highhigh-temperature gas reactor･ We received an exclusive order for graphite, which we are in the process ofmanufacturing, for the world's first commercial reactor (HTR-PM in China).
We expect to record the sale in 2012 or thereafter. (Scale of sales: Billions ofyen, roughly 1,500 t of graphite used)
・While light-water reactors presently dominate, expectations are risingworldwide for the next-generation of small, high-temperature gas reactors,
featuring increasing efficiency, economic potential, and safety.
・A number of projects are underway or have been proposed, not only in China,
but also in the United States (NGNP), South Korea, Kazakhstan, and elsewhere.
・The high-temperature gas reactor is also expected to lead the new energy cyclein the future if the environment for use as energy such as hydrogen and highheat is in place.
・We will actively make proposals for each project, calling on our strong trackrecord in the adoption and accumulation of data and expertise in Japan and
China.

(1)(1)HighHighthermal
thermalefficiency
efficiency
・
Thermalefficiency
efficiencyisisextremely
extremelyhighhighsince
sinceititcan
cantaketake・Thermalout
outheatheatofofaroundaround900ºC
900ºCusing
using helium
heliumgas.
gas.
(2)(2)Unique
Uniquesafety
safety・Thereactor
reactorcore
corewill
willnot
notmelt
meltevenevenininthe
theworst
worstcase
case
・The
as
graphite
is
used
as
the
structural
material
as graphite is used as the structural materialfor
forthethereactorreactorcore.
core.
・Does
notuseusecooling
coolingwater
water
・Doesnot・
Changesininthe
thetemperaturetemperatureininthe
thereactor
reactorcore
coreareare・Changes
moderate
moderateas
asthe
thethermal
thermalcapacity
capacityisislarge.
large.
(3)(3)Effective
Effectiveuse
useof
ofhighhighheatheat・Highheatheatcancanbe
beusedusedeffectively
effectivelyfor
forthethemanufacture
manufacture・Highofofhydrogenhydrogenand
andthetheliquefactionliquefactionand
andgasification
gasificationof
ofcoal
coalininaddition
additiontotopower
powergeneration.
generation.
(4)(4)High
Higheconomic
economicefficiency
efficiencythroughthroughdownsizing
downsizingand
andmodularization
modularizationRole of graphite
・ Graphite not only reduces the speed of high-speed neutrons but also has the characteristics

of a reflective material that confines radiation.
・ It is the best-suited and indeed only material for use as a structural material for reactor
cores, because it has a high degree of heat resistance, heat conductivity, corrosion
resistance and safety, among other features.

2. The ITER Plan: Creating the Sun on Earth・Currently in the process of delivering our C/C composite and graphite materials to remodel“Breakeven Plasma Test Facilities (JT-60SA Project)” etc. by the Japan Atomic Energy Agency
which supports the ITER project (Estimated total: 0.5 to 1 billion yen)・Our high-performance carbons, including isotropic graphite and C/C composite materials,
are expected to be adopted in not only the ITER plan, but will also be used in a broad arrayof major projects over the next 10 to 20 years, including projects (KSTAR of Korea) andprototype reactors in a number of countries that support the ITER plan and conduct
complementary research.
Copyright © Toyo Tanso Co., Ltd. All Rights Reserved

Test reactor “HTR-10” at Tsinghua University in China

International Thermonuclear Experimental Reactor (ITER)
・A large international project to “create the Sun on Earth” that aims to construct afusion experimental reactor by demonstrating the scientific and technologicalfeasibility of using fusion energy, said to be the ultimate energy, for peacefulpurposes・ The ITER is being constructed in Cadarache, France and is expected to becompleted in ten years. Seven countries and regions are involved: Japan, theEuropean Union, Russia, the United States, China, Korea and India.
・Japan leads the world in high-temperature plasma and fusion technologies andplays a central role in promoting and supporting the ITER plan.

21

Results for the Fiscal Year Ended May 31, 2011
Part 3 Supplementary Materials

Copyright © Toyo Tanso Co., Ltd. All Rights Reserved22Supplementary Material 1 Overview of Operations by Product and Segment

Notes and future outlook (1/2)
Image of net sales by application
FY11/5
FY11/5
FY12/5
Q1, Q2Q3, Q4
Forecast

Application

Notes and future outlook

Electronics applications
General industries applications
and others

Special graphite products

The uptrend is expected to

Products for solar cellmanufacturing

Products for single
crystal silicon
manufacturing

Products for EDM
electrode manufacturing

further accelerate in response to the growing demand for environmentally- friendly
and energy-saving products. Demand in Asia, including our core market China as well as South Korea andTaiwan, is expanding rapidly and sharply. Sales in Japan, Europe and North America also remain strong.
Net sales doubled in fiscal 2011 from the previous year and sales in the second half surged by more than 30%
that of the first half, indicating that sales, in the current period as well, are continuing to expand sharply. Our
major customers, namely China, South Korea and Taiwan, remain highly motivated to install solar cellmanufacturing equipment and thus have many plans for such installations.
Nevertheless, sales of some of these products may undergo an adjustment period in light of such factors as theincrease in solar cell inventories in China. We will avoid leaning too heavily on this application and focus on
selecting orders for outstanding customers and projects.
Despite entering into short-term adjustment periods, sales are on a medium-to-long term growth trajectory. We
will gain an edge by pushing forward with efforts, including differentiating our products from those of our peers,
to reinforce our competitiveness.

If anything, sales in fiscal 2011 4Q had risen, thanks to the growth of overseas sales and the trend toward building
up inventories and the fact that the earthquake disaster had left in effect only a minor impact.

Sales roughly rose by 20% during the full year in fiscal 2011 compared to the previous year. Despite the weaknessof the wafer market, the semiconductor market remained firm, buttressed by brisk sales of smart phones and othernew devices.

Regarding our core overseas markets, graphite demand continued to be strong in reaction to the favorable
performance of the automotive and consumer electronics industries stemming from demand from newly emerging
countries.

That said, the mold industry in the domestic market is in a severe state owing to the strong yen and other structuralproblems. The outlook, including the indirect impact of the Great East Japan Earthquake, bears watching.
Overseas and domestic demand is steadily recovering as a result of the turnaround of the economy and increased

Products forcontinuous casting andmetallurgy, etc.

infrastructure investments, particularly in emerging countries. Sales of components used inside furnaces were also
brisk.
Despite concerns over the indirect impact of the earthquake disaster in Japan, we anticipate strong demand overall,

given the firm performance of the automotive and semiconductor/electronic parts- related industries.

Copyright © Toyo Tanso Co., Ltd. All Rights Reserved23Supplementary Material 1

Overview of Operations by Product and Segment
Notes and future outlook (2/2)
Image of net sales by application

FY11/5
Q1, Q2

Carbon products formechanical applications

Carbon products forelectrical applications

Carbon products for general industries

Application

FY11/5
Q3, Q4

FY12/5
Forecast

Notes and future outlook

Products for generalindustries

In the domestic market, mainstay bearings, seals, etc. recovered as the performance of pumps and air conditioners
bounced back due partly to the impact of the economic stimulus measures. In addition, there has been an emergencein demand related to reconstruction assistance following the earthquake disaster.
Overseas demand is finally picking up and expanding partly as a result of successful efforts to cultivate newcustomers, thanks to the recovery in the energy and infrastructure industries.

Products fortransport machineryDemand for pantograph sliders, which are largely unaffected by economic conditions, remains steady. It should be
noted that our customers are moving to buy such products from multiple suppliers following the earthquake disaster.
Moreover, we are continuing to push forward with efforts to advance overseas.

Products for small
motorsIndustrial andautomotive products,
etc.

Although demand had already been recovering mainly in our core Chinese market since the previous fiscal year, it
has remained in an adjustment phase since the latter half of fiscal 2011 and price competition has intensified. Sales
have been sharply eroded by the strong yen given that overseas sales account for 80% of net sales.
Nevertheless, we forecast a gradual increase in sales, thanks to medium-to-long-term demand by newly emerging
countries. We will push forward efforts to strengthen our global cost competitiveness and development capabilities.
Products for industrial uses emerged from their slump and are steadily recovering, but sales remains small.
Demand for automobile use (fuel pumps, etc.) leveled off as overseas sales etc. offset concerns of a decline in linewith a reduction in domestic auto production.

SiC coated graphite
products

Three major products

Compound materials and other productsCompound semiconductor products grew sharply primarily during the first half of the fiscal year, buttressed by the strong growth

C/C composite
productsof LED-related products chiefly consisting of LCD backlights. Sales continued to be brisk, fueled partly by additional installations
especially in South Korea, Taiwan and China and the uptrend in the domestic market. Sales at the outset of the second half of the
fiscal year particularly to South Korea entered a correction phase due in part to a feeling that the market had overheated, but
returned to a recovery path at the end of the term.
Semiconductor-related products (for Si-Epi, etc.) have fully recovered. On the whole for all coating products, sales rose byapproximately 30% in the full year compared to the previous year. To meet the growing demand, we are significantly expanding
our production bases in both Japan and the United States. We aim to gain an edge over our rivals by increasing our competitive
power in integrated manufacturing, from material development to processing and coating.
Demand for large-scale crucibles for semiconductor manufacturing picked up owing partly to the completion of
inventory adjustments by major customers. Domestic and overseas sales are expanding in line with an increase in
the number of buyers.
Sales of solar cell-related products continued to be robust. Sales rose dramatically, bolstered by demand
stemming from some new projects and spot deliveries for products related to nuclear fusion reactors on an asneeded basis, etc.
On the whole, sales surged by roughly 80% in fiscal 2011 compared to the previous year. We forecast an increasein sales and have decided to build a new plant dedicated to the production of C/C composite products that will
double production capacity.
Primarily, our mainstay products for semiconductors and automobiles stayed on a recovery path and rose by approximately 20%

Graphite sheets

Copyright © Toyo Tanso Co., Ltd. All Rights Reservedin the full year compared to the preceding year. Sales temporarily stagnated, depressed by the termination of the eco-car subsidy
program in Japan and repercussions of the earthquake disaster. But the impact of such factors was offset by sales of products forsemiconductors. The strong upward trend is expected to continue going forward.

24

Supplementary Material 2

Balance Sheet for the Fiscal Year Ended May 31, 2011
(Unit: Yen, millions)

FY10/5

FY11/5

Total assets

61,786

65,191

Trade notes andaccounts receivable

10,656

13,047

Inventory

10,91012,454

Tangible fixed assets

28,29026,162

Total liabilities andnet assets

61,786

65,191

Interest-bearing debt

2,113

2,071

Capital

7,692

7,692

Net assets

48,96051,748Equity ratio

77.4%

77.5%

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

Notes
1. Trade notes and accounts receivable
Increase of 2,390 million yen from theend of FY10/05 owing to increased
sales.

2. Inventory
Increase of 1,544 million yen from theend of FY10/5, as a result of thesystematic accumulation of intermediatestock.

25

Supplementary Material 3

Statement of Cash Flows for the Fiscal Year Ended May 31, 2011

(Unit: Yen, millions)

FY10/5

FY11/5

Cash and cash
equivalents at the end of
the period

5,802

7,090

Changes in cash andcash equivalents

(609)

1,288

Cash and cash
equivalents at the
beginning of the period

6,412

5,802

CF from operating
activities

3,377

7,301

CF from investing
activities(4,103)(5,380)

CF from financing
activities

252

(550)

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Notes

1. CF from operating activities
Rose due to increased profit.
2. CF from investing activities
Expenditures for the acquisitionof tangible and intangible assets
decreased while the cash inflow
from proceeds from time deposits
decreased. This resulted in an
increase in cash outflow frominvesting activities.

26

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

Copyright © Toyo Tanso Co., Ltd. All Rights Reserved27