Japan's GE Major Tokai Carbon re-revises its Earnings Forecast for FY19
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Japanese Graphite electrodes manufacturer, Tokai Carbon has once again altered its consolidated earnings forecast for fiscal year ended December 31, 2019 (from January 1, 2019 to December 31, 2019) that was announced on August 6, 2019, based on earnings trends to date. This is the second time that the GE manufacturer have revised its earnings forecasts as the same was previously done in August 2019.
| Particulars | Original | Forecast I (Aug'19) | Forecast II (Nov'19) |
| Sales | 2,87,900 | 3,04,400 | 2,62,600 |
| Operating Income | 75,400 | 76,900 | 58,000 |
| Net Income | 49,300 | 49,300 | 36,100 |
Amount in Million yen
The new forecast suggests a downtrend in sales and earnings as the company's net sales projections have been revised from 304,400 million yen to 262,600 million yen whereas operating income forecasts are revised from 76,900 million yen to 58,000 million yen.
The key reason cited by the company for revision below the previous levels is lowering of graphite electrodes sales volume. It said that U.S. China trade war has begun to affect the economy. The slowdown in the global economy and conditional change of the market has resulted in longer time for customers to clear out their inventory which finally has affected the company's sales.
In Aug'19, forecast revision, Tokai Carbon had upped its sales and operating income forecasts based on its acquisition of COBEX HoldCo GMBH a German manufacturer of carbon and graphite products on July 26, 2019.
Plunge in GE Sales in 2019
Tokai Carbon's has three business segments: Graphite Electrodes, Carbon Black and Fine Carbon with highest sales (48%) coming from the GE segment.
During first nine months of 2019 (Jan- Sep), Tokai's sales from electrodes segment have registered an increase from 69,239 million yen to 72,023 million yen whereas its operating income fell 4.7% y-o-y to 36,262 million yen.
The increase in sales is not a result of increase in sales volumes but its prices. The supply shortage of graphite electrodes that had existed in the same period of the previous year was eased, due to accumulation of inventory by customers and a slowdown in the European economy. As a result, the sales volume of the company declined y-o-y basis. In the meantime, sales prices increased y-o-y, due to factors including the global tightening of supply for the main raw materials.
