TOKAI CARBON CO.,LTD.

Business Details

The largest segment within the Tokai Carbon Group, manufacturing and selling Carbon Black for Rubber Products, Carbon Black for Black Pigments, and Carbon Black for Conductive Applications. Primary customers are tire manufacturers, and the segment supplies globally through domestic (Tokai Carbon head office) and overseas production sites (Cancarb Limited, THAI TOKAI CARBON PRODUCT COMPANY LIMITED, Thai Tokai Carbon Product Rojana Co., Ltd., etc.). This core business accounted for approximately 45.5% of consolidated revenue in FY2025 (ending December 2025), and the company is currently advancing investment in relocating and expanding production sites in Thailand.

Recent Overview

Tire manufacturer production adjustments and increased depreciation from the new Thailand plant led to declines in both revenue and profit year on year.

In Q1 FY2026 (ending December 2026) (January to March 2026), the Carbon Black Business posted revenue of ¥38,730 million (down 0.5% year on year) and segment operating profit of ¥3,235 million (down 28.4% year on year). Although the newly consolidated Thailand subsidiary (consolidated from Q4 FY2025) contributed to results, this was insufficient to offset the decline in sales volume due to tire manufacturers' production adjustments and the increase in depreciation associated with the operation of the new Thailand plant, both of which weighed on profit. The recycling project to regenerate carbon black from used tires and other materials, as well as the Thailand production site relocation project, continue to be advanced.

Key Products

Growth Drivers

• Capacity expansion through the Thailand production site expansion/relocation project (including the acquisition of a Thailand facility from Bridgestone)
• Advancement of a recycling project to regenerate carbon black from used tires and other materials (addressing sustainable demand)
• Medium- to long-term expansion of demand for Carbon Black for Conductive Applications in the EV and battery storage markets
• Continued medium- to long-term capital investment policy for the Carbon Black Business under Vision 2030 (targets of ¥500 billion in revenue, 20% EBITDA margin, and 12% ROIC)

Risks

• Risk of production adjustments and demand fluctuations at major customer tire manufacturers (materialized in Q1 FY2026, ending December 2026)
• Risk of profit pressure from increased depreciation associated with the operation of the new Thailand plant
• Competitive pressure on the U.S. subsidiary from increasing low-cost tire imports from Asia
• Risk of decline in carbon black selling prices (linked to raw material prices and market conditions)
• Construction and operational risks and foreign exchange risk associated with the relocation and expansion of Thailand production sites
• Impact on demand and cost structure from shifts in U.S. tariff and trade policy
• Uncertainty over the global economic outlook amid deteriorating Japan-China relations and heightened tensions in the Middle East