Japanese graphite electrodes (GE) manufacturer, Tokai Carbon has recently released its first quarter results (Q1) for CY20 and the key highlights of the same are as below:
*Tokai’s GE sales volume plunged by 26% y-o-y from 15,423 tonne in Q1 2019 to 11,460 tonne in Q1 2020. Whereas the company’s sales plunged by 58% y-o-y in Q1 2020.
*This decline in sales volume and sales can be attributed to the slowdown in steel production and de-stocking of graphite electrodes.
*The company has however mentioned that there was no material impact of enlarging COVID-19 infection to its Q1 results as Q1 sales was 44% of its 1st Half guidance (120.1 billion yen) and Q1 operating income stood at 64.3% of its 1st Half guidance (10.5 billion yen).
*As a response to the pandemic, the company has decided to minimize the capital expenditures, implement thorough cost reduction, reduce inventory to generate cash and secure higher financial liquidity.
*In order to seize new growth opportunities, it has signed the put option agreement relating to a securities purchase agreement acquiring 100% shares in Carbone Savoie International SAS, the holding company of a French manufacture of carbon and graphite products Carbone Savoie SAS (dated April 10 2020).
*The company had earlier forecasted net sales of 19,640 million yen in Q2 2020, 34,800 million yen in H2 2020, and 65,900 million yen for full year from its electrodes segment. Now these estimates do not include the impact of COVID-19.
*Tokai’s sales forecasts for 2020 (even without COVID-19 impact) are already down against company’s total GE sales of 91,317 million yen in 2019. Now when the pandemic impact will be considered, the company’s forecats for 2020 would get go down further in 2020.
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