Amid all the negative sentiments that have encompassed the global graphite electrodes market over last six months (due to change in market dynamics originating from China), the Japanese GE giant, Tokai Carbon has managed to post strong numbers in Q1 (Jan-Mar) 2019.
According to the Q1 results, the company’s net sales have been recorded at 68.8 billion yen (USD 627 million) thus registering a surge of 65.5% y-o-y basis against 41.6 billion yen (USD 379 million) in Q1 2018.
In terms of profits, Tokai Carbon’s operating income has been recorded at 21.2 billion yen (USD 193 million) in Q1 CY19 against 12.6 billion yen (USD 114 million) in the corresponding quarter of the previous year.
GE sales achieve a significant surge
The company has three products in its portfolio, Graphite electrodes, Carbon black and Fine carbon with GE having the highest share in the total sales. Although the growth in Q1 2019 numbers has been attributed to increase in the sales of all the three segments, the Carbon black’s sales have surged significantly.
In Q1 CY19, the GE sales have been recorded at 27.5 billion yen (USD 251 million) registering an increase of 63%, 10.6 billion yen (USD 95.8 million) against Q1 CY18, Carbon black’s sales surged by 13 billion yen (USD 119 million) in Q1 CY19 at 27.5 billion ( USD 251 million) against 14.3 billion yen (USD 128 million) in Q1 CY18. While Carbon black sales moved up to 8.30 billion yen (USD 75 million) in Q1 CY19 against 3.89 billion yen (USD 35.49 million) in Q1 2018.
However, in terms of operating income, the highest growth was recorded in OI of graphite electrodes which increased from 8.38 billion yen (USD 76.46 million) in Q1 2018 to 15.42 billion yen (USD 141 million) in Q1 CY19 whereas that of carbon black increased from 2.81 billion yen to 3.42 billion yen in Q1 CY19.
No shortage of electrodes
As mentioned in the official release, the company’s GE sales prices increased by 20% in Q1 CY19 against the previous quarter and doubled Y-o-Y basis. It has also been highlighted that although the fundamental situation surrounding GE is unchanged, the situation of electrodes shortage with customers have been relaxed and the company’s sales output are once again returning to a normal level.
In terms of Carbon black, the company has achieved stable production due to sufficient demand from tires and automobile industry.
Change in forecasts for 2019
Tokai Carbon had made forecasts for the entire year of 2019 in February this year. However, after the change in market dynamics, the company has lowered its estimates now. While the sales forecasts have been lowered down by 10.8% from 323 billion yen to 288 billion yen operating income estimates have been reduced from 98.7 billion yen to 75.4 billion yen.
The highest plunge is being forecasted in terms of graphite electrodes sales from 141.8 billion yen to 115.4 billion yen (-18.6%) whereas in case of carbon black and fine carbon the same have been revised by 2.2% and 4% respectively.
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