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, 2018
Results of Operations
Consolidated net sales for the fiscal year ended December 31, 2018 was ￥105,277 million (up 4.8% year on year). Operating income was ￥10,505 million (up 6.4%), and profit attributable to owners of the parent was ￥6,875 million (down 0.1%) due to a deterioration of foreign exchange gain or loss, and special factors associated with tax effect accounting.
Business Development
Material Business maintained strong performance
- Sales of semiconductor photoresists and high-density integration materials increased.
- Sales of high-purity chemicals increased significantly.
- Sales of EUV (Extreme Ultraviolet) photoresists started.
As for semiconductor photoresists, KrF (krypton fluoride) excimer laser photoresists and high-density integration materials continued to show a solid growth mainly in Asia and Japan against the backdrop of robust demand for semiconductor memory. High-purity chemicals showed a steady growth as a result of the launch of manufacturing lines using cutting-edge process by a major customer in Asia.
In addition, mass production in semiconductor manufacturing process using EUV, considered as a strong candidate for the next-generation semiconductor processing technology, is about to start, and sales of TOK’s EUV photoresists started.
Sales Composition of Semiconductor Photoresist by Region
No significant changes in sales composition by region
For the fiscal year ended December 31, 2018, sales of semiconductor photoresists for Asia and Japan showed a solid growth, and sales in Asia accounted for approx. 60% of the total sales. There was no major change year on year in sales composition by region as sales in each region only showed minor fluctuations.
We expect to see a demand increase in all regions for the fiscal year ending December 31, 2019. Especially in Japan, we expect an increase in sales volume of products for 3D-NAND as its market is expected to further expand.
Outlook for the fiscal year ending December 31, 2019
Sales are forecast to increase and profit is forecast to remain the same level as the previous fiscal year due to the impact of foreign exchange rates and increased expenses.
Net sales
In the Material Business, we forecast an increase in sales due to an increase in sales volume of semiconductor photoresists and high-purity chemicals in Asia, Japan, and North America while the production level of cutting-edge memory remains high. We also expect an increase in net sales in the Equipment Business supported by an increase in sales of the Zero Newton wafer handling system, semiconductor manufacturing equipment, and flexible display manufacturing equipment.
Profit
In the Material Business, despite a steady increase in sales volume of electronic functional materials and high-purity chemicals, profit is forecast to maintain the same level as the previous fiscal year due to the impact of yen’s appreciation and an increase in expenses of the Material Business.
On the other hand, earnings in the Equipment Business are forecast to improve due to sales increase.
Dividends to Shareholders
Our basic policy for shareholder returns had been to “continuously distribute dividends with a consolidated payout ratio of over 40%” and “flexibly conduct share buyback as a means of returning profits to shareholders,” while giving consideration to the current level. However, we reviewed the policy before the start of the new Medium-Term Plan and changed it to aim at a dividend on equity ratio (DOE) of 3.5% starting from the dividend in December 2018, in order to ensure stable and continuous shareholder returns. Based on the revised policy, we intend to pay a year-end dividend of ￥60 per share for the fiscal year ended December 31, 2018. As a result, the annual dividend for the fiscal year ended December 31, 2018, including the interim dividend of ￥36, increased by ￥32 from the previous fiscal year to ￥96 per share.
