TOKYO OHKA KOGYO CO., LTD. (TOK) provides chemical products, such as photoresist, and equipment for semiconductors and liquid crystal displays.

To Our Shareholders & Investors

President Noriaki Taneichi reports business results and development
and explains the future tasks and strategies.

Looking Back over the Fiscal Year Ended December 31, 2020

Results of Operations

During the period under review, demand for semiconductors for personal computers and data servers was strong in the electronics market, due to factors such as growth in teleworking and the increasing use of cloud computing services in response to COVID-19, in addition to continued adoption of 5G,^*1 IoT,^*2 and other technologies.

Under such conditions, aiming to realize the Companywide goal of "developing the niche markets that the TOK Group should target" included in the three-year medium-term management plan TOK Medium-term Plan 2021, the Group made progress on building an infrastructure for strengthening its businesses in the future. Related initiatives included the enhancement of specialized organizations, the acceleration of quality improvements in next-generation semiconductor materials and the advancement of production technologies, as well as the strengthening of marketing in existing business fields and the establishment of new organizations to develop businesses based on newly identified needs. Furthermore, seeking to maximize our ability to generate cash, we strived to enhance our management foundations through means such as the introduction of new management indicators and the promotion of balance-sheet management.

We also established a COVID-19 Task Force to enable continuity of business activities while implementing measures to stop the spread of the virus, such as encouraging the use of teleworking Groupwide and refraining from or delaying domestic and international business travel.

An overview of sales by business shows that while sales decreased in the Equipment business as deliveries of Zero Newton^Ⓡ wafer handling systems and semiconductor manufacturing equipment were down from the previous fiscal year, sales in the Materials business were up substantially thanks to strong sales of functional materials for electronics use and high-purity chemicals. As a result, net sales during this period reached their highest level since the Company was established, at 117.5 billion yen (up 14.4% year on year).

*1 Fifth-generation mobile telecommunications systems

*2 Internet of Things

In terms of profits, operating profit also set a new record high at 15.5 billion yen (up 63.3% year on year), thanks to lower raw material costs due to falling oil prices, as well as lower depreciation costs and other expenses, in addition to growth in sales of high-value-added products.

Business Development

Material Business 

Electronic functional materials

Sales in the segment of electronic functional materials for use were up considerably from last year, to 65.878 billion yen (up 13.1% year on year). This was due mainly to growth in sales of photoresists for semiconductor use in Asian markets and in high-precision mounting materials, resulting from strong demand for semiconductors for use in devices such as personal computers and data servers, although sales of photoresists for display use were down due to changing demand conditions for small and medium-sized LCD panels.

High purity chemicals

Sales in the high-purity chemicals segment were also up considerably from last year, to 48.732 billion yen (up 19.8% year on year). This was due mainly to strong sales of chemicals accompanying photoresists for semiconductor sold to customers in Taiwan for use in state-of-the-art semiconductor manufacturing processes, although sales of chemicals accompanying photoresists for display use were down due to changing demand conditions for small and medium-sized LCD panels.

Equipment Business

Sales in the process machinery segment were down from last year to 2.811 billion yen (down 26.7% year on year), due mainly to deliveries of Zero Newton^Ⓡ wafer handling systems and semiconductor manufacturing equipment that were down from the previous fiscal year.

Outlook for the fiscal year ending December 31, 2021 (the 92nd business year)

With regard to the TOK Medium-term Plan 2021, for which this is the final fiscal year, despite uncertainties about future prospects due to the impact of COVID-19 and U.S.-China trade frictions, continued growth is expected in the electronics market during this fiscal year. As a result, we project net sales of 122.6 billion yen, which would represent a new record high for the second consecutive year. We also project a new record high for the second consecutive year in operating income, at 16.5 billion yen, thanks to increased profitability resulting from growth in demand for functional materials for electronics use. We have established a solid foothold for achieving the targets of the medium-term management plan, and we have a strong sense of having started to move along a growth track based on the long-term perspectives identified in TOK Vision 2030, while also having achieved a number of numerical targets.

The Group will continue working together as one to meet shareholders' expectations, and we appreciate our shareholders' continued support.

Dividends to Shareholders

Last year marked the 80th anniversary of the Company's establishment. For this reason, we have decided to pay commemorative dividends of 30 yen per share, to mark this 80th anniversary by expressing our gratitude to shareholders for their continuous support. Based on our dividend policy targeting a dividend on equity (DOE) ratio of 3.5%, we have increased ordinary year-end dividends by 4 yen to 64 yen per share at the end of this fiscal year. This combined with the commemorative dividends means that ordinary year-end dividends will total 94 yen per share.