Tokai Carbon – a part of Tokyo-based Tokai Carbon Co. Ltd., a global producer of high-quality, furnace grade carbon blacks – is preparing for a substantial investment in its carbon black business, with plans to commit Yen57 billion (€353 million) over the next 3 years, concluding by the end of 2026. This strategic move is part of Tokai's T-2026 mid-term management plan, aiming to strengthen its core business. The main focus of this investment is to elevate the carbon black and fine carbon units into a "higher value-added business" while also expanding production capacity.

Breaking down the investment plan, Tokai intends to invest a total of Yen146 billion across its operations, with Yen57 billion specifically allocated to the carbon black business. Within this allocation, Yen4 billion is set aside for advancing carbon neutrality efforts, another Yen4 billion for addressing environmental concerns primarily at North American plants, and a significant Yen49 billion for the regular updates and relocation of the Thai plant.

In 2023, Tokai's carbon black business performed strongly, with operating income witnessing a notable 73% year-on-year increase to Yen21.3 billion, driven by a 7.2% rise in sales amounting to Yen148 billion.

However, Tokai noted a slight decline in volumes, attributed to extended production adjustments for truck and bus tire customers and subdued demand in non-tire products. This decrease occurred despite a recovery in demand for new cars and related products. The increase in net sales and operating income was mainly due to selling price hikes, reflecting higher environmental investment costs and enhanced productivity.

For 2024, Tokai anticipates a nearly 25% decline in carbon black operating income to Yen16 billion due to increased depreciation, with overall earnings expected to decrease by 11% to Yen26 billion. On the sales side, Tokai projects carbon black revenue to grow to Yen170 billion, building upon the Yen148 billion reported in 2023. Short-term earnings may be impacted by inventory cutbacks related to demand for replacement tires in North American trucks and buses. However, Tokai remains optimistic about the recovery in demand for new vehicles, projecting annual growth for tire production to remain at 3% over the medium- to long-term.

Looking ahead to 2026, Tokai sets ambitious targets, with expected earnings reaching Yen32 billion, marking a 10% increase from 2023, while sales are projected to reach Yen184 billion. This forward-looking approach highlights Tokai's commitment to sustainable growth and resilience within the competitive carbon black industry landscape. The comprehensive investment plan signifies not only a commitment to enhancing operational capabilities but also a strategic alignment with evolving market trends and demands.

To learn more, proceed to Tokai Carbon's website.