Toyo Ink SC : Carbon Nanotube Dispersions Business for Lithium ion Battery Business Briefing transcript

Carbon Nanotube Dispersions Business for Lithium ion Battery

Business Briefing for the First Half of Fiscal Year Ending December 31, 2023

Presentation(Transcript)

• Date/time: Aug. 22, 2023 11:00am - 12:00am (Japan time)
• Speaker:
• • Hideki Okaichi: President and Representative Director, TOYOCOLOR CO., LTD.
• Presentation Material:https://schd.toyoinkgroup.com/en/ir/archives/pdflib/2023/document20230821.pdf

TRANSLATION:

This is a transcript of Financial Results Briefing for the First Half of the Fiscal Year Ending December 2023, held on Aug. 22, 2023. This is an English translation of the Japanese original, prepared only for the convenience of shareholders residing outside Japan. The original Japanese version will prevail should there be any difference in the meaning between the English version and the Japanese version.

DISCLAIMER:

The forecast or projections in this material are based on the assumptions and beliefs of our management in light of the information available as of Aug. 22, 2023. Changes in global, economic and business conditions could cause actual results to differ materially from these forecasts.

The content of this transcript have been edited or revised by the company.

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Presentation

Okaichi: As briefed by Mr. Takashima, President of Toyo Ink SC Holdings in his financial summary earlier, we at TOYOCOLOR are currently focusing on business related to carbon nanotube conductive dispersions for lithium-ion batteries, which is quite a long name, but that is the topic of my review today.

Since the term lithium-ion batteries is quite a mouthful, I hope you would allow me to simply call it LiB from now on. Also, the term CNT is used in the document. I would like to refer to carbon nanotubes as CNT.

I will briefly discuss the process we have been working on, as well as the LiB market, the key points of our technology, and our business plan for the future.

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First, here are our three key points in the CNT dispersion business for LiB.

The first is our goal to contribute to a sustainable society through the worldwide circulation of EVs and for that purpose, we would like to grow our core business of TOYO Group.

Next, as a growth business, we have set a sales target of over JPY40 billion for 2026, and hope to contribute profits to the Group over the medium to long term.

Third, we plan to invest more than JPY25 billion to build a local production network over five bases in the four global automotive regions of Europe, the United States, China, and Japan, aiming to enhance our service for customers in the EV markets that are expected to grow in the future.

These three are our targets.

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Before discussing this business, I would like to briefly reiterate the business composition of our group by segment.

This slide shows a pie chart of sales and operating profit by business segment for the full year of FY2022, with the outer circle showing sales and the inner circle showing operating profit.

Of the JPY315.9 billion in total group sales, the green portion, the colorants and functional materials-related business, which TOYOCOLOR mainly controls, accounts for about 25% of both sales and operating profit. The ink business, called out in the red box on the left, accounts for roughly half of the total sales, however the operating profit accounts for about 23%. You can see the difference in profit margin between segments.

We recognize that this is a clear indication of the need to transform the entire group's business domain by clearly allocating resources to growth markets and growth businesses in the future.

The CNT dispersion business for LiB, which I will discuss today, is a new business in the colorants and functional materials-related business, and we, TOYOCOLOR, as the lead

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company of the Group, will be responsible for promoting the business and developing new businesses.

Our products and target markets for each of our three business segments are shown here.

This is the summary. What we call the established businesses are on the top row and the growth businesses are in the bottom row. The lower you go on this chart, the more growth potential is expected.

The first green column on the left side, which is mainly controlled by TOYOCOLOR, is the business related to colorants and functional materials. The upper row shows the resin parts for automobiles, containers for household consumer goods, home appliances OA, construction materials including infrastructure, synthetic resins, and colorants business. Our core business is pigments, which are used as colorants for printing inks and other products, and their dispersions.

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